TAX BENEFIT PRESERVATION PLAN by and between FITLIFE BRANDS, INC. and COLONIAL STOCK TRANSFER COMPANY, INC., as Rights Agent, Dated as of February 26, 2021
Exhibit 4.1
by and
between
and
COLONIAL STOCK TRANSFER COMPANY, INC.,
as
Rights Agent,
Dated
as of February 26,
2021
TABLE OF CONTENTS
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Section
1.
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Certain
Definitions
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1
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Section
2.
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Appointment
of the Rights Agent
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6
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Section
3.
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Issuance
of Rights Certificates
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7
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Section
4.
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Form of
Rights Certificates
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8
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Section
5.
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Countersignature
and Registration
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9
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Section
6.
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Transfer,
Split-Up, Combination, and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights
Certificates
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9
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Section
7.
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Exercise
of Rights; Purchase Price; Expiration Date of Rights
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10
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Section
8.
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Cancellation
and Destruction of Rights Certificates
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11
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Section
9.
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Reservation
and Availability of Capital Stock
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11
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Section
10.
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Preferred
Shares Record Date
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12
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Section
11.
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Adjustment
of Purchase Price, Number and Kind of Shares, or Number of
Rights
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13
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Section
12.
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Certificate
of Adjusted Purchase Price or Number of Shares
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17
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Section
13.
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Consolidation,
Merger, or Sale or Transfer of Assets, Cash Flow or Earning
Power
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17
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Section
14.
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Fractional
Rights and Fractional Shares
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19
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Section
15.
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Rights
of Action
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20
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Section
16.
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Agreement
of Rights Holders
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20
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Section
17.
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Rights
Certificate Holder Not Deemed a Stockholder
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21
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Section
18.
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Concerning
the Rights Agent
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21
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Section
19.
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Merger
or Consolidation or Change of Name of the Rights Agent
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22
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Section
20.
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Duties
of the Rights Agent
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22
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Section
21.
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Change
of the Rights Agent
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24
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Section
22.
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Issuance
of New Rights Certificates
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25
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Section
23.
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Redemption
and ▇▇▇▇▇▇▇▇▇▇▇
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▇▇
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▇▇▇▇▇▇▇
▇▇.
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Exchange
of Rights
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25
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Section
25.
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Notice
of Certain Events
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27
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Section
26.
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Notices
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27
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Section
27.
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Supplements
and Amendments
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28
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Section
28.
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Successors
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28
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Section
29.
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Determinations
and Actions by the Board
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28
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Section
30.
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Benefits
of this Agreement
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29
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Section
31.
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Severability
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29
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Section
32.
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Governing
Law
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29
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Section
33.
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Counterparts;
Facsimiles and PDFs
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29
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Section
34.
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Descriptive
Headings
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29
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Section
35.
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Force
Majeure
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29
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Section
36.
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Further
Assurance
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29
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Exhibits
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Exhibit
A:
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Form of
Certificate of Designation of Series B Junior Participating
Preferred Stock
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Exhibit
B:
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Form of
Rights Certificate
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Exhibit
C:
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Form of
Summary of Rights to Purchase Preferred Stock
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-i-
TAX
BENEFIT PRESERVATION PLAN, dated as of February 26, 2021 (this
“Agreement”), by
and between FitLife Brands, Inc., a Nevada corporation (the
“Company”), and
Colonial Stock Transfer Company, Inc., as rights agent (the
“Rights
Agent”).
RECITALS
WHEREAS, on
February 26, 2021 (the “Rights Dividend Declaration
Date”), the Board of Directors of the Company (the
“Board”)
adopted this Agreement and authorized and declared a dividend
distribution of one preferred share purchase right (each, a
“Right” and
collectively, the “Rights”) for each Common Share (as
hereinafter defined) outstanding at the Close of Business (as
hereinafter defined) on February 26, 2021 (the “Record Date”), each Right
initially representing the right to purchase one one-thousandth
(subject to adjustment in accordance with the provisions of this
Agreement) of a Preferred Share (as hereinafter defined) and having
the rights, preferences and privileges set forth in the form of
Certificate of Designation of Series B Junior Participating
Preferred Stock attached hereto as Exhibit A, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, if the
Company experiences an “ownership change,” as defined
in Section 382 of the Internal Revenue Code of 1986, as amended, or
any successor statute (the “Code”), its ability to use Tax
Benefits (as defined herein) for income tax purposes could be
substantially limited or lost altogether; and
WHEREAS, the
Company views the Tax Benefits as highly valuable assets of the
Company, which are likely to inure to the benefit of the Company
and its stockholders, and the Company believes that it is in the
best interests of the Company and its stockholders that the Company
provide for the protection of the Tax Benefits on the terms and
conditions set forth herein; and
WHEREAS, the Board
further authorized and directed the issuance of one Right (subject
to adjustment in accordance with the provisions of this Agreement)
with respect to each Common Share that becomes outstanding between
the Record Date and the earlier of the Distribution Date and the
Expiration Date (as such terms are hereinafter defined);
provided, however, that
Rights may be issued with respect to Common Shares that shall
become outstanding after the Distribution Date and prior to the
Expiration Date in accordance with Section 22 hereof;
NOW,
THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties, intending to be legally
bound hereby, agree as follows:
Section
1. Certain Definitions. For
purposes of this Agreement, the following terms have the meanings
indicated:
(a) “Acquiring
Person” shall mean any Person who or which, together
with all Related Persons of such Person, from and after the first
public announcement by the Company of the adoption of this
Agreement, is or becomes the Beneficial Owner of 4.99% or more of
the Common Shares then outstanding, whether or not such Person
continues to be the Beneficial Owner of 4.99% or more of the Common
Shares then outstanding, but shall not include an Exempt Person or
a Grandfathered Person. Notwithstanding the foregoing: (i) no
Person shall become an Acquiring Person solely as a result of (A)
the grant or issuance by the Company to its directors, officers
and/or employees of any options, warrants, rights or similar
interests to acquire Common Shares by the Company pursuant to any
employee benefit, stock incentive plan, stock option plan or stock
ownership plan of the Company adopted by the Board, and the
subsequent vesting, exercise or conversion of such options,
warrants, rights or similar interests, (B) the grant or issuance by
the Company to its directors, officers and/or employees of
restricted Common Shares or restricted stock units, pursuant to a
restricted stock or other compensation plan or arrangement adopted
by the Board, and/or the subsequent vesting of such shares or stock
units, (C) the acquisition of Common Shares by the Company or
another Exempt Person which, by reducing the number of Common
Shares outstanding, increases the proportionate number of Common
Shares Beneficially Owned by such Person, together with all Related
Persons of such Person, to 4.99% or more of the Common Shares then
outstanding; provided,
however, that, if a Person shall become the Beneficial Owner
of 4.99% or more of the Common Shares then outstanding by reason of
acquisition of shares by an Exempt Person and shall, after the
first public announcement by the Company or other Exempt Person
disclosing such share acquisitions by an Exempt Person, become the
Beneficial Owner of any additional Common Shares (other than
pursuant to a stock split, reverse stock split, stock dividend,
reclassification or similar transaction effected by the Company)
and immediately thereafter is the Beneficial Owner of 4.99% or more
of the Common Shares then outstanding, then such Person shall be an
Acquiring Person, (D) a dividend or distribution paid or made by
the Company on the outstanding Common Shares or pursuant to a stock
split, subdivision or similar transaction effected by the Company
in which all registered holders of Common Shares are treated
substantially equally, or (E) the acquisition of Common Shares
directly from the Company; and (ii) (A) if the Board determines
that a Person who would otherwise be an Acquiring Person has become
such inadvertently (including, without limitation, because such
Person was unaware that it Beneficially Owned a percentage of
Common Shares that would otherwise cause such Person to be an
Acquiring Person, or such Person was aware of the extent of its
Beneficial Ownership of Common Shares, but had no actual knowledge
of the consequences of such Beneficial Ownership under this
Agreement and had no intention of changing or influencing control
of the Company), and (B) such Person and/or its Related Persons
divests as promptly as practicable (and in any event within five
(5) Business Days after being so requested by the Company) a
sufficient number of Common Shares so that such Person, together
with its Related Persons, is no longer the Beneficial Owner of
4.99% or more of the Common Shares then outstanding or, in the case
solely of Derivative Interests, such Person terminates as promptly
as practicable (and in any event within five (5) Business Days
after being so requested by the Company) the subject derivative
transaction or transactions or disposes of the subject derivative
security or securities as promptly as practicable (and in any event
within five (5) Business Days after being so requested by the
Company), or establishes to the satisfaction of the Board that such
Derivative Interests are not held with any intention of changing or
influencing control of the Company, then such Person shall not be
deemed to be or ever to have been an Acquiring Person for any
purposes of this Agreement as a result of such inadvertent
acquisition.
-1-
(b)
“Adjustment
Shares” shall have the meaning set forth in Section
11(a)(ii) hereof.
(c) “Affiliate”
and “Associate”
shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Exchange Act;
provided, however, that no
director or officer of the Company shall be deemed an Affiliate or
Associate of any other director or officer of the Company solely as
a result of his or her being a director or officer of the
Company.
(d) “Agreement”
shall have the meaning set forth in the preamble of this Agreement,
as it may from time to time be supplemented, amended, renewed,
restated or extended pursuant to the applicable provisions
hereof.
(e) “Articles
of Incorporation” shall mean the Company’s
Articles of Incorporation, as amended and as in effect on the date
hereof, as such may be amended, modified or restated from time to
time.
(f) A
Person shall be deemed the “Beneficial Owner” of, shall be
deemed to have “Beneficial
Ownership” of, and shall be deemed to
“beneficially
own,” any securities:
(i) which
such Person or any of such Person’s Related Persons
beneficially owns, directly or indirectly (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act);
(ii) which
such Person or any of such Person’s Related Persons, directly
or indirectly, has the legal, equitable or contractual right to
acquire (whether such right is exercisable immediately, only after
the passage of time, or upon the satisfaction of one or more
conditions (whether or not within the control of such Person),
compliance with regulatory requirements or otherwise) pursuant to
any agreement, arrangement or understanding (whether or not in
writing and other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities registered under the Securities Act)
or upon the exercise of conversion rights, exchange rights, other
rights (other than the Rights), warrants, or options, or otherwise;
provided, however, that a
Person shall not be deemed the “Beneficial Owner” of,
to have “Beneficial Ownership” of, or to
“beneficially own,” (A) securities tendered pursuant to
a tender offer or exchange offer made in accordance with the
General Rules and Regulations under the Exchange Act by or on
behalf of such Person or any of such Person’s Related Persons
until such tendered securities are accepted for purchase or
exchange, (B) securities issuable upon the exercise of Rights at
any time prior to the occurrence of a Triggering Event, or (C)
securities issuable upon the exercise of Rights from and after the
occurrence of a Triggering Event, which Rights were acquired by
such Person or any of such Person’s Related Persons prior to
the Distribution Date or pursuant to Section 3(a) or Section 22
hereof (the “Original
Rights”) or pursuant to Section 11(i) or Section 11(p)
hereof in connection with an adjustment made with respect to any
Original Rights;
(iii) which
such Person or any of such Person’s Related Persons, directly
or indirectly, has the right to vote or dispose of, including
pursuant to any agreement, arrangement, or understanding (whether
or not in writing); provided,
however, that a Person shall not be deemed the
“Beneficial Owner” of, to have “Beneficial
Ownership” of, or to “beneficially own,” any
security as a result of an agreement, arrangement or understanding
(whether or not in writing) to vote such security if such
agreement, arrangement or understanding: (A) arises solely from a
revocable proxy or consent (as such terms are defined in Regulation
14A under the Exchange Act) given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the General Rules and Regulations promulgated
under the Exchange Act to more than ten (10) holders of shares of a
class of stock of the Company registered under Section 12 of the
Exchange Act, (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or (C) arises solely because such security has been
tendered pursuant to a tender or exchange offer made by such Person
or any Related Persons thereof until such tendered security is
accepted for payment or exchange;
(iv) which
are beneficially owned, directly or indirectly, by any other Person
(or any Related Person thereof) with which such Person (or any of
such Person’s Related Persons) has any agreement, arrangement
or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy or
consent as described in the proviso to Section 1(f)(iii)), or
disposing of any voting securities of the Company; provided, however, that nothing in this
Section 1(f)(iv) shall cause a Person engaged in business as an
underwriter of securities to be the “Beneficial Owner”
of, to have “Beneficial Ownership” of, or to
“beneficially own,” any securities acquired, or which
such Person has the right to acquire, as a result of customary
agreements with and between underwriters and selling group members
entered into in connection with a bona fide public offering of
securities registered under the Securities Act; or
-2-
(v) which
are the subject of, or the reference securities for, or that
underlie, any Derivative Interest of such Person or any of such
Person’s Related Persons, with the number of Common Shares
deemed beneficially owned being the notional or other number of
Common Shares specified in the documentation evidencing the
Derivative Interest as being subject to being acquired upon the
exercise or settlement of the Derivative Interest or as the basis
upon which the value or settlement amount of such Derivative
Interest is to be calculated in whole or in part or, if no such
number of Common Shares is specified in such documentation, as
determined by the Board in its sole discretion to be the number of
Common Shares to which the Derivative Interest
relates.
Notwithstanding
anything in this definition of Beneficial Ownership to the
contrary, for all purposes of this Agreement, the phrase
“then outstanding,” when used with reference to a
Person’s Beneficial Ownership of securities of the Company,
shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding that such Person, together with all
Related Persons, would be deemed to Beneficially Own hereunder. The
number of Common Shares not actually issued and outstanding that
such Person, together with all Related Persons of such Person, is
otherwise deemed to Beneficially Own for purposes of this Agreement
shall be deemed to be issued and outstanding for the purpose of
computing the percentage of the outstanding number of Common Shares
owned by such Person, together with all Related Persons of such
Person, but shall not be deemed to be issued and outstanding for
the purpose of computing the percentage of outstanding Common
Shares owned by any other Person.
No
Person who is an officer, director or employee of an Exempt Person
shall be deemed, solely by reason of such Person’s status or
authority as such, to be the “Beneficial Owner” of, to
have “Beneficial Ownership” of or to
“Beneficially Own” any securities that are
“Beneficially Owned” (as defined in this Section 1(f)),
including, without limitation, in a fiduciary capacity, by an
Exempt Person or by any other such officer, director or employee of
an Exempt Person.
Notwithstanding any
of the foregoing, no Person shall be deemed to be the
“Beneficial Owner” of, to have “Beneficial
Ownership” of or to “Beneficially Own” any
securities which such Person or any of such Person’s Related
Persons would otherwise be deemed to “Beneficially Own”
pursuant to this Section 1(f) solely as a result of any merger or
other acquisition agreement between the Company and such Person (or
one or more of such Person’s Related Persons), or any tender,
voting or support agreement entered into by such Person (or one or
more of such Person’s Related Persons) in connection
therewith, if, prior to such Person becoming an Acquiring Person,
the Board has approved such merger or other acquisition agreement,
or such tender, voting or support agreement.
(g) “Board”
shall have the meaning set forth in the recitals to this Agreement
and also includes any duly authorized committee
thereof.
(h) “Book
Entry” shall mean an uncertificated book entry for any
Common Share or Preferred Share.
