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RIGHTS AGREEMENT
by and between
iPARTY CORP.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
as Rights Agent
Dated as of
November 9, 2001
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TABLE OF CONTENTS
Section 1. Certain Definitions................................................1
Section 2. Appointment of Rights Agent.........................................6
Section 3. Issuance of Right Certificates......................................7
Section 4. Form of Right Certificates..........................................8
Section 5. Countersignature and Registration...................................9
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates..................................................9
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights......10
Section 8. Cancellation and Destruction of Right Certificates.................12
Section 9. Reservation and Availability of Shares of Preferred Stock..........12
Section 10. Preferred Stock Record Date.......................................13
Section 11. Adjustment of Exercise Price or Number of Shares..................14
Section 12. Certification of Adjusted Exercise Price or Number of Shares......17
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.....................................................17
Section 14. Fractional Rights and Fractional Shares...........................21
Section 15. Rights of Action..................................................21
Section 16. Agreement of Right Holders........................................21
Section 17. Right Certificate Holder Not Deemed a Stockholder.................22
Section 18. Concerning the Rights Agent.......................................22
Section 19. Merger or Consolidation of, or Change in Name of,
the Rights Agent..................................................23
Section 20. Duties of Rights Agent............................................23
Section 21. Change of Rights Agent............................................25
Section 22. Issuance of New Right Certificates................................26
Section 23. Redemption........................................................26
Section 24. Notice of Proposed Actions........................................27
Section 25. Notices...........................................................27
Section 26. Supplements and Amendments........................................28
Section 27. Successors........................................................29
Section 28. Benefits of this Rights Agreement.................................29
Section 29. Delaware Contract.................................................29
Section 30. Counterparts......................................................29
Section 31. Descriptive Headings..............................................29
Section 32. Severability......................................................29
ii
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Certificate of Designations
iii
RIGHTS AGREEMENT
Rights Agreement ("Rights Agreement"), dated as of November 9, 2001,
by and between iParty Corp., a Delaware corporation (the "Company"), and
Continental Stock Transfer & Trust Company, a New York corporation (the "Rights
Agent").
W I T N E S S E T H:
WHEREAS, on November 9, 2001, the Board of Directors of the Company
authorized the issuance of, and declared a dividend payable in, one right (a
"Right") for each share of the Company's Common Stock (as such term is
hereinafter defined), par value $0.001 per share and each share of the Company's
outstanding Preferred Stock on an as converted basis (the "Preferred Stock")
(the Common Stock and the Preferred Stock shall collectively be known as the
"Capital Stock"), outstanding as of the close of business on November 9, 2001
(the "Record Date"). Each such Right represents the right to purchase one
one-hundredth (1/100) of a share of Series G Junior Preferred Stock of the
Company (the "Series G Junior Preferred Stock"), having the rights and
preferences set forth in the form of the Certificate of Designations attached
hereto as Exhibit C authorized by the Board of Directors on November 9, 2001,
upon the terms and subject to the conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further authorized
the issuance of one Right (subject to adjustment) with respect to each share of
Capital Stock which may be issued between the Record Date and the earlier to
occur of the Expiration Date or the Final Expiration Date (as such terms are
hereinafter defined);
NOW, THEREFORE, 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 shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, shall be the Beneficial Owner
(as such term is hereinafter defined) of ten percent (10%) or more
of the Voting Stock (as such term is hereinafter defined) of the
Company then outstanding; provided that, an Acquiring Person shall
not include (i) an Exempt Person (as such term is hereinafter
defined), (ii) any Person, together with all Affiliates and
Associates of such Person, who or which would be an Acquiring Person
solely by reason of (A) being the Beneficial Owner of shares of
Voting Stock of the Company, the Beneficial Ownership of which was
acquired by such Person pursuant to any action or transaction or
series of related actions or transactions approved by the Board of
Directors before such Person otherwise
became an Acquiring Person, or (B) a reduction in the number of
issued and outstanding shares of Voting Stock of the Company
pursuant to a transaction or a series of related transactions
approved by the Board of Directors of the Company; provided,
further, that in the event such Person described in this clause (ii)
does not become an Acquiring Person by reason of subclause (A) or
(B) of this clause (ii), such Person nonetheless becomes an
Acquiring Person in the event such Person thereafter acquires
Beneficial Ownership of an additional one percent (1%) of the Voting
Stock of the Company, unless the acquisition of such additional
Voting Stock would not result in such Person becoming an Acquiring
Person by reason of subclause (A) or (B) of this clause (ii), or
(iii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; iParty LLC; ▇▇▇▇▇ ▇▇▇▇; Roccia Partners,
L.P.; Boston Millennia Partners, LP; HMTF-iPC, LLC; or Taymark; each
of which has identified themselves as a 10% holder or more of Voting
Stock of the Company as of November 9, 2001; provided, that each of
such Persons shall become an Acquiring Person in the event such
Person hereafter acquires Beneficial Ownership of more than five
percent (5%) of the Voting Stock of the Company during any Twelve
(12) month period. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith 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 shares of Voting Stock 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 an "Acquiring Person" for any purposes of this Rights
Agreement.
