EXHIBIT 4.6
RIGHTS AGREEMENT
between
iPayment, Inc.
and
Wachovia Bank, National Association
Rights Agent
Dated as of April [_], 2003
TABLE OF CONTENTS
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Section 1. Certain Definitions...................................................................... 1
Section 2. Appointment of Rights Agent.............................................................. 5
Section 3. Issue of Right Certificates.............................................................. 5
Section 4. Form of Right Certificates............................................................... 7
Section 5. Countersignature and Registration........................................................ 7
Section 6. Transfer, Split Up, Combination, and Exchange of Right Certificates;
Mutilated, Destroyed, Lost, or Stolen Right Certificates................................. 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights............................ 9
Section 8. Cancellation and Destruction of Right Certificates....................................... 10
Section 9. Reservation and Availability of Series A Shares; Registration............................ 11
Section 10. Series A Shares Record Date.............................................................. 12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.............. 12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares............................... 20
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or Earning Power.................... 20
Section 14. Fractional Rights and Fractional Shares.................................................. 22
Section 15. Rights of Action......................................................................... 24
Section 16. Agreement of Right Holders............................................................... 24
Section 17. Right Certificate Holder Not Deemed a Shareholder........................................ 25
Section 18. Concerning the Rights of Agent........................................................... 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent................................ 25
Section 20. Duties of Rights Agent................................................................... 26
Section 21. Change of Rights Agent................................................................... 28
(i)
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Section 22. Issuance of New Rights Certificates...................................................... 29
Section 23. Redemption and Termination............................................................... 29
Section 24. Exchange................................................................................. 30
Section 25. Notice of Certain Events................................................................. 31
Section 26. Notices.................................................................................. 32
Section 27. Supplements and Amendments............................................................... 32
Section 28. Successors............................................................................... 33
Section 29. Determination and Actions by the Board of Directors...................................... 33
Section 30. Benefits of this Agreement............................................................... 33
Section 31. Severability............................................................................. 34
Section 32. Governing Law............................................................................ 34
Section 33. Counterparts............................................................................. 34
Section 34. Descriptive Headings..................................................................... 34
Exhibits
A. Certificate of Designations
B. Form of Right Certificate
C. Summary of Rights to Purchase Series A Shares
(ii)
EXHIBIT 4.6
RIGHTS AGREEMENT
This Rights Agreement, dated as of April [__], 2003 (the
"AGREEMENT"), by and between iPayment, Inc., a Delaware corporation (the
"COMPANY"), and Wachovia Bank, National Association, a national banking
association (the "RIGHTS AGENT").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "RIGHT") for each
Common Share (as hereinafter defined) of the Company outstanding at the close of
business on April [__], 2003 (the "RECORD DATE"), each Right representing the
right to purchase one one-hundredth of a share of Series A Participating
Preferred Stock, without par value ("SERIES A PREFERRED STOCK"), of the Company
having the rights and preferences set forth in the form of Certificate of
Designations with respect to the Series A Preferred Stock, a copy of which is
attached hereto as Exhibit A and incorporated herein. The Board of Directors has
further authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) with respect to
each Common Share that shall become outstanding (whether originally issued or
delivered from the Company's treasury) after the Record Date and on or prior to
the earliest of the Distribution Date, the Redemption Date, or the Final
Expiration Date.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties 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 (as such
term is hereinafter defined) who or which, together with all Affiliates
and Associates (as such terms are hereinafter defined) of such Person,
shall hereafter become the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Common Shares then
outstanding, but shall not include (i) the Company, any Subsidiary (as
such term is hereinafter defined) of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any Person or
entity organized, appointed, or established by the Company pursuant to
any such plan, or (ii) Caymas, LCC (the "PERMITTED INVESTOR"), or any
of its Affiliates or Associates (collectively with the Permitted
Investor, the "INVESTOR GROUP") to the extent that the members of the
Investor Group shall beneficially own in the aggregate up to, but not
exceeding, 35% of the Common Shares then outstanding. Notwithstanding
the foregoing, no Person or group shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person or group to 15% or
more of the Common Shares of the Company then outstanding (or in the
case of the Investor Group, 35% or more of the Common Shares then
outstanding); provided, however, that if a Person or group shall become
the Beneficial Owner of 15% or more of the Common Shares of the Company
then outstanding (or in the case of the Investor Group, 35% or more of
the Common Shares then outstanding) by reason of such an acquisition by
the Company and shall, after such acquisition, become the Beneficial
Owner of any additional Common Shares, then such
Person or group shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board determines that a person
who would otherwise be an "Acquiring Person," as defined pursuant to
the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer
be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
(b) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), as in effect on the Record Date.
(c) A Person shall be deemed the "BENEFICIAL OWNER" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement, or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights at any time before the
occurrence of a Triggering Event (as defined in Section l(n)
below) but thereafter including Rights acquired from and after
the Distribution Date (as defined in Section 3(a) below) other
than Rights acquired pursuant to Section 3(a), Section 11(i),
or Section 22 hereof), warrants, or options, or otherwise;
provided, however, that a Person shall not be deemed to be the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange, and provided, further, that a person
shall not be deemed to be the Beneficial Owner of, or to
beneficially own, securities that such Person has the right to
acquire (whether such right is exercisable immediately or only
after the passage of time) upon the exercise of conversion
rights conferred in any class or series of preferred stock,
without par value, of the Company issued prior to the
Distribution Date (as defined in Section 3(a) hereof) if the
resolutions of the Board (as hereafter defined) providing for
the issuance of such class or series of preferred Stock shall
specifically refer to this Rights Agreement and provide that
the right to acquire securities upon the exercise of
conversion rights so conferred shall not be deemed to
constitute beneficial ownership of such securities.);
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" (as
determined pursuant to Rule 13d-3 of the General
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Rules and Regulations under the Exchange Act, as in effect on
the Record Date) 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, or to beneficially own, any security
under this subparagraph (iii) as a result of an agreement,
arrangement, or understanding to vote such security if such
agreement, arrangement, or understanding (A) arises solely
from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act, (B) is not also then reportable by
such person on Schedule 13D under the Exchange Act (or any
comparable successor report) and (C) does not constitute a
trust, proxy, power of attorney or other device with the
purpose or effect of allowing two or more persons, acting in
concert, to avoid being deemed "beneficial owners" of such
security or otherwise avoid the status of "Acquiring Person"
under the terms of this Agreement or as part of a plan or
scheme to evade the reporting requirements under Schedule 13D
or Section 13(d) or 13(g) of the Exchange Act; or
(iv) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement, or
understanding (whether or not in writing), for the purpose of,
or with respect to, acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (iii) of this paragraph (c)), or disposing of any
voting securities of the Company, provided, however, that
nothing in this paragraph (c) shall cause a Person engaged in
business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm
commitment underwriting until the expiration of 40 days after
the date of such acquisition, and then only if such securities
continue to be owned by such Person at such expiration of
forty days.