(i) “Business
Day” shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to
close.
(j) “Bylaws”
shall mean the Company’s Amended Bylaws, as in effect on the
date hereof, and as such may be amended, modified or restated from
time to time.
(k) “Close
of Business” on any given date shall mean 5:00 p.m.,
New York City time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 p.m., New York City time, on
the next succeeding Business Day.
(l) “Closing
Price” of any security on any given day shall be the
last sale price, regular way, of such security or, in case no such
sale takes place on such day, the average of the closing bid and
asked prices, regular way, on the principal trading market on which
such security is then traded.
(m) “Common
Shares” shall mean the shares of common stock, par
value $0.01 per share, of the
Company or any other shares of capital stock of the Company into
which such shares shall be reclassified or exchanged, except that
“Common Shares”
when used with reference to any Person other than the Company shall
mean the capital stock of such Person with the greatest voting
power, or the equity securities or other equity interests having
power to control or direct the management of such
Person.
-3-
(n) “Common
Stock Equivalents” shall have the meaning set forth in
Section 11(a)(iii) hereof.
(o) “Company”
shall have the meaning set forth in the preamble hereto, except as
otherwise provided in Section 13(a) hereof.
(p) “Current
Market Price” shall have the meaning set forth in
Section 11(d) hereof.
(q) “Current
Value” shall have the meaning set forth in Section
11(a)(iii) hereof.
(r) “Definitive
Acquisition Agreement” shall mean any agreement
entered into by the Company that is conditioned on the approval by
the holders of not less than a majority of the outstanding Common
Shares of the Company and is with respect to (i) a share exchange,
one-step merger, tender offer and second-step merger,
consolidation, recapitalization, reorganization, business
combination or similar transaction involving the Company, or (ii)
the acquisition, directly or indirectly, of assets or earning power
aggregating 50% or more of the consolidated assets or earning power
of the Company and its Subsidiaries (taken as a
whole).
(s) “Derivative
Interest” shall mean any derivative securities (as
defined under Rule 16a-1 under the Exchange Act) that increase in
value as the value of the underlying equity increases, including,
but not limited to, a long convertible security, a long call option
and a short put option position, in each case, regardless of
whether (i) such interest conveys any voting rights in such
security, (ii) such interest is required to be, or is capable of
being, settled through delivery of such security or (iii)
transactions hedging the economic effect of such
interest.
(t) “Distribution
Date” shall mean the Close of Business on the earlier
to occur of (i) the tenth (10th) Business Day (or such later date
as may be determined from time to time by action of a majority of
the Board prior to the Distribution Date that would otherwise have
occurred) after the Shares Acquisition Date (or, if the tenth
(10th) Business Day after the Shares Acquisition Date occurs before
the Record Date, then the Close of Business on the Record Date), or
(ii) the tenth (10th) Business Day (or such later date as may be
determined from time to time by action of a majority of the Board
prior to the Distribution Date that would otherwise have occurred)
after the date of the commencement of, or first public announcement
of the intent of any Person (other than an Exempt Person) to
commence (within the meaning of Rule 14d-2(a) of the General Rules
and Regulations under the Exchange Act), following the first public
announcement by the Company of the adoption of this Agreement, a
tender or exchange offer, the successful consummation of which
would result in any Person (other than an Exempt Person) becoming
an Acquiring Person, irrespective of whether any shares are
actually purchased or exchanged pursuant to such offer;
provided, however, that if
a tender or exchange offer is terminated prior to the occurrence of
a Distribution Date, then no Distribution Date shall occur as a
result of such tender or exchange offer. The Board may, if deferral
is allowed in clause (i) or (ii) of the preceding sentence, defer
the date set forth in such clause, as applicable, to a specified
later date or an unspecified later date to be determined by a
subsequent action or event.
(u) “Equivalent
Preferred Shares” shall have the meaning set forth in
Section 11(b) hereof.
(v) “Exchange
Act” shall mean the Securities Exchange Act of 1934,
as amended.
(w) “Exchange
Property” shall have the meaning set forth in Section
24(f) hereof.
(x) “Exchange
Ratio” shall have the meaning set forth in Section
24(a) hereof.
(y) “Exchange
Recipients” shall have the meaning set forth in
Section 24(f) hereof.
(z) “Exempt
Person” shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee stock ownership plan,
employee benefit plan or other compensation program or arrangement
of the Company or of any of its Subsidiaries, or any Person holding
Common Shares for or pursuant to the terms of any such plan,
program or arrangement or for the purpose of funding any such plan,
program or arrangement, and (iv) any Person organized, appointed or
established by the Company or any of its Subsidiaries for or
pursuant to the terms of any such plan, program or arrangement
during the time such Person acts in such capacity.
(aa) “Expiration
Date” shall have the meaning set forth in Section 7(a)
hereof.
(bb) “Final
Expiration Date” shall have the meaning set forth in
Section 7(a) hereof.
(cc) “General
Rules and Regulations” shall mean Part 240, Subpart A
-Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
-4-
(dd) “Grandfathered
Person” shall mean any Person who or which, together
with all Related Persons of such Person, would, as of the time
immediately prior to the first public announcement by the Company
of the adoption of this Agreement, be deemed an “Acquiring
Person;” provided,
however, that such Person,
together with all Related Persons, shall cease to be a
Grandfathered Person and shall become an Acquiring Person if,
following the first public announcement by the Company of the
adoption of this Agreement, such Person, together with all Related
Persons, shall acquire, without the prior approval of the Board,
Beneficial Ownership of any additional Common Shares (other than as
a result of (i) the acquisition of Common Shares on the date of
such announcement pursuant to orders placed prior to such
announcement, (ii) a stock dividend, stock split, reverse stock
split, subdivision or similar transaction effected by the Company
in which all registered holders of Common Shares are treated
substantially equally, (iii) the grant or issuance by the Company
to its directors, officers and/or employees of options, warrants,
rights or similar interests to acquire Common Shares by the Company
pursuant to any employee benefit, stock incentive plan, stock
option plan or stock ownership plan of the Company adopted by the
Board, and the subsequent vesting, exercise or conversion of such
options, warrants, rights or similar interests, (iv) the grant or
issuance by the Company to its directors, officers and/or employees
of restricted Common Shares or restricted stock units pursuant to a
restricted stock or other compensation plan or arrangement adopted
by the Board and/or the subsequent vesting of such shares or stock
units, or (v) the acquisition of Common Shares directly from the
Company) while such Person (together with all Related Persons) is
the Beneficial Owner of 4.99% or more of the Common Shares then
outstanding.
(ee) “Independent
Board Members” shall mean those members of the Board
that have been determined by the Board to be independent in
accordance with the applicable Nasdaq listing
requirements.
(ff) “Nasdaq”
shall mean The Nasdaq Stock Market.
(gg) “NYSE”
shall mean the New York Stock Exchange.
(hh) “Original
Rights” shall have the meaning set forth in Section
1(f)(ii) hereof.
(ii) “Ownership
Statement” shall have the meaning set forth in Section
3(a) hereof.
(jj) “Person”
shall mean any individual, firm, corporation, partnership, limited
liability company, limited liability partnership, trust,
association, syndicate or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(kk) “Preferred
Shares” shall mean shares of Series B Junior
Participating Preferred Stock, par value $0.01 per share, of the
Company having the relative rights, preferences and limitations set
forth in the form of Certificate of Designation attached to this
Agreement as Exhibit
A, and, to the extent that there are not a sufficient number
of shares of Preferred Stock authorized to permit the full exercise
of the Rights, any other series of preferred stock of the Company
designated for such purpose containing terms substantially similar
to the terms of the Preferred Stock.
(ll) “Principal
Party” shall have the meaning set forth in Section
13(b) hereof.
(mm) “Purchase
Price” shall have the meaning set forth in Section
7(b) hereof.
(nn) “Record
Date” shall have the meaning set forth in the recitals
hereto.
(oo) “Redemption
Date” shall have the meaning set forth in Section 7(a)
hereof.
(pp) “Redemption
Period” shall have the meaning set forth in Section
23(a) hereof.
(qq) “Redemption
Price” shall have the meaning set forth in Section
23(a) hereof.
(rr) “Related
Person” shall mean, as to any Person, any Affiliates
or Associates of such Person.
(ss) “Right”
shall have the meaning set forth in the recitals to this
Agreement.
(tt) “Rights
Agent” shall have the meaning set forth in the
preamble of this Agreement, except as otherwise provided in Section
19 and Section 21 hereof.
(uu) “Rights
Certificate” shall have the meaning set forth in
Section 3(a) hereof.
-5-
(vv) “Rights
Dividend Declaration Date” shall have the meaning set
forth in the recitals to this Agreement.
(ww) “SEC”
shall mean the U.S. Securities and Exchange Commission and any
successor agency or instrumentality of the United States
government.
(xx) “Section
11(a)(ii) Event” shall have the meaning set forth in
Section 11(a)(ii) hereof.
(yy) “Section
11(a)(ii) Trigger Date” shall have the meaning set
forth in Section 11(a)(iii) hereof.
(zz) “Section
13 Event” shall mean any event described in Section
13(a)(i), Section 13(a)(ii) or Section 13(a)(iii)
hereof.
(aaa) “Securities
Act” shall mean the Securities Act of 1933, as
amended.
(bbb) “Shares
Acquisition Date” shall mean the first date of public
announcement (which, for purposes of this definition, shall
include, without limitation, the filing of a report or an amendment
thereto with the SEC pursuant to the Exchange Act or pursuant to a
comparable successor statute) by the Company or an Acquiring Person
indicating that an Acquiring Person has become such or that
discloses information which reveals the existence of an Acquiring
Person; provided,
however, that if a Person
is determined by the Board, in its sole discretion, not to have
become an Acquiring Person pursuant to Section 1(a)(ii), then no
Shares Acquisition Date shall be deemed to have
occurred.
(ccc) “Spread”
shall have the meaning set forth in Section 11(a)(iii)
hereof.
(ddd) “Subsidiary”
shall mean, with reference to any Person, any corporation or other
Person of which an amount of voting securities (or other ownership
interests having ordinary voting power) sufficient to elect at
least a majority of the directors (or other Persons performing
similar functions) of such corporation or other Person is
beneficially owned, directly or indirectly, by such first mentioned
Person, or otherwise controlled by such first mentioned
Person.
(eee) “Substitution
Period” shall have the meaning set forth in Section
11(a)(iii) hereof.
(fff) “Summary
of Rights” shall have the meaning set forth in Section
3(b) hereof.
(ggg) “Tax
Benefits” shall mean net operating losses, capital
loss carryovers, general business credit carryovers, alternative
minimum tax credit carryovers, foreign tax credit carryovers, any
loss or deduction attributable to a “net unrealized built-in
loss” within the meaning of Section 382, of the Company or
any of its Subsidiaries and any other tax attribute the benefit of
which is subject to possible limitation under Section
382.
(hhh) “Trading
Day” shall mean a day on which the principal national
securities exchange on which the Common Shares are listed or
admitted to trading is open for the transaction of business or, if
the Common Shares are not listed or admitted to trading on any
national securities exchange, a Business Day; provided, that if
such security is not listed or quoted on Nasdaq or the NYSE and the
principal market for such security is a non-U.S. securities
exchange, then “Trading Day” shall mean a day on which
such non-U.S. securities exchange is open for the transaction of
business.
(iii) “Triggering
Event” shall mean a Section 11(a)(ii) Event or any
Section 13 Event.
Section
2. Appointment of the Rights
Agent. The Company hereby appoints the Rights Agent to act
as rights agent for the Company in accordance with the express
terms and conditions hereof (and not implied terms and conditions),
and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such co-rights agents as it may deem
necessary or desirable, upon ten (10) calendar days’ prior
written notice to the Rights Agent. In the event the Company
appoints one or more co-rights agents, the respective duties of the
Rights Agent and any co-rights agents under the provisions of this
Agreement shall be as the Company reasonably determines, and the
Company shall notify, in writing, the Rights Agent and any
co-rights agents of such duties. The Rights Agent shall have no
duty to supervise, and shall in no event be liable for, the acts or
omissions of any such co-rights agent.
-6-
Section
3. Issuance of Rights
Certificates.
(a) Until
the Distribution Date (i) the Rights will be evidenced (subject to
Section 3(b) and Section 3(c) hereof) by the certificates for the
Common Shares registered in the names of the holders of the Common
Shares (which certificates for Common Shares shall be deemed also
to be certificates for Rights) or by the Book Entry Common Shares
registered in the name of the holders, evidenced by notation in
accounts reflecting current ownership statements issued with
respect to uncertificated Common Shares in lieu of such
certificates (“Ownership
Statements”) (which Book Entry Common Shares,
including any Ownership Statements, shall be deemed also to be
certificates for Rights) and not by separate certificates, and the
registered holders of the Common Shares shall also be the
registered holders of the associated Rights, and (ii) the Rights
will be transferable only in connection with the transfer of the
underlying Common Shares (including a transfer to the Company). As
soon as practicable after the Distribution Date, the Company shall
prepare and execute, and upon the written request of the Company,
the Rights Agent shall countersign and the Company will send or
cause to be sent (and the Rights Agent will, if so requested and
provided with all necessary information and documents will, at the
expense of the Company, send), in accordance with Section 26
hereof, to each record holder of the Common Shares as of the Close
of Business on the Distribution Date (other than an Acquiring
Person or any Related Person of an Acquiring Person), one or more
rights certificates, in substantially the form of Exhibit B attached hereto (the
“Rights
Certificates”), evidencing one Right for each Common
Share so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per Common Share
has been made pursuant to Section 11(i) or Section 11(p) hereof, at
the time of distribution of the Rights Certificates, the Company
shall not be required to issue Rights Certificates evidencing
fractional Rights, but may, in lieu thereof, make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates evidencing only whole numbers
of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates. The
Company shall promptly notify the Rights Agent in writing upon the
occurrence of the Distribution Date. Until such written notice is
received by the Rights Agent, the Rights Agent may presume
conclusively for all purposes that the Distribution Date has not
occurred.
(b) As
promptly as practicable following the Record Date, the Company
shall make available a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit C (the
“Summary of
Rights”), to each record holder of Common Shares as of
the Close of Business on the Record Date who may so request a copy
from time to time prior to the Expiration Date. With respect to
Common Shares outstanding as of the Record Date, or issued
subsequent to the Record Date, until the earlier of the
Distribution Date and the Expiration Date, the Rights associated
with such Common Shares will be evidenced by the certificate or
Book Entry Common Shares registered in the names of the holders
thereof, in each case together with the Summary of Rights. Until
the earlier of the Distribution Date and the Expiration Date, the
surrender for transfer of any certificate or the transfer of any
Book Entry Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the
transfer of the Rights associated with the Common Shares evidenced
thereby.