(b) "Affiliate" of a Person shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended ("Exchange Act"), as
in effect on the date of this Rights Agreement.
(c) "Associate" of a Person shall mean (i) with respect to a
corporation, any officer or director thereof or of any Subsidiary
(as such term is hereinafter defined) thereof, or any Beneficial
Owner of ten percent (10%) or more of any class of equity security
thereof, (ii) with respect to a partnership, any general partner
thereof or any limited partner thereof who is, directly or
indirectly, the Beneficial Owner of a ten percent (10%) ownership
interest therein, (iii) with respect to a business trust, any
officer or trustee thereof or of any Subsidiary thereof or any
Beneficial Owner of ten percent (10%) or more of any class of
beneficial interest therein, (iv) with respect to any association
other than a corporation, partnership or business trust, any officer
or director or other person performing similar functions thereof or
of any Subsidiary thereof or any Beneficial Owner of ten percent
(10%) or more of the Common Stock (as such term is hereinafter
defined) of the association, (v) with respect to a trust that is not
a business trust or an estate, any trustee, executor or similar
fiduciary or any Person who has a ten percent (10%) or greater
interest as a beneficiary in the income from or principal of such
trust or estate, (vi) with respect to a natural
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person, any relative or spouse of such person, or any relative of
such spouse, who has the same home as such person, and (vii) any
Affiliate of such Person.
(d) A Person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any securities (and correlative terms shall have
correlative meanings):
(i) that such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Regulations
13D and 13G thereunder (or any comparable or successor law or
regulation), in each case as in effect on the date hereof; or
(ii) that such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of time
or the fulfillment of a condition or both) pursuant to any
agreement, arrangement or understanding, or upon the exercise
of conversion rights, exchange rights, other rights (other
than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own," securities
tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or
exchange, or (B) the right to vote, alone or in concert with
others, 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 securities if the agreement,
arrangement or understanding to vote such securities (1)
arises solely from a revocable proxy or consent given in
response to a proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations
under the Exchange Act, and (2) is not at the time reportable
by such Person on a Schedule 13D report under the Exchange Act
(or any comparable or successor report), other than by
reference to a proxy or consent solicitation being conducted
by such Person; or
(iii) that are beneficially owned, directly or
indirectly, by any other Person 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 acquiring, holding, voting (except as described
in clause (B) of subparagraph (ii) of this paragraph (d)) or
disposing of any securities of the Company; provided, however,
that for purposes of determining Beneficial Ownership of
securities under this Rights Agreement, officers and directors
of the Company solely by reason of their status as such shall
not constitute a group (notwithstanding that they may be
Associates of one another or may be deemed to constitute a
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group for purposes of Section 13(d) of the Exchange Act) and
shall not be deemed to own shares owned by another officer or
director of the Company. Notwithstanding anything in this
paragraph (d) to the contrary, a Person shall not be deemed
the "Beneficial Owner" of, or to "Beneficially Own," any
security beneficially owned by another Person solely by reason
of an agreement, arrangement or understanding with such other
Person for the purposes of: (x) soliciting the Company's
stockholders for the election of director nominees or any
other stockholder resolution, the formation of and membership
on any committee for the purpose of promoting or opposing any
stockholder resolution or for electing a slate of nominees to
the Company's Board of Directors, service on such a slate of
nominees, or agreement to a slate of director nominees,
provided, that such other Person retains the right at any time
to withdraw as a nominee or member of any such committee, and
to withhold or revoke any vote or proxy for or against any
such stockholder resolution or for such slate of nominees; (y)
entering into revocable voting agreements or the granting or
solicitation of revocable proxies with respect to any of the
matters described in the foregoing clause (x); or (z) the
sharing of expenses and the indemnification against expenses
and liabilities by any such other Person with respect to
expenses incurred or conduct occurring during the time such
other Person is a nominee or a member of any such committee
described in the foregoing clause (x). Further,
notwithstanding anything in this paragraph (d) to the
contrary, a Person engaged in the business of underwriting
securities shall not be deemed the "Beneficial Owner" of, or
to "Beneficially Own," any securities acquired in good faith
in a firm commitment underwriting until the expiration of
forty (40) days after the date of such acquisition.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in New York are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., New York time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York time,
on the next succeeding Business Day.