(d) "BOARD" means the Board of Directors of the Company.
(e) "BUSINESS DAY" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State
of Tennessee, the State of New York, or the State in which the Rights
Agent maintains its principal place of business are authorized or
obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 4:00
P.M., Nashville, Tennessee, time, on such date; provided, however, that
if such date is not a Business Day it shall mean 4:00 P.M., Nashville,
Tennessee, time, on the next succeeding Business Day.
(g) "COMMON SHARES" when used with reference to the
Company shall mean shares of Common Stock, par value $0.01 per share,
of the Company. "Common Shares" or "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
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securities or other equity interest having power to control or direct
the management of such Person.
(h) "PERSON" shall mean any individual, firm,
corporation, partnership or other entity and shall include any
successor (by merger or otherwise) of such entity.
(i) "SECTION 11(a)(ii) EVENT" shall mean the event
described in Section 11(a)(ii).
(j) "SECTION 13(a) EVENT" shall mean any event described
in clause (x), (y) or (z) of Section 13(a).
(k) "SERIES A SHARES" shall mean shares of Series A
Participating Preferred Stock, without par value, of the Company,
including any authorized fraction of a Series A Share, unless the
context otherwise requires.
(l) "SHARES ACQUISITION DATE" shall mean the first date
of public announcement (including, without limitation, a report filed
pursuant to Section 13(d) or 14(d) under the Exchange Act) by the
Company or an Acquiring Person indicating that an Acquiring Person has
become such, other than pursuant to a Qualified Offer.
(m) "SUBSIDIARY" shall mean, with reference to any
Person, any corporation of which an amount of voting securities
sufficient to elect at least a majority of the directors of such
corporation is beneficially owned, directly or indirectly, by such
Person, or otherwise controlled by such Person.
(n) "TRIGGERING EVENT" shall mean any Section 11(a)(ii)
Event or Section 13(a) Event.
The following terms shall have the meanings indicated in the
following Sections of this Agreement:
(i) "ACT" -- Section 9(c).
(ii) "ADJUSTMENT SHARES" -- Section 11(a)(ii).
(iii) "CURRENT VALUE" -- Section 11(a)(iii).
(iv) "DISTRIBUTION DATE" -- Section 3(a).
(v) "EQUIVALENT PREFERENCE SHARES" -- Section
11(b).
(vi) "FINAL EXPIRATION DATE" -- Section 7(a).
(vii) "PRINCIPAL PARTY" -- Section 13(b).
(viii) "PURCHASE PRICE" -- Sections 4(a), 11(a)(ii)
and 13(a).
(ix) "QUALIFIED OFFER" -- Section 11(a)(ii).
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(x) "RECORD DATE" --Preamble.
(xi) "REDEMPTION DATE" -- Section 7(a).
(xii) "REDEMPTION PRICE" -- Section 23(a).
(xiii) "RIGHT" -- Preamble.
(xiv) "SERIES A PREFERRED STOCK" -- Preamble.
(xv) "SPREAD" -- Section 11(a)(iii).
(xvi) "SUBSTITUTION PERIOD" -- Section 11(a)(iii).
(xvii) "SUMMARY OF RIGHTS" -- Section 3(b).
(xviii) "TRADING DAY" -- Section 11(d)(i).
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment and agrees to act as Rights Agent under this Agreement. The Company
may from time to time appoint such co-rights agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier
of (i) the close of business on the tenth day after the Shares Acquisition Date
or (ii) the close of business on the tenth Business Day (or such later date as
may be determined by the Board) after the date on which a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company, or any
Person or entity organized, appointed, or established by the Company for or
pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act, if upon consummation thereof, such Person would become an
Acquiring Person, in either instance other than pursuant to a Qualified Offer
(the earlier of (i) and (ii) being herein referred to as the "DISTRIBUTION
DATE"), (x) the Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for Common Shares registered in the
names of the holders thereof (which certificates shall also be deemed to be
certificates for Rights) and not by separate certificates, and (y) the right to
receive Right Certificates (as hereinafter defined) will be transferable only in
connection with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more certificates for Rights, in substantially
the form of Exhibit B 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(p) hereof, at the time of distribution of the Right
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so
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that Right Certificates representing 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 Right
Certificates.
(b) As soon as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Series A Preferred
Stock, in substantially the form attached hereto as Exhibit C (the "SUMMARY OF
RIGHTS"), by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to certificates for
Common Shares outstanding as of the Record Date, until the earliest of the
Distribution Date, Redemption Date, or Final Expiration Date, the Rights will be
evidenced by such certificates registered in the names of the holders thereof
and the registered holders of the Common Shares shall also be the registered
holders of the associated Rights. Until the earliest of the Distribution Date,
the Redemption Date, or the Final Expiration Date, the surrender for transfer of
any certificate for Common Shares outstanding on the Record Date, shall also
constitute the transfer of the Rights associated with such Common Shares.
(c) Rights shall be issued in respect of all shares of
Common Stock which are issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier of the Distribution
Date, Redemption Date or Final Expiration Date. Certificates for Common Shares
issued after the Record Date but prior to the earliest of the Distribution Date,
the Redemption Date, or the Final Expiration Date shall have impressed on,
printed on, written on, or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between iPayment, Inc. and Wachovia Bank, National
Association, dated as of April [__], 2003 (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 iPayment, Inc. and the Rights
Agent. 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 or the Rights Agent, Wachovia Bank,
National Association, or its successors and assigns, will
mail to the holder of this certificate a copy of the Rights
Agreement without charge promptly following receipt of a
written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held by or on behalf
of such Person or by any subsequent holder, may become null
and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Shares
shall also be the registered holders of the associated Rights, and the
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transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Shares represented by such certificates.