(c) Rights
shall without any further action, be issued in respect of all
Common Shares that are issued (whether originally issued or from
the Company’s treasury) after the Record Date but prior to
the earlier of the Distribution Date and the Expiration Date and,
to the extent provided in Section 22 hereof, in respect of Common
Shares issued after the Distribution Date. Certificates and Book
Entry Common Shares evidencing such Common Shares shall have
printed or otherwise affixed to them a legend in substantially the
following form:
“This
certificate also evidences and entitles the registered holder
hereof to certain Rights as set forth in the Rights Agreement
between FitLife Brands, Inc., a Nevada corporation (the
“Company”), and Colonial
Stock Transfer Company, Inc., as rights agent (or any successor
rights agent) (the “Rights Agent”), dated as
of February 26, 2021, as the same may be amended, extended or
renewed from time to time (the “Rights Agreement”), the
terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of the
Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. The Company
will mail to the registered holder of this certificate, without
charge, a copy of the Rights Agreement, as in effect on the date of
mailing, promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement,
Rights which are issued or transferred to, which are or have been
beneficially owned by an Acquiring Person or any Related Person
thereof (as such capitalized terms are defined in the Rights
Agreement) or any purported subsequent holder of such Rights will
become null and void and will no longer be transferable. The Rights
shall not be exercisable, and shall be void so long as held, by a
holder in any jurisdiction where the requisite qualification to the
issuance to such holder, or the exercise by such holder, of the
Rights in such jurisdiction shall not have been obtained or be
obtainable.”
-7-
With
respect to any Book Entry Common Share, such legend shall be
included in the Ownership Statement in respect of such Common Share
or in a notice to the record holder of such Common Share in
accordance with applicable law. With respect to such certificates
or Ownership Statements containing the foregoing legend, until the
earlier of the Distribution Date and the Expiration Date, the
Rights associated with the Common Shares evidenced by such
certificates or Book Entry Common Shares shall be evidenced by such
certificates or such Book Entry Common Shares (including any
Ownership Statements) alone and the surrender for transfer of any
certificate or transfer of any Book Entry Common Share shall also
constitute the transfer of the Rights associated with the Common
Shares evidenced thereby. Notwithstanding this Section 3(c) or
anything to the contrary that may be contained elsewhere in this
Agreement, neither the failure to print the foregoing legend on any
certificates representing Common Shares or any defect that may be
contained in the legend that is so printed, nor the failure to
provide the notice thereof to the holder of any Book Entry Shares,
shall affect the enforceability of any part of this Agreement or
the rights of any holder of the Rights. In the event the Company
purchases or otherwise acquires any Common Shares after the Record
Date but prior to the Distribution Date, any Rights associated with
such Common Shares shall be deemed cancelled and retired so that
the Company shall not be entitled to exercise any Rights associated
with such Common Shares that are no longer outstanding. In the
event that any Common Shares are not represented by certificates,
references in this Agreement to certificates shall be deemed to
refer to the notations in the book entry accounts reflecting
ownership of such shares.
After
the Record Date but prior to the earlier of the Distribution Date
and the Expiration Date, if new certificate(s) representing Common
Shares are issued in connection with the transfer, split-up,
combination or exchange of certificate(s) representing Common
Shares or if new certificate(s) representing Common Shares are
issued to replace any certificate(s) that have been mutilated,
destroyed, lost, or stolen, then such new certificate(s) shall bear
a legend in substantially the form of the foregoing.
Section
4. Form of Rights
Certificates.
(a) The
Rights Certificates (and the forms of election to purchase and of
assignment and the certificates contained therein to be printed on
the reverse thereof) shall each be substantially in the form
attached hereto as Exhibit
B and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate (but which do not affect the rights,
duties, liabilities or responsibilities of the Rights Agent) and as
are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any applicable law or with any rule
or regulation made pursuant thereto or with any law, rule or
regulation of any national securities exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to
the provisions of Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on
their face shall entitle the registered holders thereof to purchase
such number of one-thousandths of a Preferred Share as shall be set
forth therein at the Purchase Price, but the amount and type of
securities, cash or other assets that may be acquired upon the
exercise of each Right and the Purchase Price thereof shall be
subject to adjustment as provided herein.
(b) Any
Rights Certificate issued pursuant hereto that represents Rights
beneficially owned by: (i) an Acquiring Person or any Related
Person of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Related Person) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Related Person) who becomes a
transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring
Person (or any such Related Person) to holders of equity interests
in such Acquiring Person or to any Person with whom such Acquiring
Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights, or
(B) a transfer which the Board, in its sole discretion, has
determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible, and only if the
Company has provided specific written instructions to the Rights
Agent) a legend in substantially the following form:
“The Rights
evidenced by this Rights Certificate are or were Beneficially Owned
by a Person who was or became an Acquiring Person or a Related
Person of an Acquiring Person (as such capitalized terms are
defined in the Rights Agreement by and between FitLife Brands,
Inc., a Nevada corporation, and Colonial Stock Transfer Company,
Inc., as Rights Agent (or any successor rights agent), dated as of
February 26, 2021, as the same may be amended, extended or renewed
from time to time (the “Rights Agreement”)).
Accordingly, this Rights Certificate and the Rights evidenced
hereby may become null and void in the circumstances specified in
Section 7(e) of the Rights Agreement and may no longer be
transferable.”
-8-
The
Company shall give written notice to the Rights Agent promptly
after it becomes aware of the existence and identity of any
Acquiring Person or any Related Person thereof. Until such notice
is received by the Rights Agent, the Rights Agent may presume
conclusively for all purposes that no Person has become an
Acquiring Person or a Related Person of an Acquiring Person. The
Company shall instruct the Rights Agent in writing of the Rights
which should be so legended.
Notwithstanding
this Section 4(b) or anything to the contrary that may be contained
elsewhere in this Agreement, the omission of the foregoing legend
or any legend substantially similar thereto shall not affect the
enforceability of any part of this Agreement or the rights of any
registered holder of Rights Certificates.
Section
5. Countersignature and
Registration.
(a) The
Rights Certificates shall be duly executed on behalf of the Company
by its Chief Executive Officer, President or a Vice President and
the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary, either manually or by facsimile or portable
document format signature. The Rights Certificates shall be
countersigned by an authorized signatory of the Rights Agent,
either manually or by facsimile or portable document format
signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such
officer of the Company before countersignature by an authorized
signatory of the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be
countersigned by an authorized signatory of the Rights Agent and
issued and delivered by the Company with the same force and effect
as though the Person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this
Agreement any such Person was not such an officer. For the
avoidance of doubt, upon the exercise of any Right, the Preferred
Share ownership may be, subject to the Board’s ratification,
reflected in Book Entry or by other electronic means of recordation
commonly used by the Rights Agent to record ownership of the
Company’s Common Shares or Preferred Shares.
(b) Following
the Distribution Date, and receipt by the Rights Agent of written
notice to that effect and all other relevant and necessary
information and documents referred to in Section 3(a), the Rights
Agent will keep, or cause to be kept, at its office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by
each of the Rights Certificates, and the date of each of the Rights
Certificates.
Section
6. Transfer, Split-Up, Combination,
and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates.
(a) Subject
to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Rights Certificates (other than
Rights Certificates representing Rights that have become null and
void pursuant to Section 7(e) hereof, or evidencing Rights that
have been redeemed or exchanged pursuant to Section 23 or Section
24 hereof) may be transferred, split-up, combined or exchanged for
another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one-thousandths of a
Preferred Share (or, following the occurrence of a Triggering
Event, Common Shares, other securities, cash or other assets, as
the case may be) as the Rights Certificate or Rights Certificates
surrendered then entitles such holder (or former holder in the case
of a transfer) to purchase. Any registered holder desiring to
transfer, split-up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing delivered to
the Rights Agent, and shall surrender, together with any required
form of assignment duly executed and properly completed, the Rights
Certificate or Rights Certificates to be transferred, split-up,
combined, or exchanged, with the form of assignment and certificate
contained therein properly completed and duly executed and with all
signatures guaranteed and any other such documentation that the
Rights Agent shall reasonably request, at the office or offices of
the Rights Agent designated for such purpose. The Rights
Certificates are transferable only on the registry books of the
Rights Agent. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have: (i) properly completed and duly
executed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate; (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) of the Rights represented by such Rights
Certificate or Related Persons thereof as the Company or the Rights
Agent shall reasonably request; and (iii) paid a sum sufficient to
cover any tax or charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates
as required by Section 9(e) hereof. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e), Section 14 and
Section 24 hereof, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment from a
registered holder of a Rights Certificate of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination, or exchange of
Rights Certificates. If and to the extent the Company does require
payment of any such taxes or charges, the Company shall give the
Rights Agent prompt written notice thereof and the Rights Agent
shall not deliver any Rights Certificate unless and until it is
satisfied that all such payments have been made, and the Rights
Agent shall forward any such sum collected by it to the Company or
to such Persons as the Company specifies by written notice. The
Rights Agent shall have no duty or obligation to take any action
with respect to a holder of a Rights Certificate under any Section
of this Agreement which requires the payment by such holder of a
Rights Certificate of applicable taxes and/or charges unless and
until it is satisfied that all such taxes and/or charges have been
paid.
-9-
(b) Subject
to the provisions of this Agreement, at any time after the
Distribution Date and prior to the Expiration Date, upon receipt by
the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to
them, and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate, if
mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section
7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject
to Section 7(e) hereof or as otherwise provided in this Agreement,
at any time after the Distribution Date the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without limitation,
the restrictions on exercisability set forth in Section 9(c),
Section 11(a)(iii), and Section 23(a) hereof) in whole or in part
upon surrender of the Rights Certificate, with the form of election
to purchase and the certificate contained therein properly
completed and duly executed, to the Rights Agent at the office or
offices of the Rights Agent designated for such purpose,
accompanied by a signature guarantee and such other documentation
as the Rights Agent may reasonably request, together with payment
of the aggregate Purchase Price with respect to the total number of
one one-thousandths of a Preferred Share (or, following the
occurrence of a Triggering Event, Common Shares, other securities,
cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the
earliest of (i) the Close of Business on March 1, 2021 (the
“Final Expiration
Date”), (ii) the time at which the Rights are redeemed
as provided in Section 23 hereof (the “Redemption Date”), and (iii) the
time at which the Rights are exchanged in full as provided in
Section 24 hereof (the earliest of (i), (ii), and (iii) being
herein referred to as the “Expiration Date”). Except for
those provisions herein that expressly survive the termination of
this Agreement, this Agreement shall terminate at such time as the
Rights are no longer exercisable hereunder.
(b) The
purchase price for each one one-thousandth of a Preferred Share
pursuant to the exercise of a Right initially shall be
$100.00 and shall be subject to
adjustment from time to time as provided in Section 11 and Section
13(a) hereof, and shall be payable in accordance with Section 7(c)
hereof (such purchase price, as so adjusted, the
“Purchase
Price”).
(c) Upon
receipt of a Rights Certificate evidencing exercisable Rights, with
the form of election to purchase and the certificate contained
therein properly completed and duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase
Price (as such amount may be adjusted as provided herein) per one
one-thousandth of a Preferred Share (or, following the occurrence
of a Triggering Event, Common Shares, other securities, cash or
other assets, as the case may be) to be purchased as set forth
below and an amount equal to any applicable tax or charge, the
Rights Agent shall, subject to Section 7(f) and Section 20(k)
hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the
total number of one one-thousandths of a Preferred Share to be
purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if, subject
to Section 14 hereof, the Company shall have elected to deposit the
total number of Preferred Shares issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the
depositary agent of depositary receipts evidencing such number of
one one-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares evidenced by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent
to comply with such request, (ii) if necessary to comply with this
Agreement, requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or depositary
receipts, subject to Section 7(f) below, cause the same to be
delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) if necessary to comply with
this Agreement, after receipt thereof, subject to Section 7(f)
below, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified bank check
or bank draft payable to the order of the Company. In the event
that the Company is obligated to issue other securities (including
Common Shares) of the Company, pay cash or distribute other
property pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities, cash or
other property are available for distribution by the Rights Agent,
if and when necessary to comply with this Agreement, and until so
received, the Rights Agent shall have no duties or obligations with
respect to such securities, cash and/or other property. The Company
reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole Preferred Shares would be
issued.
-10-
(d) In
case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights
Certificate evidencing the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to, or upon the order of,
the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, subject to
the provisions of Sections 6 and 14 hereof.
(e) Notwithstanding
anything in this Agreement to the contrary, from and after the
first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or a Related Person
of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any Related Person thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any Related Person thereof) who becomes a
transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring
Person (or any such Related Person) to holders of equity interests
in such Acquiring Person (or any such Related Person) or to any
Person with whom the Acquiring Person (or any such Related Person)
has any continuing agreement, arrangement or understanding (whether
or not in writing) regarding the transferred Rights or (B) a
transfer that the Board, in its sole discretion, has determined is
part of a plan, arrangement or understanding (whether or not in
writing) that has as a primary purpose or effect the avoidance of
this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision
of this Agreement, the Rights Certificates or otherwise. The
Company shall notify the Rights Agent when this Section 7(e)
applies and shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but neither the Company nor the Rights Agent shall
have any liability to any holder of Rights Certificates or any
other Person as a result of its failure to make any determinations
with respect to an Acquiring Person or any of its Related Persons
or transferees hereunder.
(f) Notwithstanding
anything in this Agreement or any Rights Certificate to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder of a Rights Certificate upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and duly executed the
certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or Related Persons thereof) or
former Beneficial Owner (or Related Persons thereof) of the Rights
represented by the Rights Certificate as the Company or the Rights
Agent shall reasonably request.
Section
8. Cancellation and Destruction of
Rights Certificates. All Rights Certificates surrendered for
the purpose of exercise, transfer, split-up, combination or
exchange shall, if surrendered to the Company or any of its agents,
be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Rights Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy
or cause to be destroyed such cancelled Rights Certificates, and in
such case shall deliver a certificate of destruction thereof to the
Company.
Section
9. Reservation and Availability of
Capital Stock.
(a) The
Company covenants and agrees that at all times prior to the
Expiration Date it will cause to be reserved and kept available out
of its authorized and unissued Preferred Shares (and, following the
occurrence of a Triggering Event, out of its authorized and
unissued Common Shares or other securities as may be issuable upon
exercise of the Rights and/or out of its securities held in
treasury, as the case may be), the number of Preferred Shares (and,
following the occurrence of a Triggering Event, to the extent
reasonably practicable, Common Shares or other securities, as the
case may be) that, as provided in this Agreement, including, but
not limited to, Section 11(a)(iii) hereof, will be sufficient to
permit the exercise in full of all of the outstanding Rights. Upon
the occurrence of any events resulting in an increase in the
aggregate number of Preferred Shares (or other equity securities of
the Company) issuable upon exercise of all outstanding Rights above
the number then reserved, the Company shall make appropriate
increases in the number of shares so reserved.
(b) So
long as the Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares or other securities, as the case
may be) issuable and deliverable upon the exercise of the Rights
may be listed on any national securities exchange or quoted on a
quotation system, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable through
the Expiration Date, all shares reserved for such issuance to be
listed on such exchange or quoted on such quotation system, as the
case may be, upon official notice of issuance upon such
exercise.
-11-
(c) The
Company shall use commercially reasonable efforts to (i) file, as
soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration
to be delivered by the Company upon exercise of the Rights has been
determined in accordance with Section 11(a) hereof, a registration
statement on an appropriate form under the Securities Act, with
respect to the securities purchasable upon exercise of the Rights,
(ii) cause such registration statement to become effective as soon
as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure
compliance with, the securities or “blue sky” laws of
the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time
not to exceed ninety (90) calendar days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement
(with prompt written notice thereof to the Rights Agent; and until
such written notice is received by the Rights Agent, the Rights
Agent may presume conclusively that no such suspension has
occurred) stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect (with prompt written
notice thereof to the Rights Agent; and until such written notice
is received by the Rights Agent, the Rights Agent may presume
conclusively that such suspension is still in effect). In addition,
if the Company shall determine that a registration statement is
required following the Distribution Date, the Company similarly may
temporarily suspend the exercisability of the Rights until such
time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been
obtained, the exercise thereof shall not be permitted under
applicable law, or a registration statement shall not have been
declared effective.