(g) "Common Stock" when used with reference to the Company
shall mean the Company's common stock, par value $0.001 per share.
"Common Stock" when used with reference to any Person other than the
Company which shall be organized in corporate form shall mean the
capital stock or other equity security with the greatest per share
voting power of such Person. "Common Stock" when used with reference
to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest that shall
represent the right to participate in profits, losses, deductions
and credits of such Person and that shall be entitled to exercise
the greatest voting power per
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unit of such Person.
(h) "Distribution Date" shall have the meaning set forth in
Section 3(b) hereof.
(i) "Exchange Act" shall have the meaning set forth in Section
1(b) hereof.
(j) "Exempt Person" shall mean the Company, any Subsidiary of
the Company, or any employee benefit plan or employee stock plan of
the Company or any Subsidiary of the Company, or any trust or other
entity organized, appointed, established or holding Common Stock for
or pursuant to the terms of any such plan.
(k) "Exercise Price" shall have the meaning set forth in
Sections 4 and 7(b) hereof.
(l) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(m) "Fair Market Value" of any property shall mean the fair
market value of such property as determined in accordance with
Section 11(b) hereof.
(n) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(o) "Person" shall mean any partnership, limited liability
company, business trust, other association, government entity,
estate, trust, foundation or natural person.
(p) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(q) "Qualifying Tender Offer" shall mean a tender or exchange
offer for all outstanding shares of Capital Stock of the Company not
beneficially owned by the Person making such offer (or by its
Affiliates or Associates) approved by a majority of the Board of
Directors prior to the time that any Person has become an Acquiring
Person and after receiving the advice of a nationally recognized
investment banking firm and, after taking into account the potential
long-term value of the Company and all other factors that they
consider relevant.
(r) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(s) "Right Certificate" shall have the meaning set forth in
Section 3(d) hereof.
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(t) "Stock Acquisition Date" shall mean the first date on
which there shall be a public announcement by the Company or an
Acquiring Person that an Acquiring Person has become such (which,
for purposes of this definition, shall include, without limitation,
a report filed pursuant to Section 13(d) of the Exchange Act) or
such earlier date as a majority of the Board of Directors shall
become aware of the existence of an Acquiring Person.
(u) "Subsidiary" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having
voting power sufficient to elect a majority of the board of
directors or other persons performing similar functions are
beneficially owned, directly or indirectly, by such Person or by any
corporation or other entity that is otherwise controlled by such
Person.
(v) "Summary of Rights" shall have the meaning set forth in
Section 3(a) hereof.
(w) "Trading Day" shall have the meaning set forth in Section
11(b) hereof.
(x) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of any transfer of any security,
instrument or right, including Rights, shares of Common Stock and
shares of Preferred Stock.
(y) "Voting Stock" shall mean (i) the Common Stock of the
Company, and (ii) any other shares of capital stock of the Company
entitled to vote generally in the election of directors or entitled
to vote together with the Common Stock in respect of any merger,
consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up. For purposes of this
Agreement, a stated percentage of the Voting Stock shall mean a
number of shares of the Voting Stock as shall equal in voting power
that stated percentage of the total voting power of the then
outstanding shares of Voting Stock in the election of a majority of
the Board of Directors or in respect of any merger, consolidation,
sale of all or substantially all of the Company's assets,
liquidation, dissolution or winding up.