Section 4. Form of Right Certificates. (a) The Right
Certificates (and the forms of election to purchase Series A Shares and of
assignment to be printed on the reverse thereof) shall be substantially the same
as Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries, or endorsements printed thereon as the Company may deem
appropriate 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 rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Sections 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the Record Date and on
their face shall entitle the holders thereof to purchase such number of one
one-hundredths of a share of Series A Participating Preferred Stock as shall be
set forth therein at the price per one one-hundredth of a Series A Share set
forth therein (the "PURCHASE PRICE"), but the amount and kind of the securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section
3(a), Section 11(i) or Section 22 hereof that represents Rights beneficially
owned by (i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or such Associate or Affiliate) who
becomes a transferee before or concurrently with the Acquiring Person's becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement, or understanding regarding the transferred
Rights or (B) a transfer which the Board has determined is part of a plan,
arrangement, or understanding which has as a primary purpose or effect avoidance
of Section 7(e) hereof, and any Right Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement, or adjustment of any
other Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby may
become void in the circumstances specified in Section 7(e) of
such Agreement.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board (if he is the Chief Executive Officer) or its President, any Executive
Vice President, or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof, attested by the Secretary or any Assistant Secretary of the Company, or
shall bear a facsimile thereof. The Right Certificates shall not be valid for
any purpose unless countersigned
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(manually or by facsimile) by the Rights Agent. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal offices, books for registration
and transfer of the Right Certificates issued or to be issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates, the certificate number of each of the Right Certificates, and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination, and Exchange of
Right Certificates; Mutilated, Destroyed, Lost, or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), and 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 earlier of the Redemption Date or the Final Expiration
Date, any Right Certificate or Right Certificates (other than Rights
Certificates representing Rights that may have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined, or exchanged for
another Right Certificate or Right Certificates, entitling the registered holder
to purchase a like number of Series A Shares (or, following a Triggering Event,
Common Shares, other securities or property, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled 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 Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined, or exchanged at the principal office of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Right Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 4(b), 7(e), 14 and 24 hereof, countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment 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
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction, or
mutilation of a Right Certificate, and, in case of loss, theft, or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all
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reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will execute
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
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, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Sections 9(c), 11(a)(iii) and 23(a) hereof) in whole
or in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each one one-hundredth of a Series A Share as to which the Rights are exercised,
at or prior to the close of business on the earliest of (i) April [__], 2013
(the "FINAL EXPIRATION DATE"), or (ii) the date on which the Rights are redeemed
or exchanged as provided in Sections 23 and 24 hereof (the "REDEMPTION DATE").
(b) The Purchase Price for each one one-hundredth of a
Series A Share pursuant to the exercise of a Right shall initially be ninety
Dollars ($90), shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the Series A Shares (or other
shares, securities, or property, as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof, in cash, or by
certified check or cashier's check payable to the order of the Company, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)(A)
requisition from any transfer agent of the Series A Shares (or make available,
if the Rights Agent is the transfer agent for such shares) certificates for the
number of Series A Shares to be purchased (and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests), or (B) if the
Company shall have elected to deposit the Series A Shares issuable upon exercise
of the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-hundredths of a
Series A Share as are to be purchased (in which case certificates for the Series
A Shares represented by such receipts shall be deposited by the transfer agent
with the depositary agent), and the Company hereby directs the depositary agent
to comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or, upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and (iv) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate. In the event that the Company is obligated to
issue other securities (including Common Shares) or assets pursuant to Section
11(a) hereof, the Company will make all arrangements necessary so that such
other securities or assets are available for distribution by the Rights Agent,
if and when
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appropriate. The Company reserves the right to require before the occurrence of
a Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock would be issued.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Right Certificate or to his duly authorized assigns subject to the provisions of
Section 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 an Associate or
Affiliate of an Acquiring Person, (ii) a transferee from an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or such
Associate or Affiliate) 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 to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that the Board has determined
is part of a plan, arrangement, or understanding 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 any holder of such Rights shall thereupon have no rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to insure
that the provisions of this Section 7(e) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates, or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificate upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination, or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written
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request of the Company, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Series A Shares;
Registration. (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Series A Shares
and authorized and issued shares of Series A Shares held in its treasury the
number of Series A Shares that will be sufficient to permit the exercise in full
of all outstanding Rights. Prior to the occurrence of a Triggering Event, the
Company shall not be obliged to cause to be reserved and kept available out of
its authorized and unissued Common Shares or shares of preference stock (other
than Series A Shares), any Common Shares or any shares of preference stock
(other than the Series A Shares) to permit exercise of outstanding Rights.
(b) If the Series A Shares issuable upon the exercise of
Rights may be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) If then required by applicable law, the Company shall
use its best efforts to (i) file, as soon as practicable following the earliest
date after the first occurrence of a Section 11(a)(ii) Event as to which the
consideration to be delivered by the Company upon exercise of the Rights has
been determined pursuant to this Agreement, or as soon as is required by law
following the Distribution Date, as the case may be, a registration statement
under the Securities Act of 1933 (the "ACT"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (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 Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the date of the expiration of the Rights. If then required
by applicable law, 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 90 days after the
date set forth in clause (i) 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 or comply with such state securities or "blue sky" laws. Upon
any such suspension, the Company shall issue a public announcement 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.
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 Series A Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized, issued and fully paid and nonassessable shares.
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(e) The Company covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any Series A Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax that may be payable in respect
of any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates for the Series A Shares (or Common Shares
and/or other securities, as the case may be) in a name other than that of the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for Series A Shares (or Common
Shares and/or other securities, as the case may be) upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Series A Shares Record Date. Each person in whose
name any certificate for Series A Shares (or Common Shares and/or other
securities, 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 the Series A
Shares (or Common Shares and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Series A Shares (or Common Shares and/or other securities, 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 on, and such certificate shall be dated,
the next succeeding Business Day on which the Series A Shares (or Common Shares
and/or other securities, as the case may be) transfer books of the Company are
open. Before the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled (in such holder's capacity as such) 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
any shares, to receive dividends or other distributions with respect to any
shares or to exercise any preemptive rights with respect to any shares, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares
covered by each Right, and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) i) In the event the Company shall, at any time after
the date of this Agreement, (A) declare a dividend on the Series A
Shares payable in Series A Shares, (B) subdivide the outstanding Series
A Shares, (C) combine the outstanding Series A Shares into a smaller
number of Series A Shares, or (D) issue any shares of its capital stock
in a reclassification of the Series A 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, combination, or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted
-12-
so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital
stock, which, if such Right had been exercised immediately prior to
such date and at a time when the Series A Shares 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,
combination, or reclassification. If an event occurs that requires an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), 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).
(ii) In the event that any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any entity organized,
appointed, or established by the Company for or pursuant to the terms
of any such plan), alone or together with its Affiliates and
Associates, shall become an Acquiring Person, unless the event causing
such person to become an Acquiring Person is a transaction set forth in
Section 13(a) hereof, or is an acquisition of Common Shares pursuant to
a tender or exchange offer for all outstanding Common Shares at a price
and on terms determined by at least a majority of the members of the
Board who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more investment banking
firms, to be (a) at a price that is fair to the stockholders (taking
into consideration all factors that such members of the Board deem
relevant, including, without limitation, long-term prospects and value
of the Company and the prices and terms that such members of the Board
believe, in good faith, could reasonably be achieved if the Company's
assets were sold on an orderly basis designed to realize maximum
value), and (b) otherwise in the best interest of the Company and its
stockholders (a "QUALIFIED OFFER"), then, in such case, proper
provision shall be made so that each holder of a Right, except as
provided below and in Section 7(e) hereof, shall thereafter have a
right to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of Series
A Shares, and subject to the provisions of Section 11(a)(iii) below,
such number of Common Shares of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a Series A Share for which a Right was
exercisable immediately prior to the first occurrence of an event set
forth in this Section 11(a)(ii), and dividing that product (which
product, following such first occurrence, shall be referred to as the
"PURCHASE PRICE" for each Right and for all purposes of this Agreement)
by (y) 50% of the current per share market price of the Common Shares
(determined pursuant to Section 11(d) hereof), but not less than the
par value thereof, on the date of such first occurrence (such number of
shares, being referred to herein as the "ADJUSTMENT SHARES").