(d) The
Company covenants and agrees that it will take all such action as
may be necessary to ensure that all one one-thousandths of a
Preferred Share (and, following the occurrence of a Triggering
Event, Common Shares or other securities, as the case may be)
delivered upon exercise of the Rights shall, at the time of
delivery of the certificates or depositary receipts for such shares
(subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and
nonassessable.
(e) The
Company further covenants and agrees that it will pay when due and
payable any and all federal and state taxes and charges that may be
payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates, entries in the book entry
account system of the transfer agent, or depositary receipts for a
number of one one-thousandths of a Preferred Share (or, following
the occurrence of a Triggering Event, Common Shares or other
securities, cash or other assets, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to
pay any tax or charge that may be payable in respect of any
transfer or delivery of Rights Certificates or depositary receipts
or entries in the book entry account system of the transfer agent
to a Person other than, or the issuance or delivery of a number of
one one-thousandths of a Preferred Share (or, following the
occurrence of a Triggering Event, Common Shares or other
securities, cash or other assets, as the case may be) in a name
other than that of the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver
any certificates or depositary receipts or entries in the book
entry account system of the transfer agent for a number one
one-thousandths of a Preferred Share (or, following the occurrence
of a Triggering Event, Common Shares or other securities, cash or
other assets as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax or
charge shall have been paid (any such tax or charge being payable
by the registered holder of such Rights Certificates at the time of
surrender) or until it has been established to the Company’s
or to the Rights Agent’s satisfaction that no such tax or
charge is due.
Section
10. Preferred Shares Record
Date. Each Person in whose name any certificate or entry in
the book entry account system of the transfer agent for a number of
one one-thousandth of a Preferred Share (or, following the
occurrence of a Triggering Event, Common Shares or other
securities, cash or other assets, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of such fractional Preferred
Shares (or, following the occurrence of a Triggering Event, Common
Shares or other securities, cash, or other assets as the case may
be) evidenced thereby on, and such certificate or entry shall be
dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and
all applicable taxes and governmental charges) was made;
provided, however, that, if the date of such
surrender and payment is a date upon which the Preferred Shares
(or, following the occurrence of a Triggering Event, Common Shares
or other securities, cash or other assets, as the case may be)
transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares (fractional
or otherwise) on, and such certificate or entry shall be dated, the
next succeeding Business Day on which the Preferred Shares (or,
following the occurrence of a Triggering Event, Common Shares or
other securities, cash, or other assets as the case may be)
transfer books of the Company are open and, provided, further, that if delivery of
the Preferred Shares is delayed pursuant to Section 9(c), when such
Preferred Shares first become deliverable. Prior to the exercise of
the Rights evidenced thereby, the registered holder of a Rights
Certificate, as such, shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions, or to
exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as
provided herein.
-12-
Section
11. Adjustment of Purchase Price,
Number and Kind of Shares, or Number of Rights. The Purchase
Price, the number and kind of shares, or fractions thereof,
purchasable upon exercise of each Right, and the number of Rights
outstanding are subject to adjustment from time to time as provided
in this Section 11.
(a) In
the event the Company shall at any time after the first public
announcement by the Company of the adoption of this Agreement (A)
declare or pay a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide or split the outstanding Preferred
Shares, (C) combine or consolidate the outstanding Preferred Shares
into a smaller number of shares, or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in effect
at the time of the record date for such dividend or of the
effective date of such subdivision, split, combination,
consolidation, or reclassification, and the number and kind of
Preferred Shares or fractions thereof (or other capital stock, as
the case may be), issuable on such date, shall be proportionately
adjusted so that the registered holder of any Right exercised after
such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of
Preferred Shares or fractions thereof (or other capital stock, as
the case may be), which, if such Right had been exercised
immediately prior to such date (whether or not such Right was then
exercisable) and at a time when the Preferred Share (or other
capital stock, as the case may be) transfer books of the Company
were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, split,
combination, consolidation, or reclassification. If an event occurs
that would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) In
the event any Person shall become an Acquiring Person (a
“Section 11(a)(ii)
Event”), then, promptly following the occurrence of
such Section 11(a)(ii) Event, proper provision shall be made so
that, upon expiration of the Redemption Period and subject to
Section 23 hereof, each registered holder of a Right (except as
provided below in Section 11(a)(iii) and in Sections 7(e), 13 and
24 hereof) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of a number of one
one-thousandths of a Preferred Share, such number of Common Shares
of the Company as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the then number of
one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (B) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the
“Purchase Price”
for each Right and for all purposes of this Agreement) by fifty
percent (50.0%) of the Current Market Price per Common Share on the
date of such first occurrence (such number of shares, the
“Adjustment
Shares”).
(iii) In
the event that (A) the number of Common Shares authorized by the
Articles of Incorporation, but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights, is
not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof or (B) the Board otherwise
shall determine to do so in its sole discretion, the Company,
acting by resolution of the Board, shall (1) determine the value of
the Adjustment Shares issuable upon the exercise of a Right (the
“Current
Value”), and (2) with respect to each Right (subject
to Section 7(e) hereof), make adequate provision to substitute for
the Adjustment Shares, upon the exercise of such Right and payment
of the applicable Purchase Price, (u) cash, (v) a reduction in the
Purchase Price, (w) Common Shares or other equity securities of the
Company (including, without limitation, shares, or units of shares,
of preferred stock, such as the Preferred Shares, which the Board
has deemed to have essentially the same value or economic rights as
Common Shares (such shares of preferred stock being referred to as
“Common Stock
Equivalents”)), (x) debt securities of the Company,
(y) other assets, or (z) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate
value has been determined by the Board based upon the advice of a
nationally recognized investment banking firm selected by the
Board; provided,
however, that, if, under the circumstances set forth in
clause (A) above, the Company shall not have made adequate
provision to deliver value pursuant to clause (2) above within
thirty (30) calendar days following the later of (I) the first
occurrence of a Section 11(a)(ii) Event and (II) the date on which
the Company’s right of redemption pursuant to Section 23(a)
hereof expires (the later of (I) and (II) being referred to herein
as the “Section 11(a)(ii)
Trigger Date”), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares (to the
extent available) and then, if necessary, cash, which shares and
cash have an aggregate value equal to the Spread. For purposes of
the preceding sentence, the term “Spread” shall mean the excess of
the Current Value over the Purchase Price. If the Board determines
in good faith that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise in full of
the Rights, the thirty (30) calendar day period set forth above may
be extended to the extent necessary, but not more than ninety (90)
calendar days after the Section 11(a)(ii) Trigger Date, in order
that the Company may seek stockholder approval for the
authorization of such additional shares (such thirty (30) calendar
day period, as it may be extended, is herein called the
“Substitution
Period”). To the extent that action is to be taken
pursuant to the first or third sentences of this Section
11(a)(iii), the Company shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and the Company may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to
seek such stockholder approval for such authorization of additional
shares or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof.
In the event of any such suspension, the Company shall issue a
public announcement (with prompt written notice thereof to the
Rights Agent) stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement (with
prompt written notice thereof to the Rights Agent) at such time as
the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of each Adjustment Share shall be the Current
Market Price per Common Share on the Section 11(a)(ii) Trigger Date
and the per share or per unit value of any Common Stock Equivalent
shall be deemed to equal the Current Market Price per Common Share
on such date.
-13-
(b) In
case the Company shall fix a record date for the issuance of
rights, options, or warrants to all registered holders of Preferred
Shares entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record
date) Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares
(“Equivalent Preferred
Shares”)) or securities convertible into Preferred
Shares or Equivalent Preferred Shares at a price per Preferred
Share or Equivalent Preferred Share (or having a conversion price
per share, if a security convertible into Preferred Shares or
Equivalent Preferred Shares) less than the Current Market Price per
Preferred Share on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date, plus the number
of Preferred Shares that the aggregate offering price of the total
number of Preferred Shares or Equivalent Preferred Shares so to be
offered (or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
Current Market Price, and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the
number of additional Preferred Shares or Equivalent Preferred
Shares to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by
delivery of consideration, part or all of which may be in a form
other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding and conclusive for all purposes on the Rights Agent and the
holders of the Rights. Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event
that such rights, options, or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price that
would then be in effect if such record date had not been
fixed.
(c) In
case the Company shall fix a record date for a distribution to all
registered holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of
cash (other than a regular cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend
payable in Preferred Shares, but including any dividend payable in
stock other than Preferred Shares) or evidences of indebtedness, or
of subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price
per Preferred Share on such record date, less the fair market value
(as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and
shall be binding and conclusive for all purposes) of the portion of
the cash, assets or evidences of indebtedness so to be distributed,
or of such subscription rights or warrants applicable to a
Preferred Share, and the denominator of which shall be such Current
Market Price per Preferred Share. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price that would then be in effect if
such record date had not been fixed.
(d) For
the purpose of any computation hereunder, other than computations
made pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per Common
Share on any date shall be deemed to be the average of the daily
Closing Prices per Common Share for the thirty (30) consecutive
Trading Days immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the
“Current Market
Price” per Common Share on any date shall be deemed to
be the average of the daily Closing Prices per Common Share for the
ten (10) consecutive Trading Days immediately following such date;
provided, however,
that in the event that the Current Market Price per Common Share is
determined during a period following the announcement by the issuer
of such Common Share of (A) a dividend or distribution on such
Common Shares payable in Common Shares or securities convertible
into such Common Shares (other than the Rights), or (B) any
subdivision, combination, consolidation, reverse stock split or
reclassification of such Common Shares, and the ex-dividend date
for such dividend or distribution, or the record date for such
subdivision, combination, consolidation, reverse stock split or
reclassification shall not have occurred prior to the commencement
of the requisite thirty (30) Trading Day or ten (10) Trading Day
period, as set forth above, then, and in each such case, the
Current Market Price shall be properly adjusted to take into
account ex-dividend trading. The Closing Price for each day shall
be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on Nasdaq or the NYSE or,
if the Common Shares are not listed or admitted to trading on
Nasdaq or the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common
Shares are listed or admitted to trading or, if the Common Shares
are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported on a quotation system then in use, or, if on
any such date the Common Shares are not so quoted, the average of
the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Shares selected by the
Board. If on any such date the Common Shares are not publicly held
and are not so listed, admitted to trading, or quoted, and no
market maker is making a market in the Common Shares, the
“Current Market
Price” per Common Share shall mean the fair value per
share on such date as determined in good faith by the Board, which
determination shall be described in a statement filed with the
Rights Agent and shall be binding and conclusive for all purposes
on the Rights Agent and the holders of the Rights.
-14-
(ii) For
the purpose of any computation hereunder, the “Current Market Price” per
Preferred Share shall be determined in the same manner as set forth
above for the Common Shares in Section 11(d)(i) hereof (other than
the penultimate sentence thereof). If the Current Market Price per
Preferred Share cannot be determined in the manner provided above
or if the Preferred Shares are not publicly held or listed,
admitted to trading, or quoted in a manner described in Section
11(d)(i) hereof, the Current Market Price per Preferred Share shall
be conclusively deemed to be an amount equal to 100 (as such number
may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common
Shares occurring after the first public announcement by the Company
of the adoption of this Agreement) multiplied by the Current Market
Price per Common Share. If neither the Common Shares nor the
Preferred Shares are publicly held or listed, admitted to trading,
or quoted, the “Current
Market Price” per Preferred Share shall mean the fair
value per share as determined in good faith by a majority of the
Board, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding and conclusive for all
purposes on the Rights Agent and the holders of the Rights. For all
purposes of this Agreement, the Current Market Price of one
one-thousandth of a Preferred Share shall be equal to the Current
Market Price of one Preferred Share divided by 100.
(e) Anything
herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1.0%) in
the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest thousandth of a
Common Share or other share or one-millionth of a Preferred Share,
as the case may be.
(f) If
as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the registered holder of any Right thereafter
exercised shall become entitled to receive any shares of capital
stock other than Preferred Shares, thereafter the number of such
other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares contained in
Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j), (k), (l)
and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Shares shall apply on like terms to
any such other shares.
(g) All
Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of
one one-thousandths of a Preferred Share (or other securities or
amount of cash or combination thereof) purchasable from time to
time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless
the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Section 11(b) and Section
11(c) hereof, each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a Preferred Share (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one
one-thousandths of a share covered by a Right immediately prior to
this adjustment, by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The
Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-thousandths of a Preferred
Share purchasable upon the exercise of a Right pursuant to Section
11(h) hereof. Each of the Rights outstanding after the adjustment
in the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held
of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one
thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement, and
notify the Rights Agent in writing, of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates
have been issued, shall be at least ten (10) calendar days later
than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and delivered by the Company,
and countersigned and delivered by the Rights Agent, in the manner
provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Rights Certificates on the record date
specified in the public announcement.
-15-
(j) Irrespective
of any adjustment or change in the Purchase Price or the number of
one one-thousandths of a Preferred Share issuable upon the exercise
of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of one one-thousandths of
a share that were expressed in the initial Rights Certificates
issued hereunder.
(k) Before
taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the number of
one one-thousandths of a Preferred Share issuable upon exercise of
the Rights, the Company shall take any corporate action that may,
in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue, fully paid and
nonassessable, such number of one one-thousandths of a Preferred
Share at such adjusted Purchase Price.
(l) In
any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (and shall notify
the Rights Agent in writing of any such election) until the
occurrence of such event the issuance to the registered holder of
any Right exercised after such record date of the number of one
one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over
and above the number of one one-thousandths of a Preferred Share
and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due ▇▇▇▇ or other
appropriate instrument evidencing such holder’s right to
receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such
adjustment.
(m) Anything
in this Section 11 to the contrary notwithstanding, prior to the
Distribution Date, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that
the Board, in its good faith judgment, shall determine to be
advisable in order that any (i) consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of any Preferred
Shares at less than the Current Market Price, (iii) issuance wholly
for cash of Preferred Shares or securities that by their terms are
convertible into or exchangeable for Preferred Shares, (iv) stock
dividends or (v) issuance of rights, options or warrants referred
to in this Section 11, hereafter made by the Company to registered
holders of its Preferred Shares shall not be taxable to such
stockholders or shall reduce the taxes payable by such
holders.
(n) The
Company covenants and agrees that in the event that a Section
11(a)(ii) Event occurs and the Rights shall then be outstanding, it
shall not, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or otherwise
transfer (or permit any Subsidiary to sell or otherwise transfer),
in one transaction, or a series of related transactions, assets,
cash flow or earning power aggregating fifty percent (50.0%) or
more of the assets, cash flow or earning power of the Company and
its Subsidiaries (taken as a whole and calculated on the basis of
the Company’s most recent regularly prepared financial
statements) to any other Person or Persons (other than the Company
or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer
there are any charter or bylaw provisions, rights, warrants or
other instruments or securities outstanding or agreements in effect
that would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation,
merger, sale or transfer the stockholders of the Person who
constitutes, or would constitute, the “Principal Party”
for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of
its Related Persons; provided, however, that this
Section 11(n) shall not affect the ability of any Subsidiary of the
Company to consolidate with, merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the
Company.