Any determination required to be made by the Board of Directors of
the Company for purposes of applying the definitions contained in this Section 1
shall be made by the Board of Directors in its good faith judgment, which
determination shall be binding on the Rights Agent and the holders of the
Rights.
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
in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
6
Section 3. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the
Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit A (the "Summary of Rights"),
by first class mail, postage prepaid, to each record holder of the Capital Stock
as of the close of business on the Record Date, at the address of such holder
shown on the records of the Company.
(b) Until the close of business on the day which is the earlier of
(i) the tenth (10th) day after the Stock Acquisition Date, or (ii) the tenth
(10th) business day (or such later date as may be determined by action of the
Board of Directors prior to such time as any Person becomes an Acquiring Person)
after the date of the commencement by any Person (other than an Exempt Person)
of, or the first public announcement of the intent of any Person (other than an
Exempt Person) to commence, a tender or exchange offer upon the successful
consummation of which such Person, together with its Affiliates and Associates,
would be the Beneficial Owner of fifteen percent (15%) or more of the then
outstanding shares of Voting Stock of the Company (irrespective of whether any
shares are actually purchased pursuant to any such offer) (the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the Rights shall
be evidenced by the certificates for Capital Stock registered in the name of the
holders of Capital Stock and not by separate Right certificates and the record
holders of such certificates for Capital Stock shall be the record holders of
the Rights represented thereby, and (y) each Right shall be transferable only
simultaneously and together with the transfer of a share of Capital Stock
(subject to adjustment as hereinafter provided). Until the Distribution Date
(or, if earlier, the Expiration Date or Final Expiration Date), the surrender
for transfer of any certificate for Capital Stock shall constitute the surrender
for transfer of the Right or Rights associated with the Capital Stock evidenced
thereby, whether or not accompanied by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Capital Stock
that become outstanding after the Record Date but prior to the earlier of the
Distribution Date, the Expiration Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect of
shares of Capital Stock that become outstanding after the Distribution Date.
Certificates for Capital Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Company's treasury or
transfer or exchange of Capital Stock) after the Record Date but prior to the
earliest of the Distribution Date, the Expiration Date, or the Final Expiration
Date (or, in certain circumstances as provided in Section 22 hereof, after the
Distribution Date) shall have impressed, printed, written or stamped thereon or
otherwise affixed thereto a legend in a form substantially as follows:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
THE SAME NUMBER OF RIGHTS (SUBJECT TO ADJUSTMENT) AS THE NUMBER OF
SHARES OF CAPITAL STOCK REPRESENTED BY THIS CERTIFICATE, SUCH RIGHTS
BEING ON THE TERMS PROVIDED UNDER THE RIGHTS AGREEMENT BETWEEN
iPARTY CORP. AND CONTINENTAL STOCK TRANSFER & TRUST COMPANY (THE
"RIGHTS AGENT"), DATED AS
7
OF NOVEMBER 9, 2001, AS IT MAY BE AMENDED FROM TIME TO TIME (THE
"RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF iPARTY CORP. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, SUCH RIGHTS SHALL BE EVIDENCED BY SEPARATE
CERTIFICATES AND SHALL NO LONGER BE EVIDENCED BY THIS CERTIFICATE.
iPARTY CORP. SHALL MAIL TO THE REGISTERED HOLDER OF THIS CERTIFICATE
A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A
WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN
SECTION 7(E) OF THE RIGHTS AGREEMENT, RIGHTS ISSUED TO OR
BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY
NOT BE TRANSFERRED TO ANY PERSON.
(d) As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first class mail, postage prepaid, to each record holder of the Capital Stock
as of the close of business on the Distribution Date, as shown by the records of
the Company, at the address of such holder shown on such records, a certificate
in the form provided by Section 4 hereof (a "Right Certificate"), evidencing one
(1) Right (subject to adjustment as provided herein) for each share of Capital
Stock so held. As of and after the Distribution Date, the Rights shall be
evidenced solely by Right Certificates and may be transferred by the transfer of
the Right Certificate as permitted hereby, separately and apart from any
transfer of one or more shares of Capital Stock.
Section 4. Form of Right Certificates. The Right Certificates (and
the forms of election to purchase shares, certificate and assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Capital Stock or the Rights may from time to time be
listed or as the Company may deem appropriate to conform to usage or otherwise
and as are not inconsistent with the provisions of this Rights Agreement.