(iii) In the event that the total of the Common Shares that
are issued but not outstanding and authorized but unissued (excluding
Common Shares reserved for issuance pursuant to the specific terms of
any indenture, option plan, or other agreement) is not sufficient to
permit the exercise in full of the Rights in accordance with Section
11(a)(ii) hereof, then the Board shall: (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the exercise of a
Right under Section 11(a)(ii)) hereof
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(the "CURRENT VALUE") over (2) the Purchase Price (such excess, the
"SPREAD"), and (B) with respect to each Right (subject to Section 7(e)
hereof), make adequate provision to substitute for, or provide an
election to acquire in lieu of, the Adjustment Shares, upon payment of
the applicable Purchase Price (as such price may thereafter be reduced
pursuant to this Section 11(a)(iii), as set forth below) any
combination of the following having an aggregate value equal to the
Current Value (such aggregate value to be determined by the Board based
upon the advice of a nationally-recognized investment banking firm
selected by the Board): (1) common stock, preferred stock, notes,
and/or other securities of one or more Subsidiaries of the Company, (2)
a reduction in the current Purchase Price, (3) Common Shares, preferred
shares and/or other equity securities of the Company, and/or (4) debt
securities, cash, and/or other assets of the Company; provided,
however, if this Section 11(a)(iii) is applicable and the Company shall
not have made adequate provision to deliver value pursuant to clause
(B) above within 30 days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires, 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 in an aggregate amount equal to the Spread. If the Board shall
determine 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 30-day period set forth above may be extended to the
extent necessary, but not more than 90 days following the first
occurrence of a Section 11(a)(ii) Event, in order that the Company may
seek stockholder approval for the authorization of such additional
shares (such period, as it may be extended, the "SUBSTITUTION PERIOD").
To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares and/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 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. For purposes of this Section 11(a)(iii), the value of the
Common Shares shall be the current per share market price (as
determined pursuant to Section 11(d) hereof) of the Common Shares on
the date of the first occurrence of a Section 11(a)(ii) Event. The
provisions of this Section 11(a)(iii) shall apply only to Common Shares
of the Company and shall not apply to the securities of any other
Person.
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(b) In case the Company shall fix a record date for the
issuance of rights, options, or warrants to all holders of Series A
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Series A Shares
(or shares having the same rights, privileges, and preferences as the
Series A Shares ("EQUIVALENT PREFERENCE SHARES")) or securities
convertible into Series A Shares or equivalent preference shares at a
price per Series A Share or equivalent preference share (or having a
conversion price per share, if a security convertible into Series A
Shares or equivalent preference shares) less than the current per share
market price of the Series A Shares (as defined in Section 11(d)
hereof) 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 Series A Shares outstanding
on such record date plus the number of Series A Shares which the
aggregate offering price of the total number of Series A Shares and/or
equivalent preference shares so to be offered (and/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 Series A Shares outstanding
on such record date plus the number of additional Series A Shares
and/or equivalent preference 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 in
a consideration part or all of which shall 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 on the
holders of the Rights. Series A Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for the
distribution to all holders of the Series A Shares (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of any debt securities,
cash, or assets (other than a regular quarterly cash dividend or a
dividend payable in Series A Shares) or 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
per share market price of the Series A Shares (as defined in Section
11(d) hereof) 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 binding on the
holders of Rights) of the portion of the cash, assets, or debt
securities so to be distributed or of such subscription rights or
warrants applicable to one Series A Share and the denominator of which
shall be such current per share market price of the Series A Shares (as
determined pursuant to Section 11(d) hereof). 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
again be adjusted to be the Purchase Price that would then be in effect
if such record date had not been fixed.
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(d) (i) For the purpose of any computation
hereunder, other than computations made pursuant to Section 11(a)(iii)
hereof, the "current per share market price" of the Common Shares on
any date shall be deemed to be the average of the daily closing prices
per Common Share for the 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 per share market price of the Common Shares is determined
during a period following the announcement by the issuer of such Common
Shares of a dividend or distribution on such Common Shares payable in
such Common Shares or securities convertible into such Common Shares
(other than the Rights), or any subdivision, combination, or
reclassification of such Common Shares, and prior to the expiration of
the requisite 30 Trading Day or 10 Trading Day period after the
ex-dividend date for such dividend or distribution or the record date
for such subdivision, combination, or reclassification, then, and in
each such case, the "current per share market price" shall be
appropriately 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 on the principal national securities exchange, if
any, on which the Common Shares are then 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 by the National Association of
Securities Dealers, Inc., Automated Quotations System ("NASDAQ") or
such other system then in use, or, if on any such date the Common
Shares are not quoted by any such organization, 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 no market maker is making a market in Common Shares, the
fair value of such shares on such date as determined in good faith by
the Board shall be used. The term "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. If the Common
Stock is not publicly held or not so listed or traded, "current per
share market price" shall mean the fair value per share as determined
in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agents and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Series A Shares shall be
determined in the same manner as set forth above for Common Shares in
clause (i) of this Section 11(d). If the current per share market price
of the Series A Shares cannot be determined in the manner provided
above, the "current per share market price" of the Series A Shares
shall be conclusively deemed to be the current per share market price
of the Common Shares, multiplied by one hundred (appropriately adjusted
to reflect any stock split, stock dividend, or similar transaction
occurring after the date hereof). If neither the Common Shares nor the
Series
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A Shares are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and binding on the holders of
Rights.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least one percent 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 the nearest ten-thousandth of a Common
Share or other share or one-millionth of a Series A Share as the case
may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment provided for in this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the date of the expiration of the
right to exercise any Rights.
(f) If, as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any property,
other securities (other than shares of capital stock of, the Company),
or shares of capital stock of the Company other than Series A Shares,
thereafter the amount of such property, other securities (other than
shares of capital stock of the Company) and the number of such other
shares of capital stock so receivable upon exercise of any Right (as
well as any consideration to be paid therefor), 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 Series
A Shares (and the Purchase Price) contained in this Section 11, and the
provisions of Sections 7, 9, 10, 13, and 14 with respect to the Series
A Shares shall apply on like terms to any such property, other
securities and other shares of capital stock.