(o) The
Company covenants and agrees that after the Distribution Date and
so long as any Rights shall then be outstanding (other than Rights
that have become null and void pursuant to Section 7(e) hereof), it
will not, except as permitted by Section 23, Section 24, or Section
27 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
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(p) Anything
in this Agreement to the contrary notwithstanding, in the event
that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare or
pay a dividend on the outstanding Common Shares payable in Common
Shares, (ii) subdivide or split the outstanding Common Shares,
(iii) combine or consolidate the outstanding Common Shares into a
smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of Common Shares (including any such
reclassification in connection with a consolidation or merger in
which the Company is a continuing or surviving corporation), the
number of Rights associated with each Common Share then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date (or issued or delivered on or after the
Distribution Date pursuant to Section 22 hereof), shall be
proportionately adjusted so that the number of Rights thereafter
associated with each Common Share following any such event shall
equal the result obtained by multiplying the number of Rights
associated with each Common Share immediately prior to such event
by a fraction, the numerator of which shall be the total number of
Common Shares outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of
Common Shares outstanding immediately following the occurrence of
such event. The adjustments provided for in this Section 11(p)
shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or reclassification is
effected. If an event occurs that would require an adjustment under
Section 11(a)(ii) and this Section 11(p), the adjustments provided
for in this Section 11(p) shall be in addition and prior to any
adjustment required pursuant to Section 11(a)(ii).
Section
12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is made as
provided in Section 11 or Section 13 hereof, the Company shall (a)
promptly prepare a certificate setting forth such adjustment and a
brief reasonably detailed statement of the facts, computations and
methodology accounting for such adjustment, (b) promptly file with
the Rights Agent, and with each transfer agent for the Preferred
Shares and the Common Shares, a copy of such certificate and (c) if
a Distribution Date has occurred, mail a brief summary thereof to
each registered holder of a Rights Certificate in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment or statement
therein contained and shall have no duty or liability with respect
to, and shall not be deemed to have knowledge of, any adjustment or
any such event unless and until it shall have received such a
certificate.
Section
13. Consolidation, Merger, or Sale or
Transfer of Assets, Cash Flow or Earning Power.
(a) In
the event that, at any time on or following the Shares Acquisition
Date, directly or indirectly,
(i) the
Company shall consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), and the Company shall
not be the continuing or surviving corporation or other entity of
such consolidation or merger;
(ii) any
Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof) shall consolidate with,
or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part
of the outstanding Common Shares shall be changed into or exchanged
for stock or other securities of any other Person (or the Company)
or cash or any other property; or
(iii) the
Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction
or a series of related transactions, assets, cash flow or earning
power aggregating fifty percent (50.0%) or more of the assets, cash
flow or earning power of the Company and its Subsidiaries (taken as
a whole and calculated on the basis of the Company’s most
recent regularly prepared financial statements) to any Person or
Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(o)
hereof);
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then,
and in each such case (except as may be contemplated by Section
13(d) hereof), proper provision shall be made so that: (A) each
registered holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price multiplied by
the number of one one-thousandths of a share of Preferred Shares
for which a Right is then exercisable in accordance with the terms
of this Agreement, such number of validly authorized and issued,
fully paid, nonassessable and freely tradeable Common Shares of the
Principal Party, not subject to any liens, encumbrances, rights of
first refusal, transfer restrictions, preemptive rights or other
adverse claims of any nature whatsoever, as shall be equal to the
result obtained by (1) multiplying the number of one
one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately prior
to such first occurrence of a Section 11(a)(ii) Event, and (2)
dividing that product (which, following the first occurrence of a
Section 13 Event, shall be referred to as the “Purchase Price” for each Right and
for all purposes of this Agreement) by fifty percent (50.0%) of the
Current Market Price per Common Share of such Principal Party on
the date of consummation of such Section 13 Event; (B) such
Principal Party shall thereafter be liable for, and shall assume,
by virtue of such Section 13 Event, all the obligations and duties
of the Company pursuant to this Agreement; (C) the term
“Company” shall
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (D) such Principal Party shall
take such steps (including, but not limited to, the reservation of
a sufficient number of Common Shares) in connection with the
consummation of any such transaction as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights;
provided, however,
that upon the subsequent occurrence of any merger, consolidation,
sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary
transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Purchase Price, such cash, shares, rights,
options warrants and other property which such holder would have
been entitled to receive had he, she or it at the time of such
transaction, owned the Common Shares of the Principal Party
purchasable upon the exercise of a Right, and such Principal Party
shall take such steps (including, but not limited to, reservation
of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants, options and other property; and (E)
the provisions of Section 11(a)(ii) hereof shall be of no effect
with respect to events occurring at any time following the first
occurrence of any Section 13 Event, and the Rights that have not
theretofore been exercised shall thereafter become exercisable in
the manner described in this Section 13.
(b) “Principal
Party” shall mean:
(i) in
the case of any transaction described in Section 13(a)(i) or
Section 13(a)(ii) hereof, the Person (including the Company as
successor thereto or as the surviving entity) that is the issuer of
any securities into which Common Shares of the Company are
converted, changed, or exchanged in such merger or consolidation
or, if there is more than one such issuer, the issuer of Common
Shares of such issuer that has the highest aggregate current market
price (determined pursuant to Section 11(d) hereof) and if no
securities or other equity interests are so issued, the Person
(including the Company as successor thereto or as the surviving
entity) that is the other party to such merger or consolidation,
or, if there is more than one such Person, the Person that is a
constituent party to such merger or consolidation, the Common
Shares of such Person of which has the highest aggregate current
market price (determined pursuant to Section 11(d) hereof);
and
(ii) in
the case of any transaction described in Section 13(a)(iii) hereof,
the Person that is the party receiving the greatest portion of the
assets, cash flow or earning power transferred pursuant to such
transaction or transactions, or if each Person that is a party to
such transaction or transactions receives the same portion of the
assets, cash flow or earning power transferred pursuant to such
transaction or transactions, or if the Person receiving the largest
portion of the assets, cash flow or earning power cannot be
determined, whichever of such Persons is the issuer of Common
Shares having the greatest aggregate value of shares outstanding
(as determined pursuant to Section 11(d) hereof); provided, however, that in any
such case, (A) if the Common Shares of such Person (who, but for
this proviso, would be the Principal Party) are not at such time
and have not been continuously over the preceding twelve (12) month
period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the
Common Shares of which are and have been so registered,
“Principal Party” shall refer to such other Person; and
(B) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of two or more of which are
and have been so registered, “Principal Party” shall
refer to whichever of such Persons is the issuer of the Common
Shares having the greatest aggregate market value.
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(c) The
Company shall not consummate a Section 13 Event unless the
Principal Party shall have a sufficient number of authorized Common
Shares that have not been issued or reserved or that are held in
treasury for issuance to permit the exercise in full of the Rights
in accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that the
requirements of Section 13(a) and Section 13(b) hereof shall
promptly be performed in accordance with their terms and further
providing that, as soon as practicable after the date of any such
Section 13 Event, the Principal Party, as soon as practicable after
the execution of such agreement, will:
(i) prepare
and file a registration statement under the Securities Act, with
respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts
to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(ii) take
all such other action as may be necessary to enable the Principal
Party to issue the securities purchasable upon exercise of the
Rights, including, but not limited to, the registration or
qualification of such securities under all requisite securities
laws of jurisdictions of the various states and the listing of such
securities on such exchanges and trading markets as may be
necessary or appropriate; and
(iii) deliver
to registered holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates that comply in
all respects with the requirements for registration on Form 10 (or
any successor form) under the Exchange Act.
(d) The
provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a) hereof.
(e) In
case the Principal Party that is to be a party to a transaction
referred to in this Section 13 has at the time of such transaction,
or immediately following such transaction will have, a provision in
any of its authorized securities or in its certificate of
incorporation or bylaws or other instrument governing its affairs,
or any other agreements or arrangements, which provision would have
the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, of Common Shares of
such Principal Party at less than such then current market price
(other than to holders of Rights pursuant to this Section 13); (ii)
providing for any special payment, tax, or similar provisions in
connection with the issuance of the Common Shares of such Principal
Party pursuant to the provisions of Section 13; or (iii) otherwise
eliminating or substantially diminishing the benefits intended to
be afforded by the Rights in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section
13; then, in such event, the Company shall not consummate any such
transaction unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of
such Principal Party shall have been cancelled, waived, or amended,
or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as
a consequence of, the consummation of the proposed
transaction.
Section
14. Fractional Rights and Fractional
Shares.
(a) The
Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(p) hereof,
or to distribute Rights Certificates that evidence fractional
Rights. In lieu of such fractional Rights, the Company shall pay to
the registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount
in cash equal to the same fraction of the current market price of a
whole Right. For purposes of this Section 14(a), the current market
price of a whole Right shall be the Closing Price of the Rights for
the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The Closing
Price of the Rights for any Trading Day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on Nasdaq or the NYSE or, if the Rights are not
listed or admitted to trading on Nasdaq or the NYSE, as reported in
the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the
principal national securities exchange on which the Rights are
listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by a
quotation system then in use or, if on any such date the Rights are
not so quoted, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights, selected by the Board. If on any such date the Rights are
not publicly held and are not so listed, admitted to trading, or
quoted, and no market maker is making a market in the Rights, the
current market value of a Right shall mean the fair value of a
Right on such date as determined in good faith by the Board, which
determination shall be described in a statement filed with the
Rights Agent and delivered to the holders of the Rights and shall
be binding and conclusive for all purposes.
-19-
(b) The
Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or
to distribute certificates or make any entries in the book entry
account system of the transfer agent that evidence fractional
Preferred Shares (other than fractions that are integral multiples
of one one-thousandth of a Preferred Share). In lieu of fractional
Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company may pay to the
registered holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market price of one one-thousandth of
a Preferred Share. For purposes of this Section 14(b), the current
market price of one one-thousandth of a Preferred Share shall be
one thousandtgh of the Closing Price of a Preferred Share or, if
unavailable, the appropriate alternative price (in each case, as
determined pursuant to Section 11(d)(ii) hereof) for the Trading
Day immediately prior to the date of such exercise.
(c) Following
the occurrence of a Triggering Event, the Company shall not be
required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates or make Book Entry Common
Share notations that evidence fractional Common Shares. In lieu of
fractional Common Shares, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Common Share. For
purposes of this Section 14(c), the current market value of one
Common Share shall be the Closing Price of one Common Share or, if
unavailable, the appropriate alternative price (in each case, as
determined pursuant to Section 11(d)(i) hereof) on the Trading Day
immediately prior to the date of such exercise.
(d) The
registered holder of a Right by the acceptance of that Right
expressly waives such holder’s right to receive any
fractional Rights or any fractional shares upon exercise of a
Right, except as permitted by this Section 14.
(e) Whenever
a payment for fractional Rights or fractional shares is to be made
by the Rights Agent under this Agreement, the Company shall (i)
promptly prepare and deliver to the Rights Agent a certificate
setting forth in reasonable detail the facts related to such
payments and the prices and formulas utilized in calculating such
payments; and (ii) provide sufficient funds to the Rights Agent in
the form of fully collected funds to make such payments. The Rights
Agent shall be fully protected in relying upon such a certificate
and has no duty with respect to, and will not be deemed to have
knowledge of, any payment for fractional Rights or fractional
shares under any Section of this Agreement relating to the payment
of fractional Rights or fractional shares unless and until the
Rights Agent has received such a certificate and sufficient
monies.
Section
15. Rights of Action. All
rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent hereunder, are vested in the
respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, of the Common Shares); and any
registered holder of any Rights Certificate (and, prior to the
Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the registered holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common
Shares), may, on such holder’s own behalf and for such
holder’s own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder’s right to exercise
the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the registered
holders of Rights, it is specifically acknowledged that the
registered holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and, accordingly, shall be
entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
Section
16. Agreement of Rights
Holders. Every registered holder of a Right, by accepting
the same, consents and agrees with the Company and the Rights Agent
and with every other registered holder of a Right
that:
(a) prior
to the Distribution Date, the Rights shall be evidenced by Book
Entry Common Shares (which Book Entry Common Shares shall also be
deemed to represent certificates for Rights) or, in the case of
certificated shares, the certificates for the Common Shares
registered in the names of the holders of the Common Shares (which
certificates for Common Shares also constitute certificates for
Rights) and each Right will be transferable only in connection with
the transfer of Common Shares;
(b) after
the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates contained
therein properly completed and duly executed;
-20-
(c) subject
to Section 6(a) and Section 7(f) hereof, the Company and the Rights
Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, a Common Share
certificate or Book Entry Common Share) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Rights Certificates or the Common Share certificate or Ownership
Statement or other notices provided to holders of Book Entry Common
Shares made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall
be required to be affected by any notice to the contrary;
and
(d) notwithstanding
anything in this Agreement to the contrary, neither the Company nor
the Rights Agent shall have any liability to any holder of a Right
or a beneficial interest in a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree, judgment or ruling (whether interlocutory or
final) issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, that the
Company must use its best efforts to have any such injunction,
order, decree, judgment or ruling lifted or otherwise overturned as
soon as possible.
Section
17. Rights Certificate Holder Not
Deemed a Stockholder. No registered holder, as such, of any
Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the registered holder of the number of
one one-thousandths of a Preferred Share or any other securities of
the Company that may at any time be issuable on the exercise of the
Rights evidenced thereby, nor shall anything contained herein or in
any Rights Certificate be construed to confer upon the registered
holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Rights Certificate shall have
been exercised in accordance with the provisions
hereof.
Section
18. Concerning the Rights
Agent.
(a) The
Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, reimbursement for its reasonable
expenses and counsel fees and disbursements and other disbursements
incurred in the preparation, delivery, negotiation, amendment,
administration and execution of this Agreement and the exercise and
performance of its duties hereunder.
(b) The
Company also agrees to indemnify the Rights Agent and its
Affiliates and their respective employees, officers, and directors
for, and to hold them harmless against, any loss, liability,
damage, judgment, fine, penalty, claim, demand, settlement, cost,
or expense that may be paid, incurred or suffered by it, or which
it may become subject, without gross negligence, bad faith or
willful misconduct (each as determined by a final non-appealable
judgment of a court of competent jurisdiction) on the part of the
Rights Agent, for any action taken, suffered or omitted by the
Rights Agent in connection with the execution, acceptance,
administration, exercise and performance of its duties under this
Agreement, including reasonable attorneys’ fees and expenses
and the costs and expenses of defending against any claim of
liability in the premises. The costs and expenses incurred in
enforcing this right of indemnification shall be paid by the
Company. Notwithstanding anything in this Agreement to the
contrary, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of
any kind whatsoever even if the Rights Agent has been advised of
the likelihood of such loss or damage. Any liability of the Rights
Agent under this Agreement (other than by reason of the Rights
Agent’s gross negligence, bad faith or willful misconduct, as
is determined by a final non-appealable judgment of a court of
competent jurisdiction) will be limited to the amount of fees paid
by the Company to the Rights Agent.