Subject to the provisions of Section 22 hereof, Right Certificates evidencing
Rights whenever issued, (i) shall be dated as of the date of issuance of the
Rights they represent, and (ii) subject to adjustment from time to time as
provided herein, on their face shall entitle the holders thereof to purchase
such number of shares (including fractional shares which are integral multiples
of one one-hundredth (1/100) of a share) of Series G Junior Preferred Stock as
shall be
8
set forth therein at the price payable upon exercise of a Right provided by
Section 7(b) hereof as the same may from time to time be adjusted as provided
herein (the "Exercise Price").
Section 5. Countersignature and Registration.
(a) Each Right Certificate shall be executed on behalf of the
Company by its Chief Executive Officer, President or any Vice President, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof which shall be attested by the Secretary or any Assistant
Secretary of the Company, either manually or by facsimile signature. Each Right
Certificate shall be countersigned by the Rights Agent either manually or by
facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
Right Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Right Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Right Certificate had not ceased
to be such officer of the Company. Any Right Certificate may be signed on behalf
of the Company by any person who, on the 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 office or one or more offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Right Certificates 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 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 7(e), 7(f) 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 Expiration Date or the
Final Expiration Date, any Right Certificate may be (i) transferred, or (ii)
split up, combined or exchanged for one or more other Right Certificates,
entitling the registered holder to purchase a like number of shares of Series G
Junior Preferred Stock as the Right Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer any Right Certificate shall surrender the Right Certificate
at the office of the Rights Agent designated for the surrender of Right
Certificates with the form of certificate and assignment on the reverse side
thereof duly endorsed (or enclosed with such Right Certificate a written
instrument of transfer in form satisfactory to the Company and the Rights
Agent), duly executed by the registered holder thereof or his or her attorney
duly authorized in writing, and with such signature duly guaranteed. Any
registered holder desiring to 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 to be split up,
9
combined or exchanged at the office of the Rights Agent designated therefor.
Thereupon, the Rights Agent shall 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
Transfer Tax that may be imposed in connection with any transfer, split up,
combination or exchange of any Right Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof,
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, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company shall issue and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e) and 23(a) hereof). Except as otherwise provided herein, the Rights
may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in New York, New York, together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the Close of Business on the earlier of (i) November 9, 2011 (the
"Final Expiration Date"), or (ii) the date on which the Rights are redeemed as
provided in Section 23 hereof (such earlier date being herein referred to as the
"Expiration Date").
(b) The Exercise Price for each one one-hundredth (1/100) of a share
of Preferred Stock issued pursuant to the exercise of a Right shall initially be
Two dollars (US$2.00) (the "Exercise Price"). The Exercise Price and the number
of shares of Preferred Stock or other securities to be acquired upon exercise of
a Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof. The Exercise Price shall be payable in lawful money of the
United States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable to the Company or the Rights Agent of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Right
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Series G
Junior Preferred Stock one or more certificates representing the number of
shares of Series G Junior Preferred Stock to be so
10
purchased, and the Company hereby authorizes and directs such transfer agent to
comply with all such requests, (ii) as provided in Section 14(b) hereof, at the
election of the Company, cause any fractional shares of Series G Junior
Preferred Stock to be rounded up to the nearest whole number, and (iii) after
receipt of such Series G Junior Preferred Stock certificates, 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. Notwithstanding the foregoing provisions of this Section 7(c), the
Company may suspend the issuance of shares of Series G Junior Preferred Stock
upon exercise of a Right for a reasonable period, not in excess of ninety (90)
days, during which the Company seeks to register under the Securities Act of
1933, as amended (the "Securities Act"), and any applicable securities law of
any other jurisdiction, the shares of Series G Junior Preferred Stock to be
issued pursuant to the Rights; provided, however, that nothing contained in this
Section 7(c) shall relieve the Company of its obligations under Section 9(c)
hereof.