(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 Series A Shares 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 Sections 11(b)
and (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-hundredths of a
Series A Share (calculated to the nearest one one-millionth of a Series
A Share) obtained by (i) multiplying (x) the number of one
one-hundredths 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
substitution for any adjustment in the
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number of Series A Shares purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths of a
Series A 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 the number of Rights (calculated to
the nearest one ten-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 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 Right Certificates have
been issued, shall be at least 10 days later than the date of the
public announcement. If Right 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 Right Certificates on such record date Right
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 Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed, and countersigned 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 Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Series A Shares issuable upon the
exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-hundredth of a share and the number of shares which were expressed
in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of the
then stated value, if any, of the Series A Shares 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
Series A Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 requires 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 until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Series A Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Series A Shares 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,
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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 upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required or permitted by this Section 11, as and to the extent that in
its good faith judgment the Board shall determine to be advisable in
order that any (i) consolidation or subdivision of the Series A Shares,
(ii) issuance wholly for cash of any of the Series A Shares at less
than the current market price, (iii) issuance wholly for cash of Series
A Shares or securities which by their terms are convertible into or
exchangeable for Series A Shares, (iv) dividends on Series A Shares
payable in Series A Shares or (v) issuance of rights, options, or
warrants referred to in this Section 11, hereafter made by the Company
to holders of its Series A Shares shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one or more
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person (other than the Company and/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 or sale there are any rights, warrants, or other
instruments or securities outstanding or agreements in effect which
would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) before, simultaneously
with or immediately after such consolidation, merger or sale, the
shareholders 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 Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it shall not, except as permitted by Section 23 or
27 hereof, take (or permit any Subsidiary to take) any action which at
the time it is reasonably foreseeable will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Record Date and prior to the Distribution Date (i) declare a
dividend on the outstanding Common Shares payable in Common Shares,
(ii) subdivide the outstanding Common Shares, (iii) combine the
outstanding Common Shares into a smaller number of shares, or (iv)
issue any Shares of its capital stock in a reclassification of its
outstanding capital stock, the number of Rights associated with each
Common Share then outstanding, or issued or delivered thereafter but
prior to the Distribution Date shall be proportionately adjusted so
that the number of Rights thereafter associated with each Common Share
(including other Common Shares issued after the date of such event, but
prior to the Distribution Date) following any such event
-19-
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 before 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. For
purposes of this Section 11(p), any Common Shares issued after the
Distribution Date, which were not issued together with a Right
(pursuant to the Preamble hereto or by action of the Board pursuant to
Section 22 hereof) shall not be counted as outstanding.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares or the Series A Shares a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Right Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing Common Shares)
in accordance with Section 25 hereof. The Rights Agent shall be fully, protected
in relying on any such certificate and on any adjustment therein contained and
shall not be obligated or responsible for calculating any adjustment nor shall
it be deemed to have knowledge of such adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger, or Sale or Transfer of
Assets or Earning Power. b) In the event that, following the Shares Acquisition
Date, directly or indirectly (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof) and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction that
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 Common Shares shall be changed into,
or exchanged for stock or other securities of any other Person or cash or any
other property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in a single
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or group of related 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), then, and in each such case
(except as may be contemplated by Section 13(d) hereof), proper provision shall
be made so that (i) each 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 current Purchase Price, such number of validly authorized and issued, fully
paid, nonassessable and freely tradable Common Shares of the Principal Party (as
hereinafter defined), free and clear of liens, encumbrances, or other adverse
claims and not subject to any rights of call or first refusal, redemption, or
repurchase, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-hundredths of a share of Series
A Shares for which a Right was exercisable immediately prior to the first
occurrence of a Section 13(a) Event (or if a Section 11(a)(ii) Event has
occurred prior to the occurrence of a Section 13(a) Event, multiplying the
number of such one-hundredths of a share of Series A
-20-
Shares for which a Right is 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) and dividing the product (which
product, following such first occurrence, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by (2) 50% of the
current per share market price (determined pursuant to Section 11(d) hereof) per
Common Share of such Principal Party on the date of consummation of such Section
13(a) Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13(a) Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) 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(a) Event; (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its 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; and (v) the provisions of Section 11(a)(ii) hereof shall thereafter
be of no effect following the first occurrence of a Section 13(a) Event.
(b) "PRINCIPAL PARTY" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which Common
Shares of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case in subsections (b)(i) or (ii) of this
Section 13, (1) if the Common Shares of such Person 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 is and has been
so registered, "Principal Party" shall refer to such other Person; (2) 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; and (3) in case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
requirements set forth in clauses (1) and (2) of this subsection (b), above,
shall apply to each of the chains of ownership having an interest in such joint
venture as if such party were a "subsidiary" of both or all of such joint
venturers, and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such joint venture bear to the total of such interests.
-21-
(c) The Company shall not consummate any such
consolidation, merger, sale, or transfer unless the Principal Party shall have a
sufficient number of authorized Common Shares, which have not been issued or
reserved 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 providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger, or sale of assets mentioned in paragraph
(a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement
under the 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 Act) until the Final
Expiration Date;
(ii) take such 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 holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that one of the
transactions described in Section 13(a) hereof shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof, the Rights
which have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if: (i) such transaction is
consummated with a Person or Persons who acquired Common Shares pursuant to a
tender or exchange offer for all outstanding Shares of Common Shares which is a
Qualified Offer (or a wholly owned Subsidiary of any such Person or Persons);
(ii) the price per share for the Common Share offered in such transaction is not
less than the price per share for the Common Share paid to all holders of shares
of Common Shares whose shares were purchased pursuant to such tender or exchange
offer; and (iii) the form of consideration being offered to the remaining
holders of Common Shares pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender or exchange offer. Upon consummation
of any such transaction contemplated by this Section 13(d), all Rights hereunder
shall expire.
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
-22-
Section 11(p) hereof, or to distribute Right Certificates that evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right 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 value of a whole Right. For the purposes of
this Section 14(a), the current market value 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 for any 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 on the principal
national securities exchange, if any, on which the Rights are then 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 NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, 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 no such market maker is
making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board shall be used.
(b) The Company shall not be required to issue fractions
of Series A Shares (other than fractions which are integral multiples of one
one-hundredth of a Series A Share) upon exercise of the Rights or to distribute
certificates that evidence fractional Series A Shares (other than fractions
which are integral multiples of one one-hundredth of a Series A Share).
Fractions of Series A Shares in integral multiples of one one-hundredth of a
Series A Share may, at the election of the Company, be evidenced by Depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges, and
preferences to which they are entitled as beneficial owners of the Series A
Shares. In lieu of fractional Series A Shares that are not integral multiples of
one one-hundredth of a Series A Share, the Company shall pay to the registered
holders of Right 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 Series A Share. For purposes of this Section 14(b), the current
market value of a Series A Share shall be the closing price of a Series A Share
(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 that evidence fractional Common
Shares. In lieu of fractional Common Shares, the Company may pay to the
registered holders of Right 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 (as determined pursuant to Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
-23-
(d) The holder of a Right, by the acceptance of the
Rights expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as otherwise set forth
herein.