(c) The
Rights Agent may conclusively rely upon and shall be protected and
shall incur no liability for or in respect of any action taken,
suffered or omitted to be taken by it in connection with its
acceptance and administration of this Agreement or the exercise or
performance of its duties hereunder in reliance upon any Rights
Certificate or certificate for Common Shares, Preferred Shares or
for other securities of the Company (including in the case of
uncertificated securities, by notation in book entry accounts
reflecting ownership), instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document
believed by it to be genuine and to have been signed, executed and,
where expressly required hereunder, guaranteed, verified or
acknowledged, by the proper Person or Persons, or otherwise upon
the advice of counsel as set forth herein. The Rights Agent shall
not be deemed to have knowledge of any event of which it was
supposed to receive notice thereof hereunder, and the Rights Agent
shall be fully protected and shall incur no liability for failing
to take any action in connection therewith, unless and until it has
received such notice.
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(d) The
provisions of this Section 18, Section 20 and Section 29 hereof
shall survive the termination or expiration of this Agreement, the
exercise or expiration of the Rights and the resignation,
replacement or removal of the Rights Agent.
Section
19. Merger or Consolidation or Change
of Name of the Rights Agent.
(a) Any
Person into which the Rights Agent or any successor rights agent
may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights
Agent or any successor rights agent shall be a party, or any Person
succeeding to the corporate trust, stock transfer or other
stockholder services business of the Rights Agent or any successor
rights agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; but only if
such Person would be eligible for appointment as a successor rights
agent under the provisions of Section 21 hereof. The purchase of
all or substantially all of the Rights Agent’s assets
employed in the performance of transfer agent activities shall be
deemed a merger or consolidation for purposes of this Section 19.
In case at the time such successor rights agent shall succeed to
the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any
such successor rights agent may adopt the countersignature of an
authorized signatory of a predecessor rights agent and deliver such
Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, an
authorized signatory of any successor rights agent may countersign
such Rights Certificates either in the name of the predecessor or
in the name of the successor rights agent; and in all such cases
such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In
case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature of an authorized signatory under the Rights
Agent’s prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, an authorized
signatory of the Rights Agent may countersign such Rights
Certificates either in the prior name of the Rights Agent or in the
changed name of the Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section
20. Duties of the Rights Agent.
The Rights Agent undertakes to perform only the duties and
obligations expressly imposed by this Agreement (and no implied
duties or obligations) upon the following terms and conditions, by
all of which the Company and the registered holders of Rights
Certificates, by their acceptance thereof, shall be
bound:
(a) The
Rights Agent may consult with legal counsel (who may be legal
counsel for the Company or an employee or legal counsel of the
Rights Agent), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent
and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted to be taken by it in
accordance with such advice or opinion.
(b) Whenever
in the performance of its duties under this Agreement the Rights
Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring
Person or Affiliate or Associate thereof, and the determination of
Current Market Price) be proved or established by the Company prior
to the Rights Agent taking, suffering or omitting to take any
action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by a
person believed by the Rights Agent to be any one of the Chief
Executive Officer (including a Person acting in such capacity on an
interim basis), the President, the Chief Financial Officer, any
Executive Vice President, any Senior Vice President, the General
Counsel, or the Corporate Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full and complete
authorization and protection to the Rights Agent, and the Rights
Agent shall incur no liability, for or in respect of any action
taken or suffered or omitted to be taken by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The
Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct (which gross
negligence, bad faith or willful misconduct must be determined by a
final, non-appealable judgment of a court of competent
jurisdiction).
-22-
(d) The
Rights Agent shall not be assumed to have knowledge of and shall
not be required to take note of or act upon any fact or
circumstance including the occurrence of facts or circumstances
leading to the Shares Acquisition Date or the Distribution Date,
facts or circumstances relating to whether any Person may be an
Affiliate or an Associate of any other Person, facts or
circumstances relevant to an adjustment to the Purchase Price,
facts or circumstances relevant to events described in Section 13,
Section 23 and Section 24, which may be relevant to performance by
the Rights Agent under this Agreement unless the Company has
provided written notice thereof to the Rights Agent; and the
Company agrees that it will (i) promptly notify the Rights Agent in
writing of the occurrence of the Shares Acquisition Date (including
the identity of the Acquiring Person and the date on which the
Shares Acquisition Date occurred), the Distribution Date, the
Redemption Date, and of any events described in Section 13, and
(ii) promptly provide the Rights Agent with such other information
as the Rights Agent may reasonably request in connection with the
performance of its duties under this Agreement.
(e) Notwithstanding
anything in this Agreement to the contrary, any liability of the
Rights Agent under this Agreement will be limited to the amount of
annual fees paid by the Company to the Rights Agent during the
twelve (12) months immediately preceding the event for which
recovery from the Rights Agent is being sought. Anything to the
contrary notwithstanding, in no event will the Rights Agent be
liable for special, punitive, indirect, incidental or consequential
damage or loss of any kind whatsoever (including but not limited to
lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of
action.
(f) The
Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in
the Rights Certificates and it shall not be required to verify the
same (except as to a countersignature by one of its authorized
signatories on such Rights Certificates), but all such statements
and recitals are and shall be deemed to have been made by the
Company only.
(g) The
Rights Agent shall not have any liability for or be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution and
delivery hereof by the Rights Agent) or in respect of the validity
or execution of any Rights Certificate (except a countersignature
by one of its authorized signatories on any such Rights
Certificate); nor shall it be responsible for any breach by the
Company of any covenant or failure by the Company to satisfy any
condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming null and void pursuant to
Section 7(e) hereof) or any adjustment required under the
provisions of Section 11, Section 13, Section 23 or Section 24
hereof or responsible for the manner, method or amount of any such
change or adjustment or the ascertaining of the existence of facts
that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates
after receipt by the Rights Agent of a certificate describing any
such adjustment, delivered pursuant to Section 12); nor shall it by
any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Common Shares or
Preferred Shares or any other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any
Common Shares or Preferred Shares will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(h) The
Company agrees that it will perform, execute, acknowledge, and
deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments, and
assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(i) The
Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such instructions
shall be full authorization and protection to the Rights Agent and
the Rights Agent shall not be liable for any action taken,
suffered, or omitted to be taken by it in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions. The Rights Agent shall be fully
authorized and protected in relying upon the most recent
instructions received by any such officer. Notwithstanding anything
in this Agreement to the contrary, the Rights Agent shall not be
required to take any instruction of the Company that the Rights
Agent believes, in its sole discretion, would cause the Rights
Agent to take action that is illegal.
(j) The
Rights Agent and any stockholder, Affiliate, director, officer or
employee of the Rights Agent may buy, sell, or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent or any such stockholder, Affiliate, director, officer
or employee from acting in any other capacity for the Company or
for any other Person.
-23-
(k) The
Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself
(through its directors, officers, and employees) or by or through
its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the
Company or any other Person resulting from any such act, default,
neglect, or misconduct, absent gross negligence, bad faith, or
willful misconduct (which gross negligence, bad faith or willful
misconduct must be determined by a final, non-appealable judgment
of a court of competent jurisdiction) of the Rights Agent in the
selection and continued employment thereof.
(l) No
provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder (other
than internal costs incurred by the Rights Agent in providing
services to the Company in the ordinary course of its business as
Rights Agent) or in the exercise of any of its rights or powers if
there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(m) If,
with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate contained in the
form of assignment or form of election to purchase, as the case may
be, has either not been properly completed or duly executed or
indicates an affirmative response to clause 1 or 2 thereof, the
Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the
Company.
(n) The
Rights Agent shall have no responsibility to the Company, any
holders of Rights or any holders of Common Shares for interest or
earnings on any monies held by the Rights Agent pursuant to this
Agreement.
(o) The
Rights Agent shall not be required to take notice or be deemed to
have notice of any event or condition hereunder, including any
event or condition that may require action by the Rights Agent,
unless the Rights Agent shall be specifically notified in writing
of such event or condition by the Company, and all notices or other
instruments required by this Agreement to be delivered to the
Rights Agent must, in order to be effective, be received by the
Rights Agent as specified in Section 26 hereof, and in the absence
of such notice so delivered, the Rights Agent may conclusively
assume no such event or condition exists.
Section
21. Change of the Rights Agent.
The Rights Agent or any successor rights agent may resign and be
discharged from its duties under this Agreement upon thirty (30)
calendar days’ prior written notice given to the Company (or
such lesser notice as is acceptable to the Company in its sole
discretion) in accordance with Section 26 hereof, and to the extent
that the Rights Agent or one of its Affiliates is not also the
transfer agent for the Company, to each transfer agent of the
Common Shares and Preferred Shares by registered or certified mail.
In the event the transfer agency relationship in effect between the
Company and the Rights Agent terminates, the Rights Agent will be
deemed to have resigned automatically and be discharged from its
duties under this Agreement as of the effective date of such
termination, and the Company shall be responsible for sending any
required notice. The Company may remove the Rights Agent or any
successor rights agent upon thirty (30) calendar days’ notice
given to the Rights Agent or successor rights agent, as the case
may be, in accordance with Section 26 hereof, and to each transfer
agent of the Common Shares and Preferred Shares by registered or
certified mail, and, if such removal occurs after the Distribution
Date, to the registered holders of the Rights Certificates in
accordance with Section 26 of this Agreement. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period
of thirty (30) calendar days after giving proper notice of such
removal or after it has been properly notified of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by
the registered holder of a Rights Certificate (who shall, with such
notice, submit such holder’s Rights Certificate for
inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction
for the appointment of a new rights agent. Any successor rights
agent, whether appointed by the Company or by such a court, shall
be (a) a legal business entity organized and doing business under
the laws of the United States or of any State thereof, in good
standing, which is authorized under such laws to exercise
stockholder service powers and which has, along with its
Affiliates, at the time of its appointment as rights agent a
combined capital and surplus of at least $50,000,000.00 or (b) an
Affiliate of a legal business entity described in clause (a) of
this sentence. After appointment, the successor rights agent shall
be vested with the same powers, rights, duties, and
responsibilities as if it had been originally named as rights agent
without further act or deed; but the predecessor rights agent shall
deliver and transfer to the successor rights agent any property at
the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for that purpose, but
such predecessor rights agent shall not be required to make any
additional expenditure or assume any additional liability in
connection with the foregoing; and, except as the context herein
otherwise requires, such successor rights agent shall be deemed to
be the “Rights Agent” for all purposes of this
Agreement. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with
the predecessor rights agent and each transfer agent of the Common
Shares and the Preferred Shares, and, if such appointment occurs
after the Distribution Date, the Company shall give notice thereof
to the registered holders of the Rights Certificates in accordance
with Section 26 hereof. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor rights agent, as
the case may be.
-24-
Section
22. Issuance of New Rights
Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its
option, issue new Rights Certificates evidencing Rights in such
form as may be approved by the Board to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the
earlier of the redemption of the Rights, the exchange of the
Rights, and the Final Expiration Date, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise
of stock options or under any employee benefit plan or arrangement,
granted or awarded as of the Distribution Date, or upon the
exercise, conversion, or exchange of securities hereinafter issued
by the Company, and (b) may, in any other case, if deemed necessary
or appropriate by the Board, issue Rights Certificates evidencing
the appropriate number of Rights in connection with such issuance
or sale; provided,
however, that (i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section
23. Redemption and
Termination.
(a) The
Board may, at its option, at any time prior to the earlier of (i)
the Close of Business on the tenth (10th) Business Day following
the Shares Acquisition Date (or, if the tenth (10th) Business Day
following the Shares Acquisition Date occurs before the Record
Date, the Close of Business on the Record Date) and (ii) the Final
Expiration Date (the “Redemption Period”), direct the
Company to, and if directed the Company shall, redeem all but not
less than all of the then outstanding Rights at a redemption price
of $0.01 per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend, or similar transaction
occurring after the first public announcement by the Company of the
adoption of this Agreement (such redemption price, as adjusted,
being hereinafter referred to as the “Redemption Price”).
Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until the expiration of the
Redemption Period. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based on the Current
Market Price of the Common Shares at the time of redemption) or any
other form of consideration determined by the Board, in the
exercise of its sole discretion, to be at least equal to the
Redemption Price.
(b) Immediately
upon the time of the effectiveness of the redemption of the Rights
pursuant to paragraph (a) of this Section 23 or such earlier time
as may be determined by the Board in the action ordering such
redemption (although not earlier than the time of such action),
evidence of which shall be filed with the Rights Agent, and without
any further action and without any notice, the right to exercise
the Rights shall terminate, whether or not previously exercised,
and each Right, whether or not previously exercised, will
thereafter represent only the right to receive the Redemption Price
for each Right so held. Promptly after the action of the Board
directing the Company to make the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent
and the registered holders of the then outstanding Rights in
accordance with Section 26 hereof. Any notice given in accordance
with Section 26 hereof shall be deemed given whether or not the
holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price will
be made. Notwithstanding anything in this Section 23 to the
contrary, the redemption of the Rights as directed by the Board may
be made effective at such time, on such basis and subject to such
conditions as the Board, in its sole discretion, may
establish.
Section
24. Exchange of
Rights.
(a) The
Board may, at its option, at any time after any Person becomes an
Acquiring Person, authorize and direct the Company to, and if
directed the Company shall, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of
Section 7(e) hereof) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
first public announcement by the Company of the adoption of this
Agreement (such exchange ratio being hereinafter referred to as the
“Exchange
Ratio”). The exchange of the Rights by the Board may
be made effective at such time, on such basis, and with such
conditions as the Board in its sole discretion may establish.
Notwithstanding the foregoing, the Board shall not be empowered to
direct the Company to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Related
Persons of such Person, becomes the Beneficial Owner of fifty
percent (50.0%) or more of the Common Shares then
outstanding.
-25-
(b) Immediately
upon the action of the Board directing the Company to exchange any
Rights pursuant to Section 24(a) hereof and without any further
action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a registered
holder of such Rights shall be to receive that number of Common
Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange (with prompt written notice
thereof to the Rights Agent); provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall give notice
of any such exchange to all of the registered holders of such
Rights in accordance with Section 26 hereof. Any notice given in
accordance with Section 26 hereof shall be deemed given whether or
not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights
(other than Rights that have become null and void pursuant to the
provisions of Section 7(e) hereof) held by each registered holder
of Rights.
(c) In
any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or Equivalent Preferred
Shares) for Common Shares exchangeable for Rights, at the initial
rate of one one-thousandth of a Preferred Share (or Equivalent
Preferred Shares) for each Common Share, as appropriately adjusted
to reflect stock splits, stock dividends, and other similar
transactions after the first public announcement by the Company of
the adoption of this Agreement.
(d) In
the event the number of Common Shares authorized by the Articles of
Incorporation, but which are not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights, is
not sufficient to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company may either take such
action as may be necessary to authorize additional Common Shares
for issuance upon exchange of the Rights or alternatively, at the
option of the Board, substitute to the extent of such insufficiency
for each Common Share that would otherwise be issuable upon
exchange of a Right, cash, debt securities of the Company, other
assets, or any combination of the foregoing, in any event having an
aggregate value, as determined in good faith by the Board (whose
determination shall be described in a statement filed with the
Rights Agent and shall be binding and conclusive for all purposes
on the Rights Agent and the holders of the Rights), equal to the
Current Market Price per Common Share (as determined pursuant to
Section 11(d)(i)) for the Trading Day immediately prior to the date
of exchange pursuant to this Section 24.