Section 15. Rights of Action. All rights of action in respect
of this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of. the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will 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 Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) before the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of
transfer and with appropriate forms and certificates fully executed;
(c) subject to Sections 6(a) and 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated
Common Shares certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common
Shares certificates made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall 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 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 or ruling issued by a court having 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
-24-
of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends, or be deemed for any purpose the holder of the Series A Shares or any
other securities of the Company that may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
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 Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights of 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,
its reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith, or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises. The costs
and expenses of enforcing this right of indemnification shall also be paid by
the Company. The indemnification provided for hereunder shall survive the
expiration of the Rights and termination of this Agreement.
(b) The Rights Agent shall be fully indemnified against,
shall be protected from, and shall incur no liability or expense (including
without limitation attorneys' fees and expenses) for, or in respect of any
action taken, suffered or omitted by it in connection with, its administration
of this Agreement in reliance upon any Right Certificate or certificate for the
Series A Shares or Common Shares or for other securities of the Company,
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 be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of its counsel as set forth in Section 20 hereof.
(c) Notwithstanding anything in this Agreement to the
contrary, in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits).
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. c) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Rights Agent or any successor
-25-
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper of any further act on the part of
any of the parties hereto, provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right 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 Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right 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), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such 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 and the determination of "current per share market
price") be proved or established by the Company before taking or
suffering 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 any one of the Chairman of the Board, the President, the
Executive Vice President, any Vice President, the Treasurer, or the
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad faith, or
willful misconduct.
(d) 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 Right Certificates
-26-
(except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any adjustment required under the provisions of
Sections 11, 13 or 24 hereof or responsible for the manner, method, or
amount of any such adjustment or the ascertainment of the existence of
facts that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after actual
notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization
or reservation of any Series A Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Series A Shares
will, when issued, be validly authorized and issued, fully paid, and
nonassessable.
(f) 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.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, the
Executive Vice President, any Vice President, the Secretary, or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Agreement and the
date on or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date
specified in such application (which date shall not be less than ten
Business Days after the date any officer of the Company actually
receives such application, unless, any such officer shall have
consented in writing to an earlier date) unless, prior to taking any
such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to
such application subject to the proposed action or omission and/or
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, 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 interested
in any transaction in which the Company may be
-27-
interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself 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 resulting from any such act, default, neglect, or
misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
(j) 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
or in the exercise of its rights 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.
(k) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached
to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 on such certificate attached to the form
of assignment or form of election to purchase, the Rights Agent shall
not take any further action with respect to such requested exercise or
transfer without first consulting with the Company.
(l) The Rights Agent shall not be required to take notice
or be deemed to have any notice of any fact, event or determination
(including, without limitation, any dates or events defined in this
Agreement or the designation of any Person as an Acquiring Person,
Affiliate or Associate) under this Agreement unless and until the
Rights Agent shall be specifically notified in writing by the Company
of such fact, event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Series A Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares and
Series A Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. 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 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of
-28-
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
corporation organized and doing business under the laws of the United States or
of the State of Missouri or the State of New York (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of Missouri or the State of New York), in good
standing, having an office in the State of Missouri or the State of New York,
which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100,000,000. 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 the purpose. 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 Series A Shares and mail a notice thereof in writing to
the registered holders of the Right Certificates. 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.
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 Right Certificates
evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price per share and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance, sale, or delivery of Common Shares
following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to Common Share so issued, sold, or
delivered pursuant to the exercise of stock options or under any employee plan
or arrangement outstanding, 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 of Directors of the Company, issue Right Certificates representing
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 (A) the time at which an
Acquiring Person becomes such, or (B) the Final Expiration Date, redeem all but
not less than all the then outstanding Rights at a redemption price of $.001 per
Right, appropriately adjusted to reflect any stock split, stock dividend, or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "REDEMPTION PRICE"). The redemption of the Rights
by the Board
-29-
may be made effective at such time, on such basis and with such conditions as
the Board, in its sole discretion, may establish.
(b) In the case of a redemption permitted under Section
23 hereof, immediately upon the action of the Board ordering the redemption of
the Rights, evidence of which shall have been filed promptly with the Rights
Agent, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. Within ten days after the
action of the Board ordering the redemption of the Rights under Section 23(a)
hereof, the Company shall give notice of such redemption to the holders of the
then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the Transfer Agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the Redemption Date and the method by which the payment
of the Redemption Price will be made. The Company may, at its option, discharge
all of its obligations with respect to providing such notice to Rights holders
by (i) issuing a press release announcing the manner of redemption of the
Rights, (ii) depositing with a bank or trust company in New York, New York, or
Nashville, Tennessee, having a capital and surplus of at least $100,000,000,
funds necessary for such redemption, in trust, to be applied to the redemption
of the Rights so called for redemption and (iii) arranging for the mailing of
the Redemption Price to the registered holders of the Rights.
Section 24. Exchange. (a) The Board may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all (but not less
than all) of the then outstanding and exercisable Rights (which shall not
include Rights that have become 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 date hereof (such exchange ratio being
hereinafter referred to as the "EXCHANGE RATIO"). Notwithstanding the foregoing,
the Board shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any Person or entity
organized, appointed or established by the Company pursuant to any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board ordering the
exchange of all of the 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 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; 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 mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder received the notice.
Each such
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notice of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Series A Shares (or equivalent preferred
shares) for Common Shares exchangeable for Rights, at the initial rate of one
one-hundredth of a Series A Share (or equivalent preferred share) for each
Common Share, as appropriately adjusted to reflect stock splits, stock dividends
and other similar transactions after the date hereof.
(d) The Company shall not be required to issue fractions
of Common Shares or to distribute certificates which evidence fractional Series
A Shares (except as hereinafter provided) of fractional Common Shares, but if
the exchange is for Series A Shares, the Company shall be obligated to issue
fractional shares so long as any fraction of a Series A Share so to be issued is
at least equal to one one-hundredth of a Series A Share. In lieu of such
fractional shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole share. For the purposes of this Section 24(d), (i) the current
market value 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 following the day of the public announcement by
the Company that an exchange is to be effected pursuant to this Section 24, and
(ii) the current market value of a Series A Share or fraction of a Series A
Share shall be the current market value on such day of a Series A Share (or
fraction of a Series A Share) as determined in accordance with Section 11(d).
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 holders of its Series A Shares or to make
any other distribution to the holders of its Series A Shares (other than a
regular quarterly cash dividend), or (ii) to offer to the holders of its Series
A Shares rights or warrants to subscribe for or to purchase any additional
Series A Shares or shares of stock of any class or any other securities, rights,
or options, or (iii) to effect any reclassification of its Series A Shares
(other than a reclassification involving only the subdivision of outstanding
Series A 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) hereof), 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 or more transactions, of more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any other Person or
related Person, or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
Right 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, or 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, if
applicable, the date of participation therein by the holders of the Common
Shares and/or Series A Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any such action covered by clause (i) or (ii)
above at least 20 days before the record date for determining holders of the
Series A Shares for purposes of such action, and in the case of any such other
action, at least 20
-31-
days before the date of participation therein by the holders of the Common
Shares and/or Series A Shares, whichever shall be the earlier.
(b) In case of the occurrence of a Section 11(a)(ii)
Event, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Right 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
holders of Rights under Section 11(a)(ii), and (ii) all references in the
preceding paragraph to Series A Shares shall be deemed thereafter to refer to
Common Shares and/or, if appropriate, other securities.
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 Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
iPayment, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman of the Board
with a copy to:
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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 holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Wachovia Bank, National Association
[__________________]
Attention: [__________]
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate 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.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing Common Shares. From and
after the Distribution Date, the Company and the Rights Agent shall,
-32-
if the Company shall so direct, supplement or amend this Agreement without
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Right Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); provided this Agreement may not be supplemented or
amended to lengthen, pursuant to Clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable or (B) any other time period unless such lengthening is
for the purpose of protecting, enhancing, or clarifying the rights of, and/or
the benefits to, the holders of Rights. Upon the delivery of a certificate from
an appropriate 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. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Shares. Notwithstanding anything herein to
the contrary, this Agreement may not be amended at a time when the Rights are
not redeemable. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the Rights Agent
under this Agreement will be effective against the Rights Agent without the
execution of such supplement or amendment by the Rights Agent.
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. Determination and Actions by the Board of
Directors. For all purposes of this Agreement, any calculation of the number of
Common Shares outstanding at any particular time and any determination of the
particular percentage of such outstanding Common Shares of which any Person is
the Beneficial Owner shall be made in accordance with the provisions of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in
effect as of the date hereof. 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 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 a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations, and determinations (including, for purposes of clause (ii)
below, all omissions with respect to the foregoing) which are done or made by
the Board, in good faith, shall (i) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Right Certificates and all other
parties, and (iii) not subject the Board to any liability to the holders of the
Right Certificates.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
-33-
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right 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;
provided, however, notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant, or restriction is held by such court or
authority to be invalid, void, or unenforceable and the Board determines in its
good faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of such
determination by the Board.
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware, and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience of reference
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
-34-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
IPAYMENT, INC.
Attest:
By_________________________ By______________________________________
Name: Name:
Title: Title:
[SEAL]
WACHOVIA BANK, NATIONAL ASSOCIATION
Attest:
By_________________________ By______________________________________
Name: Name:
Title: Title:
[SEAL]
-35-
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES,
AND RIGHTS FOR SERIES A PARTICIPATING PREFERRED STOCK
[Filed as a separate exhibit]
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- ___________________ Rights
NOT EXERCISABLE AFTER APRIL [__], 2013, UNLESS EXTENDED PRIOR THERETO BY THE
BOARD OF DIRECTORS OR EARLIER IF EXCHANGED OR REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND UNDER CERTAIN
CIRCUMSTANCES TO EXCHANGE, IN EACH CASE AT THE OPTION OF THE COMPANY AND ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF SUCH AGREEMENT.]*
Right Certificate
iPayment, Inc.
This certifies that , or registered assigns, is the
registered owner of the number of Rights set forth above, each which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of April [__], 2003, (the "RIGHTS AGREEMENT"), between
iPayment, Inc., a Delaware corporation (the "COMPANY"), and Wachovia Bank,
National Association, a national banking association (the "RIGHTS AGENT"), to
purchase from the Company at any time prior to 4:00 PM (Nashville, Tennessee
time) on April [___], 2013 (unless such date is extended prior thereto by the
Board of Directors) (the "FINAL EXPIRATION DATE"), at the office or offices of
the Rights Agent designated for such purpose, or its successors as Rights Agent,
one one-hundredth of a fully paid, non-assessable share of Series A
Participating Preferred Stock, without par value ("SERIES A PREFERRED STOCK"),
of the Company, at a purchase price of ninety Dollars ($90) per one
one-hundredth of a share (the "PURCHASE PRICE"), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase and related
Certificate duly executed. Except as otherwise provided in the Rights Agreement,
the Purchase Price shall be paid in cash. The number of _________
* The bracketed portion of the legend should be inserted only if applicable.
Rights evidenced by this Right Certificate (and the number of fractional shares
of Series A Preferred Stock that may be purchased upon exercise thereof) set
forth above, and the Purchase Price per fractional share of Series A Preferred
Stock set forth above, are the number and Purchase Price as of April [__], 2003,
based on the Series A Preferred Stock as constituted at such date. The Company
reserves the right to require before 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 shares of Preferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate, or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of any such Section
11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price, and
the number and kind of shares of Series A Preferred Stock or other securities
that may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as such term is defined in the
Rights Agreement).
This Right Certificate is subject to all of the terms,
provisions, and conditions of the Rights Agreement, which terms, provisions, and
conditions 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 Right Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances specified in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of shares of Series A
Preferred Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If the
rights evidence by this Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right at any time prior to the earlier of (i) the
time at which an Acquiring Person becomes such, or (ii) the Final Expiration
Date. In addition, under certain circumstances following the Stock
-2-
Acquisition Date, the Rights may be exchanged, in whole or in part, for shares
of the Common Stock, or shares of preferred stock of the Company having
essentially the same value or economic rights as such shares. Immediately upon
the action of the Board of Directors of the Company authorizing exchange or
redemption of the Rights, the Rights will no longer be exercisable, and
thereafter the only right of the holders of the Rights evidenced hereby will be
to receive the securities issuable on exchange or the Redemption Price.
The Rights Agreement may be supplemented or amended without
the approval of any holder of the Rights (or the Common Shares) as set forth in
the Rights Agreement.
No fractional shares of Series A Preferred Stock will be
issued upon the exercise of any Right or Rights evidenced hereby (other than
fractions that are integral multiples of one one-hundredth of a share of Series
A Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made as
provided in the Rights Agreement. The Company, at its election, may require that
a number of Rights be exercised so that only whole shares of Preferred Stock
would be issued.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
Series A Preferred Stock or of any other securities of the Company (including
Common Shares) that 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 provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement and its corporate seal.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
-3-
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of _______________, 200__.
Countersigned
WACHOVIA BANK, NATIONAL ASSOCIATION IPAYMENT, INC.