(e) The
Company shall not be required to issue fractions of Common Shares
or to distribute certificates or make Book Entry Common Share
notations that evidence fractional Common Shares. In lieu of such
fractional Common Shares, there shall be paid to the registered
holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in
cash equal to the same fraction of the current market price of a
whole Common Share. For the purposes of this Section 24(e), the
current market price of a whole Common Share shall be the Closing
Price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section
24.
(f) Notwithstanding
anything in this Section 24 to the contrary, the exchange of the
Rights may be made effective at such time, on such basis and with
such conditions as the Board in its sole discretion may establish.
Without limiting the preceding sentence, the Board may (i) in lieu
of issuing Common Shares or any other securities contemplated by
this Section 24 to the Persons entitled thereto in connection with
the exchange (such Persons, the “Exchange Recipients,” and such
shares and other securities, together with any dividends or
distributions made on such shares or other securities, the
“Exchange
Property”) issue, transfer or deposit the Exchange
Property to or into a trust or other entity that may hold such
Exchange Property for the benefit of the Exchange Recipients
(provided that such trust or other entity may not be controlled by
the Company or any of its Related Persons and provided further that
the trustee or similar fiduciary of the trust or other entity will
attempt to distribute the Exchange Property to the Exchange
Recipients as promptly as practicable), (ii) permit such trust or
other entity to exercise all of the rights that a stockholder of
record would possess with respect to any shares deposited in such
trust or entity and (iii) impose such procedures as are necessary
to verify that the Exchange Recipients are not Acquiring Persons or
Related Persons of Acquiring Persons as of any time periods
established by such trust or entity.
-26-
Section
25. Notice of Certain
Events.
(a) In
case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the
registered holders of Preferred Shares or to make any other
distribution to the registered holders of Preferred Shares (other
than a regular periodic cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the registered
holders of Preferred Shares rights or warrants to subscribe for or
to purchase any additional Preferred Shares or shares of stock of
any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), or (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), or to
effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of fifty percent
(50.0%) or more of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole and calculated on
the basis of the Company’s most recent regularly prepared
financial statements) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or
(v) to effect the liquidation, dissolution, or winding up of the
Company, then, in each such case, the Company shall give to each
registered holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of
such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the registered holders of
the Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) calendar days prior
to the record date for determining registered holders of the
Preferred Shares for purposes of such action, and in the case of
any such other action, at least twenty (20) calendar days prior to
the date of the taking of such proposed action or the date of
participation therein by the registered holders of the Preferred
Shares, whichever shall be the earlier; provided, however, that no such
action shall be taken pursuant to this Section 25(a) that will or
would conflict with any provision of the Company’s Articles
of Incorporation; provided, further, that no such notice
shall be required pursuant to this Section 25, if any Subsidiary of
the Company effects a consolidation or merger with or into, or
effects a sale or other transfer of assets or earning power to, any
other Subsidiary of the Company.
(b) In
case a Section 11(a)(ii) Event shall occur, then, in any such case,
(i) the Company shall as soon as practicable thereafter give to the
Rights Agent, and, to the extent feasible, each registered holder
of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to
registered holders of Rights under Section 11(a)(ii) hereof, and
(ii) all references in Section 25(a) to Preferred Shares shall be
deemed thereafter to refer to Common Shares and/or, if appropriate,
other securities.
Notwithstanding
anything to the contrary that may be contained in this Section 25
or elsewhere in this Agreement, the failure to give, or any defect
in, any notice required to be given pursuant to this Section 25
shall not affect the legality or validity of the transaction or
event to which the notice requirement was applicable.
In case
any Section 13 Event shall occur, then the Company shall, as soon
as practicable thereafter, give to each registered holder of a
Rights Certificate, to the extent feasible, and to the Rights Agent
in accordance with Section 26 hereof, a written notice of the
occurrence of such event, which notice shall describe such event
and the consequences of such event to the holders of Rights under
Section 13(a) hereof.
Section
26. Notices. Notices or demands
authorized by this Agreement to be given or made by the Rights
Agent or by the holder of any Rights Certificate to or on the
Company will be sufficiently given or made if in writing and sent
by a recognized national overnight delivery service, or first-class
mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent by the Company) as
follows:
▇▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇, Chief Executive Officer
with
copies (which will not constitute notice) to:
Disclosure
Law Group, a Professional Corporation
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Director
-27-
Subject
to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company, or
by the registered holder of any Rights Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by (i)
first-class mail, postage prepaid, (ii) a recognized national
overnight delivery service, prepaid, or (iii) courier or messenger
service, in each case addressed (until another address is filed in
writing by the Rights Agent with the Company) as
follows:
Colonial Stock
Transfer Company, Inc.
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇
Email:
▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a
copy to:
▇▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇, Chief Executive Officer
Email:
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Notices
or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the registered holder of any Rights
Certificate or, if prior to the Distribution Date, to the
registered holder of the Common Shares shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to
such holder at the address of such holder as shown on the registry
books of the Rights Agent or, if prior to the Distribution Date, as
shown on the registry books of the transfer agent for the Common
Shares.
Section
27. Supplements and Amendments.
Except as otherwise provided in this Section 27, the Company, by
action of the Board, may from time to time and in its sole and
absolute discretion, and the Rights Agent shall if the Company so
directs, supplement or amend this Agreement in any respect without
the approval of any holders of Rights, including, without
limitation, in order to (a) cure any ambiguity contained herein,
(b) correct or supplement any provision contained herein that may
be defective or inconsistent with any other provisions contained
herein, (c) shorten or lengthen any time period hereunder, or (d)
otherwise change, amend, or supplement any provisions hereunder in
any manner that the Company may deem necessary or desirable;
provided, however,
that from and after such time as any Person becomes an Acquiring
Person, this Agreement shall not be supplemented or amended in any
manner that would adversely affect the interests of the holders of
Rights (other than Rights that have become null and void pursuant
to Section 7(e) hereof) as such or cause this Agreement to become
amendable other than in accordance with this Section 27. Any such
supplement or amendment shall be evidenced by a writing executed by
the Company and the Rights Agent. Without limiting the foregoing,
the Company, by action of the Board, may at any time before any
Person becomes an Acquiring Person amend this Agreement to make the
provisions of this Agreement inapplicable to a particular
transaction by which a Person might otherwise become an Acquiring
Person or to otherwise alter the terms and conditions of this
Agreement as they may apply with respect to any such transaction.
Upon the delivery of a certificate from an authorized officer of
the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights
Agent shall execute such supplement or amendment; provided that the
Rights Agent shall not be obligated to enter into any supplement or
amendment that adversely affects the rights, duties, obligations or
immunities of the Rights Agent under this Agreement. Prior to the
Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of the Common
Shares.
Section
28. Successors. All the
covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section
29. Determinations and Actions by the
Board. The Board shall have the exclusive power and
authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board or to the Company, or
as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration
of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend or supplement this
Agreement and whether any proposed amendment adversely affects the
interests of the holders of Right Certificates). For all purposes
of this Agreement, any calculation of the number of Common Shares
or other securities outstanding at any particular time, including
for purposes of determining the particular percentage of such
outstanding Common Shares or any other securities of which any
Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) that are done or made by
the Board in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the registered holders of the
Rights and all other parties, and (y) not subject the Board, or any
member thereof, to any liability to the registered holders of the
Rights. The Rights Agent is entitled always to assume the
Company’s Board acted in good faith and shall be fully
protected and incur no liability in reliance thereon.
-28-
Section
30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders
of the Rights Certificates (and, prior to the Distribution Date,
the Common Shares) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares).
Section
31. Severability. If any term,
provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated.
Section
32. Governing Law. This
Agreement, each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State
of Nevada and for all purposes shall be governed by and construed
in accordance with the laws of such jurisdiction applicable to
contracts made and to be performed entirely within such
jurisdiction; provided,
however, that all provisions regarding the rights, duties,
and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within
such State.
Section
33. Counterparts; Facsimiles and
PDFs. This Agreement and any supplements or amendments
hereto may be executed in any number of counterparts and each of
such counterparts will for all purposes be deemed to be an
original, and all such counterparts will together constitute one
and the same instrument, it being understood that all parties need
not sign the same counterpart. A signature to this Agreement
executed or transmitted electronically (including by facsimile and
a portable document format signature) will have the same authority,
effect and enforceability as an original signature. No party hereto
may raise the use of such electronic execution or transmission to
deliver a signature, or the fact that any signature or agreement or
instrument was transmitted or communicated through such electronic
transmission, as a defense to the formation of a contract, and each
party forever waives any such defense, except to the extent such
defense relates to lack of authenticity.
Section
34. Descriptive Headings.
Descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this
Agreement.
Section
35. Force Majeure.
Notwithstanding anything to the contrary contained herein, the
Rights Agent shall not be liable for any delays or failures in
performance resulting from acts beyond its reasonable control
including, without limitation, acts of God, terrorist acts,
shortage of supply, breakdowns or malfunctions, interruptions or
malfunction of computer facilities, or loss of data due to power
failures or mechanical difficulties with information storage or
retrieval systems, labor difficulties, war, or civil
unrest.
Section
36. Further Assurance. The
Company shall perform, acknowledge and deliver or cause to be
performed, acknowledged and delivered all such further and other
acts, documents, instruments and assurances as may be reasonably
required by the Rights Agent for its carrying out or performing the
provisions of this Agreement.
[SIGNATURE PAGE FOLLOWS]
-29-
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above
written.
By:
/s/ ▇▇▇▇▇▇
▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇
Title:
Chief Executive Officer and
Chair
COLONIAL STOCK
TRANSFER COMPANY, INC., AS RIGHTS AGENT
By:
/s/ ▇▇▇▇▇
▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇▇▇▇▇▇
Title:
VP of Sales
-30-
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATION
(see attached)
-31-
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate
No. R- __________ Rights
NOT
EXERCISABLE AFTER 5:00 P.M., NEW YORK CITY TIME, ON MARCH 1, 2022
UNLESS THE RIGHTS ARE EARLIER REDEEMED OR EXCHANGED. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE, IN EACH
CASE, AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. THE RIGHTS EVIDENCED BY THIS CERTIFICATE SHALL
NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD BY A HOLDER
IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION FOR THE
ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE
RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE
OBTAINABLE. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS OR
BECOMES AN ACQUIRING PERSON OR ANY RELATED PERSON THEREOF (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY
BENEFICIALLY OWNED BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT BENEFICIAL OWNER, MAY BECOME NULL AND VOID AND NO LONGER
TRANSFERABLE.
RIGHTS
CERTIFICATE
This
certifies that ___________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions
and conditions of the Rights Agreement, dated as of February 26,
2021, and as supplemented, restated or amended from time to time
(the “Rights
Agreement”), by and between FitLife Brands, Inc., a
Nevada corporation (the “Company”), and Colonial Stock
Transfer Company, Inc., as rights agent (the “Rights Agent”), to purchase from
the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m., New
York City time, on March 1, 2022, unless the Rights are previously
redeemed or exchanged, at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, nonassessable share of Series B
Junior Participating Preferred Stock, par value $0.01 per share, of
the Company (a “Preferred
Share”), at a purchase price of $100.00 in cash per one one-thousandth of a
Preferred Share (such purchase price, as may be adjusted, the
“Purchase
Price”), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and
related certificate duly executed. The Company reserves the right
to require prior to the occurrence of a Triggering Event (as such
term is defined in the Rights Agreement) that a number of Rights be
exercised so that only whole Preferred Shares will be issued.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the Rights
Agreement.
This
Rights Certificate is subject to all of the terms, covenants, and
restrictions of the Rights Agreement, which terms, covenants, and
restrictions are hereby incorporated herein by reference and made a
part hereof and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent,
the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set
forth in the Rights Agreement. Copies of the Rights Agreement are
on file at the principal executive offices of the Company and the
office or offices of the Rights Agent and are also available upon
written request to the Rights Agent.
In
certain circumstances described in the Rights Agreement, the Rights
evidenced thereby may entitle the registered holder thereof to
purchase capital stock of an entity other than the Company or
receive capital stock, cash, or other assets of an entity other
than the Company, all as provided in the Rights Agreement. Upon the
occurrence (whether prior to, on or after the date of this Rights
Certificate) of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or a
Related Person of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such
Acquiring Person or of any such Related Person thereof who becomes
a transferee after the Acquiring Person becomes an Acquiring
Person, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, concurrently with
or prior to such transfer, became an Acquiring Person, or a Related
Person of an Acquiring Person, such Rights shall become null and
void and will no longer be transferable and no holder hereof shall
have any right with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
-32-
As
provided in the Rights Agreement, the Purchase Price, and the
number of one one-thousandths of a Preferred Share or other
securities issuable upon exercise of a Right and the number of
Rights outstanding are subject to modification and adjustment upon
the happening of certain events, including Triggering
Events.
This
Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent designated
for such purpose, with the Form of Election and Certificate set
forth on the reverse side properly completed and duly executed, may
be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-thousandths of a
Preferred Share as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject
to the provisions of the Rights Agreement, the Rights evidenced by
this Rights Certificate may be redeemed by the Company under
certain circumstances, at its option, at a redemption price of
$0.01 per Right, payable in cash, or other securities or property
of the Company, as determined by the Board of Directors of the
Company, in the exercise of its sole discretion, at any time prior
to the earlier of (i) the Close of Business on the tenth (10th)
Business Day (or such later date as may be determined by the Board
pursuant to clause (i) of the first sentence of Section 3(a) of the
Rights Agreement with respect to the Distribution Date) following
the Shares Acquisition Date (or, if the Shares Acquisition Date
shall have occurred prior to the Record Date, the Close of Business
on the tenth (10th) Business Day following the Record Date), and
(ii) the Final Expiration Date. The redemption of the Rights may be
made effective at such time, on such basis, and subject to such
conditions as the Board of Directors in its sole discretion may
establish.
In any
such exchange, the Company, at its option, may, and to the extent
there are an insufficient number of authorized Common Shares not
reserved for any other purpose to exchange for all of the
outstanding Rights, shall, substitute Preferred Shares or other
securities of the Company for some or all of the Common Shares
exchangeable for Rights such that the aggregate value received by a
holder of Rights in exchange for each Right is substantially the
same value as one Common Share. The exchange of the Rights by the
Company may be made effective at such time, on such basis, and
subject to such conditions as the Board in its sole discretion may
establish.
Immediately upon
the action of the Board of Directors of the Company authorizing any
such redemption or exchange, and without any further action or any
notice, the Rights (other than Rights that are not subject to such
redemption or exchange) will terminate and the Rights will only
enable holders to receive the redemption price without any interest
thereon or the shares issuable upon such exchange, as
applicable.
No
fractional Preferred Shares or fractional shares of other
securities will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions that are integral multiples
of one one-thousandth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment may be made, as provided in the
Rights Agreement.
No
holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of Preferred Shares or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed
to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as may otherwise be provided in the Rights
Agreement), or to receive dividends or other distributions or to
exercise any preemptive or subscription rights, or otherwise,
unless and until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights
Agreement.
This
Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights
Agent.
WITNESS
the facsimile signature or portable document format of the proper
officers of the Company.