By_________________________ By______________________________________
Authorized Signature Title:
Attest:
By______________________________________
[SEAL] Title:
[SEAL]
-4-
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby sells, assigns,
and transfers unto______________________________________________________________
(Please print name and address of transferee)
______________________________________________________ this Right Certificate,
together with all right, title, and interest therein, and does hereby
irrevocably constitute and appoint _________________ Attorney, to transfer the
within Right Certificate on the books of the within-named Company, with full
power of substitution.
Dated: _________________, 200_
________________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: _____________, 200_ ________________________________________
Signature
Signature Guaranteed:
NOTICE
The signature(s) to the foregoing Assignment and Certificate
must correspond to the name(s) as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
-2-
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: iPayment, Inc.
The undersigned hereby irrevocably elects to exercise
____________ Rights represented by this Right Certificate to purchase the shares
of Series A Shares issuable upon the exercise of the Rights (or Common Shares 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:
Please insert social security
or other identifying number:____________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance of such
Rights shall be registered in the name of and delivered to:_________________
Please insert social security
or other identifying number:____________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated: _______________, 200_
________________________________________
Signature
Signature Guaranteed:
-3-
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ]
are [ ]are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated: _______________, 200_
________________________________________
Signature
Signature Guaranteed:
NOTICE
The signature(s) to the foregoing Election to Purchase and
Certificate must correspond to the name(s) as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
SERIES A PREFERRED STOCK
On April [__], 2003 the Board of Directors of iPayment, Inc.
(the "COMPANY") declared a dividend distribution of one Right for each
outstanding share of common stock, par value $0.01 per share (a "COMMON
SHARE"), of the Company to shareholders of record at the close of business on
April [__], 2003 (the "RECORD DATE"). Except as set forth below, each Right
entitles the registered holder to purchase from the Company one one-hundredth
of a share (a "UNIT") of Series A Participating Preferred Stock, without par
value ("SERIES A SHARES"), at a price of [__________] Dollars ($[___]) (the
"PURCHASE PRICE"), subject to adjustment. The Purchase Price shall be paid in
cash. The description and terms of the Rights are set forth in a Rights
Agreement (the "RIGHTS AGREEMENT") between the Company and Wachovia Bank,
National Association, as Rights Agent.
Initially, no separate Right Certificates will be distributed.
Until the earlier to occur of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an "ACQUIRING PERSON") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
(or 35% or more in the case of Caymas, LLC or its affiliates or associated
persons) of the outstanding Common Shares (the "SHARES ACQUISITION DATE") or
(ii) 10 Business Days (or such later date as the Board of Directors may
determine) following the commencement of a tender offer or exchange offer if,
upon consummation thereof, such person or group would become an Acquiring Person
(the earlier of such dates being called the "DISTRIBUTION DATE"), the Rights
will be evidenced, with respect to any Common Shares outstanding on and after
the Record Date, by the certificates representing such Common Shares. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with Common Share certificates. As soon as practicable
following the Distribution Date, separate certificates evidencing the rights
("RIGHT CERTIFICATES") will be mailed to holders of record of the Common Shares
as of the close of business on the Distribution Date and, thereafter, such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire on April [__], 2013, unless such date is extended or the Rights are
earlier redeemed or exchanged by the Company as described below.
In the event that a person (other than the Company and certain
other entities) becomes an Acquiring Person (other than pursuant to a tender
offer for all outstanding Common Shares at a price and on terms approved by a
majority of the independent Directors (a "QUALIFIED OFFER")) each holder of a
Right will thereafter have the right to receive, upon the exercise thereof at
the Purchase Price, Common Shares (or, in certain circumstances, cash, property
or other securities of the Company) having a value equal to two times the
Purchase Price. Notwithstanding any of the foregoing, following the occurrence
of the event set forth above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
For example, at a Purchase Price of $[___] per Right, each
Right not otherwise voided following an event set forth in the preceding
paragraph would entitle the holder to purchase $[___] worth of Common Shares (or
other consideration, as noted above) for $[___]. Assuming that the Common Shares
had a per share value of $[___] at such time, the holder of each valid right
would be entitled to purchase eight Common Shares for $[___].
In the event that, at any time following the Shares
Acquisition Date, (i) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving corporation,
or in which the Company is the surviving corporation but in which its Common
Shares are changed or exchanged (other than pursuant to a Qualified Offer), or
(ii) more than 50% of the Company's assets or earning power is sold or
transferred, the Rights Agreement provides that proper provision shall be made
so that each holder of a Right (other than Rights that previously have been
voided as set forth above) shall thereafter have the right to receive, upon the
exercise thereof at the Purchase Price, common shares of the acquiring company
having a value equal to two times the Purchase Price.
The Purchase Price payable, and the number of Units of Series
A Shares or other securities or property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the event
of a dividend of Series A Shares on, or a subdivision, combination or
reclassification of, the Series A Shares, (ii) upon the grant to holders of the
Series A Shares of certain rights or warrants to subscribe for Series A Shares
or securities convertible into Series A Shares, or (iii) upon the distribution
to holders of the Series A Shares of debt securities or assets (excluding
regular quarterly cash dividends and dividends payable in Series A Shares) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares that are not integral multiples
of one one-hundredth of a Series A Share will be issued and, in lieu thereof, an
adjustment in cash will be made based on the closing price of the Series A
Shares on the last trading date prior to the date of exercise.
At any time after the date of the Rights Agreement until the
date upon which an Acquiring Person becomes such, the Board of Directors may
redeem the Rights in whole, but not in part, at a price of $.001 per Right,
subject to adjustments (the "REDEMPTION PRICE").
At any time after a person becomes an Acquiring Person,
provided that the Acquiring Person beneficially owns not more than 50% of the
outstanding Common Shares, the Board of Directors may, at its option, exchange
all of the then outstanding and exercisable Rights for Common Shares at an
exchange ratio of one Common Share per Right or for Series A Shares (or
equivalent preference shares) at an exchange ratio of one one-hundredth of a
Series A Share (or equivalent preference share) per Right.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company. While the distribution of the
Rights will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Shares (or other
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consideration) of the Company or for common stock of the acquiring company or in
the event of the redemption of the Rights.
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors before the Distribution Date. Thereafter, the Rights
Agreement may be amended to cure any ambiguity, to correct defects and
inconsistencies, to make changes that do not adversely affect the interests of
holders of the Rights (other than an Acquiring Person), or to shorten or
lengthen any time period under the Rights Agreement; provided, that no amendment
to adjust the time period governing redemption shall be made at such time as the
Rights are no longer redeemable and no other time period may be lengthened
unless it is for the purpose of protecting, enhancing, or clarifying the rights
of, or benefits to, the holders of Rights. The foregoing notwithstanding, no
amendment may be made at such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company or the Rights Agent. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
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