Dated
as of February 26, 2021.
By:
Name:
▇▇▇▇▇▇ ▇▇▇▇
Title:
Chief Executive Officer
Countersigned:
Colonial Stock
Transfer Company, Inc., as Rights Agent
By:
Name:
▇▇▇▇▇ ▇▇▇▇▇▇
Title:
Authorized Agent
-33-
[Form
of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be
executed by the registered holder if such
holder
desires to transfer the Rights Certificate.)
FOR
VALUE RECEIVED __________________________________________ hereby
sells, assigns and transfers unto
_________________________________________
(Please
print name and address of transferee)
(Please
spell out and include in numerals the
number
of Rights being transferred by this Agreement)
of the
Rights evidenced by this Rights Certificate, together with all
right, title and interest therein, and does hereby irrevocably
constitute and appoint _____ Attorney, to transfer the number of
Rights indicated on the books of the within named Company, with
full power of substitution.
Dated
as of: __________ ___, 20__
SIGNATURE
By:
Name:
Title:
Medallion
Signature Guaranteed:
Signatures
must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program),
at a guarantee level reasonably satisfactory to the Rights Agent. A
notary public is not sufficient guarantee of a
signature.
-34-
CERTIFICATE
The
undersigned hereby certifies by checking the appropriate boxes
that:
(1) the
Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person
who is or was an Acquiring Person or a Related Person of any such
Acquiring Person (as such terms are defined in the Rights
Agreement); and
(2)
after due inquiry and to the best knowledge of the undersigned, he,
she or it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or a Related Person of an Acquiring
Person.
Dated
as of: __________ ___, 20__
SIGNATURE
By:
Name:
Title:
Medallion
Signature Guaranteed:
Signatures
must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program),
at a guarantee level reasonably satisfactory to the Rights Agent. A
notary public is not sufficient guarantee of a
signature.
-35-
NOTICE
The
signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement
or any change whatsoever.
-36-
[Form
of Reverse Side of Rights Certificate - Continued]
FORM OF ELECTION TO PURCHASE
(To be
executed by the registered holder if such holder desires
to
exercise
any or all Rights evidenced by the Rights
Certificate.)
To: FitLife
Brands, Inc.
The
undersigned hereby irrevocably elects to exercise __________
(_______) Rights evidenced by this Rights Certificate to purchase
the Preferred Shares issuable upon the exercise of the Rights (or
such other securities of the Company or of any other person which
may be issuable upon the exercise of the Rights) and requests that
certificates for such shares be issued in the name of and delivered
to or that such shares be credited to the book entry account
of:
(Please
print name, address and social security,
tax
identification or other identifying number.)
If such
number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of
such Rights shall be registered in the name of and delivered
to:
(Please
print name, address and social security,
tax
identification or other identifying number.)
Dated:
__________ ___, ____
SIGNATURE
By:
Name:
Title:
Medallion
Signature Guaranteed:
Signatures
must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program),
at a guarantee level reasonably satisfactory to the Rights Agent. A
notary public is not sufficient guarantee of a
signature.
-37-
CERTIFICATE
The
undersigned hereby certifies by checking the appropriate boxes
that:
(1) the
Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an
Acquiring Person or a Related Person of any such Acquiring Person
(as such terms are defined pursuant to the Rights Agreement);
and
(2)
after due inquiry and to the best knowledge of the undersigned, he,
she or it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or became an
Acquiring Person or a Related Person of an Acquiring
Person.
Dated:
__________ ___, ____
SIGNATURE
By:
Name:
Title:
Medallion
Signature Guaranteed:
Signatures
must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program),
at a guarantee level reasonably satisfactory to the Rights Agent. A
notary public is not sufficient guarantee of a
signature.
-38-
NOTICE
The
signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement
or any change whatsoever.
-39-
EXHIBIT C
FITLIFE BRANDS, INC.
SUMMARY OF RIGHTS
TO PURCHASE PREFERRED STOCK
On
February 26, 2021, the Board of Directors (the “Board”) of FitLife Brands, Inc., a
Nevada corporation (the “Company”), declared a dividend
distribution of one preferred share purchase right (each, a
“Right”) for
each outstanding share of common stock, par value $0.01 per share,
of the Company (the “Common
Shares”). The dividend was payable to holders of
record as of the close of business on February 26, 2021 (the
“Record Date”)
and with respect to Common Shares issued thereafter until the
Distribution Date (as defined below) and, in certain circumstances,
with respect to Common Shares issued after the Distribution
Date.
The
following is a summary description of the Rights. This summary is
intended to provide a general description only and is subject to
the detailed terms and conditions of the Rights Agreement, dated as
of February 26, 2021 (the
“Rights
Agreement”), by and between the Company and Colonial
Stock Transfer Company, Inc., as rights agent (the
“Rights
Agent”).
1. Issuance
of Rights
Each
holder of Common Shares as of the Record Date will receive a
dividend of one Right per Common Share. One Right will also be
issued together with each Common Share issued by the Company after
the Record Date and prior to the Distribution Date (as defined in
Section 2 below), and in certain circumstances, after the
Distribution Date. New certificates (or, if uncertificated, the
book entry account that evidences record ownership of such shares)
for Common Shares issued after the Record Date will contain a
notation incorporating the Rights Agreement by
reference.
Until
the Distribution Date:
●
the
Rights will not be exercisable;
●
the
Rights will be evidenced by the certificates for Common Shares (or,
if uncertificated, by the book entry account that evidences record
ownership of such shares) and not by separate rights certificates;
and
●
the
Rights will be transferable by, and only in connection with, the
transfer of Common Shares.
2. Distribution
Date; Exercise of Rights; Beneficial Ownership
The
Rights are not exercisable until the Distribution Date. As of and
after the Distribution Date, the Rights will separate from the
Common Shares and each Right will become exercisable to purchase
from the Company one one-thousandth of a share of Series B Junior
Participating Preferred Stock, par value $0.01 per share, of the
Company (each whole share, a “Preferred Share”) at a purchase
price of $100.00 per one one-thousandth of a Preferred Share (such
purchase price, as may be adjusted from time to time, the
“Purchase
Price”). This portion of a Preferred Share would give
the holder thereof approximately the same dividend, voting, and
liquidation rights as would one Common Share.
-40-
The
“Distribution
Date” is the earlier of:
●
the
close of business on the tenth (10th) business day (or such later
date as may be determined from time to time by action of a majority
of the Board prior to the Distribution Date that would otherwise
have occurred) following the first date of public announcement that
any person, together with such person’s Related Persons (as
defined below) (other than the Company or certain related
entities), has become the beneficial owner of 4.99% or more of the
then outstanding Common Shares (other than as a result of
repurchases of Common Shares by the Company, certain stock option
or restricted stock grants by the Company or the exercise or
conversion thereof, certain inadvertent acquisitions or purchases
of Common Shares directly from the Company) (such person, an
“Acquiring Person
”) or that discloses information which reveals the existence
of an Acquiring Person; provided, however, that stockholders who
beneficially own 4.99% or more of the outstanding Common Shares as
of the time immediately prior to the first public announcement by
the Company of the adoption of the Rights Agreement (including any
Common Shares beneficial ownership of which is acquired on the date
of such announcement pursuant to orders placed prior to such
announcement), will not be considered an Acquiring Person unless
and until such stockholder or any of its Related Persons acquires,
without the prior approval of the Board, beneficial ownership of
any additional Common Shares, subject to certain exceptions (such
date being the “Shares
Acquisition Date”); and
●
the
close of business on the tenth (10th) business day (or such later
date as a majority of the Board shall determine prior to the
Distribution Date that would otherwise have occurred) after the
date of the commencement of, or first public announcement of the
intent of any person (other than the Company or certain related
entities) to commence (within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the U.S. Securities Exchange
Act of 1934, as amended (the “Exchange Act ”), a tender or
exchange offer that, if successfully completed, would result in
such person becoming an Acquiring Person; provided, however, that
if a tender or exchange offer is terminated prior to the occurrence
of a Distribution Date, then no Distribution Date shall occur as a
result of such tender or exchange offer.
A
person will be deemed to “beneficially own” any Common
Shares if such person or any Related Person:
●
is
considered a “beneficial owner” of the Common Shares
under Rule 13d-3 of the General Rules and Regulations under the
Exchange Act;
●
has the
right to acquire the Common Shares, either immediately or in the
future, pursuant to any agreement, arrangement, or understanding
(other than a customary underwriting agreement relating to a bona
fide public offering of the Common Shares) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise, except that a person will not be deemed to be a
beneficial owner of (a) Common Shares tendered pursuant to a tender
offer or exchange offer by or on behalf of such person or any
affiliated or associated persons of such person until the tendered
Common Shares are accepted for purchase or exchange, (b) securities
issuable upon exercise of a Right before the occurrence of a
Triggering Event (as defined in Section 5 below), or (c) securities
issuable upon exercise of a Right after the occurrence of a
Triggering Event if the Rights are originally issued Rights or were
issued in connection with an adjustment to originally issued
Rights;
●
has the
right to vote or dispose of the Common Shares pursuant to any
agreement, arrangement, or understanding (other than a right to
vote arising from the granting of a revocable proxy or consent);
or
●
has an
agreement, arrangement, or understanding with another person who
beneficially owns Common Shares and the agreement, arrangement, or
understanding is for the purpose of acquiring, holding, voting, or
disposing of any securities of the Company (other than customary
underwriting agreements relating to a bona fide public offering of
Common Shares or a right to vote arising from the granting of a
revocable proxy or consent).
For
purposes of the Rights Agreement, a “Related Person” means, as to any
person, any Affiliates or Associates of such person. For purposes
of the Rights Agreement, “Affiliate” and
“Associate” have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
-41-
Certain
synthetic interests in securities created by derivative positions -
whether or not such interests are considered to be ownership of the
underlying Common Shares or are reportable for purposes of
Regulation 13D of the Securities Exchange Act - are treated as
beneficial ownership of the number of Common Shares specified in
the documentation evidencing the derivative position as being
subject to being acquired upon the exercise or settlement of the
derivative position or as the basis upon which the value or
settlement amount of such derivative position is to be calculated
in whole or in part.
3. Issuance
of Rights Certificates
As soon
as practicable after the Distribution Date, the Rights Agent will
mail rights certificates to holders of record of the Common Shares
as of the close of business on the Distribution Date and,
thereafter, the separate rights certificates alone will evidence
the Rights.
4. Expiration
of Rights
The
Rights will expire on the earliest of (a) the Close of Business on
▇▇▇▇▇ ▇, ▇▇▇▇, (▇) the time at which the Rights are redeemed (as
described in Section 6 below), and (c) the time at which the Rights
are exchanged in full (as described in Section 7
below).
5. Change
of Exercise of Rights Following Certain Events
In the
event that a person becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon exercise,
Common Shares (or, in certain circumstances, other securities,
cash, or other assets of the Company) having a value equal to two
times the Purchase Price. Notwithstanding the foregoing, following
the occurrence of a person becoming an Acquiring Person, all Rights
that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person (or by
certain related parties) will be null and void. However, Rights are
not exercisable following the occurrence of a person becoming an
Acquiring Person until such time as the Rights are no longer
redeemable by the Company as set forth in Section 6
below.
6. Redemption
At any
time until ten (10) business days following the Shares Acquisition
Date (as defined in Section 2 above), the Board may direct the
Company to redeem the Rights in whole, but not in part, at a price
of $0.01 per Right (payable in cash, Common Shares, or other
consideration deemed appropriate by the Board). Immediately upon
the action of the Board directing the Company to redeem the Rights,
the Rights will terminate and the only right of the holders of
Rights will be to receive the $0.01 redemption price.
7. Exchange
of Rights
At any
time after a person becomes an Acquiring Person, but before such
person acquires beneficial ownership of fifty percent (50.0%) or
more of the outstanding Common Shares, the Board may direct the
Company to exchange the Rights (other than Rights owned by such
person or certain related parties, which will have become null and
void), in whole or in part, at an exchange ratio of one Common
Share per Right (subject to adjustment). The Company may substitute
Preferred Shares (or shares of a class or series of the
Company’s preferred stock having equivalent rights,
preferences, and privileges) for Common Shares at an initial rate
of one one-thousandth of a Preferred Share (or of a share of a
class or series of the Company’s preferred stock having
equivalent rights, preferences, and privileges) per Common Share.
Immediately upon the action of the Board directing the Company to
exchange the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the number of Common
Shares (or one one-thousandth of a Preferred Share or of a share of
a class or series of the Company’s preferred stock having
equivalent rights, preferences, and privileges) equal to the number
of Rights held by such holder multiplied by the exchange
ratio.
8. Adjustments
to Prevent Dilution; Fractional Shares
The
Board may adjust the Purchase Price, the number of Preferred Shares
or other securities or assets issuable upon exercise of a Right,
and the number of Rights outstanding to prevent dilution that may
occur (a) in the event of a stock dividend on, or a subdivision,
combination, or reclassification of, the Preferred Shares, (b) in
the event of a stock dividend on, or a subdivision or combination
of, the Common Shares, (c) if holders of the Preferred Shares are
granted certain rights, options, or warrants to subscribe for
Preferred Shares or convertible securities at less than the current
market price of the Preferred Shares, or (d) upon the distribution
to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends) or of
subscription rights or warrants (other than those referred to
above).
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With
certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one
percent (1.0%) of the Purchase Price. No fractional Preferred
Shares will be issued (other than fractions that are integral
multiples of one one-thousandth of a Preferred Share), and in lieu
thereof, an adjustment in cash may be made based on the market
price of the Preferred Shares on the last trading date prior to the
date of exercise.
9. No
Stockholder Rights Prior to Exercise; Tax
Considerations
Until a
Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the Rights should not be taxable to stockholders or
to the Company, stockholders may, depending upon the circumstances
then existing, recognize taxable income in the event that the
Rights become exercisable for Common Shares (or other
consideration) of the Company or for common shares of the acquiring
company or in the event of the redemption of the Rights as set
forth in Section 7 above.
10. Amendment
of the Rights Agreement
The
Company (by action of the Board) may supplement or amend any
provision of the Rights Agreement in order to (a) cure any
ambiguity, (b) correct or supplement any provision contained in the
Rights Agreement that may be defective or inconsistent with other
provisions of the Rights Agreement, (c) shorten or lengthen any
time period under the Rights Agreement, or (d) make any other
provisions with respect to the Rights that the Company deems
necessary or desirable; provided, however, that no
supplement or amendment made after the time any person becomes an
Acquiring Person may adversely affect the interests of the
registered holders of rights certificates (other than an Acquiring
Person or any affiliates or associates of an Acquiring Person).
Without limiting the foregoing, the Company may at any time before
any person becomes an Acquiring Person amend the Rights Agreement
to make the provisions of the Rights Agreement inapplicable to a
particular transaction by which a person might otherwise become an
Acquiring Person or to otherwise alter the terms and conditions of
the Rights Agreement as they may apply with respect to any such
provision.
11. Availability
of Rights Agreement
The
Company intends to file, on March 1, 2021, or in no event later
than four (4) business days after the date the Rights Agreement is
executed, a copy of the Rights Agreement with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 8-K.
In addition, a copy of the Rights Agreement will be available free
of charge from the Company. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Rights Agreement, which is
incorporated by reference in this summary description.
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