(d) In case the record 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 his or
her assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, other than pursuant to a Qualifying Tender
Offer, any Rights that are beneficially owned by (x) such Acquiring Person (or
any Associate or Affiliate of such Acquiring Person), (y) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
after the invalidation time, or (z) a transferee of such Acquiring Person (or
any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the invalidation time pursuant to either (I) a transfer from
the Acquiring Person to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or understanding regarding the
transferred Rights, or (II) a transfer which is part of a plan, arrangement or
understanding which has the purpose or effect of avoiding the provisions of this
Section 7(e), and subsequent transferees of such Persons referred to in clause
(y) and (z) above, shall be void without any further action and any holder of
such Rights shall thereafter have no rights whatsoever with respect to such
Rights under any provision of this Rights Agreement. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) are
complied with, but shall have no liability to any holder of Right Certificates
or any other Person as a result of its failure to make any determination with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. No Right Certificate shall be issued pursuant to Section 3 hereof
that represents Rights Beneficially Owned by an Acquiring Person whose Rights
would be void pursuant to the provisions of this Section 7(e) or any Associate
or Affiliate
11
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
provisions of this Section 7(e) or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the provisions of this Section 7(e) shall
be canceled.
(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 record holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such record holder shall have (i)
completed and signed the certificate following 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 cancel
and retire, any 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 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 Shares of Preferred
Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of Series
G Junior Preferred Stock, or out of authorized and issued shares of Series G
Junior Preferred Stock held in its treasury, such number of shares of Series G
Junior Preferred Stock as will from time to time be sufficient to permit the
exercise in full of all outstanding Rights.
(b) The Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares of Series G Junior
Preferred Stock issued or reserved for issuance in accordance with this Rights
Agreement to be listed, upon official notice of issuance, upon the principal
national securities exchange, if any, upon which any of the Capital Stock is
listed or, if the principal market for any of the Capital Stock is not on any
national securities exchange, to be eligible for quotation in The Nasdaq Stock
Market or any successor thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Series G Junior
Preferred Stock delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares (subject to payment of
12
the Exercise Price in respect thereof), be duly and validly authorized and
issued and fully paid and non-assessable shares.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section 11(a)(ii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act, with respect to
the shares of Series G Junior Preferred Stock 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 Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for Series G Junior
Preferred Stock, and (B) the date of the expiration of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days,
the issuance of shares of Series G Junior Preferred Stock upon exercise of a
Right in order to prepare and file a registration statement under the Securities
Act and permit it to become effective. 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. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective.
(e) The Company covenants and agrees that it will pay when due and
payable any and all federal and state Transfer Taxes which may be payable in
respect of the issuance or delivery of the Right Certificates or of any shares
of Series G Junior Preferred Stock issued or delivered upon the exercise of
Rights. The Company shall not, however, be required to pay any Transfer Tax
which may be payable in respect of any transfer or delivery of a Right
Certificate to a Person other than, or the issuance or delivery of certificates
for Series G Junior Preferred Stock upon exercise of Rights in a name other than
that of, the registered holder of the Right Certificate, and the Company shall
not be required to issue or deliver a Right Certificate or certificate for
Series G Junior Preferred Stock to a Person other than such registered holder
until any such Transfer Tax shall have been paid (any such Transfer 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
Transfer Tax is due.
Section 10. Series G Junior Preferred Stock Record Date. Each Person
in whose name any certificate for shares of Series G Junior Preferred Stock is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such Series G Junior Preferred Stock represented
thereby on, and such certificate shall be dated as of, the date upon which the
Right Certificate evidencing such Rights was duly surrendered and payment of the
Exercise 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
G Junior Preferred Stock 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 as of, the next succeeding Business Day on which the
relevant transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate, as such, shall not
13
be entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Exercise Price or Number of Shares. The
Exercise Price and the number of shares of Series G Junior Preferred Stock that
may be purchased upon exercise of a Right 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 Rights Agreement (A) declare or pay any dividend on the
Common Stock payable in shares of Common Stock, (B) subdivide or
split the outstanding shares of Common Stock into a greater number
of shares, or (C) combine or consolidate the outstanding shares of
Common Stock into a smaller number of shares or effect a reverse
split of the outstanding shares of Common Stock, then and in each
such event the number of shares of Series G Junior Preferred Stock
issuable upon the exercise of a Right after the record date for such
event (if one shall have been established or, if not, after the date
of such event) shall be the number of shares of Series G Junior
Preferred Stock issuable immediately prior to such event multiplied
by a fraction the numerator of which is the number of rights
outstanding immediately prior to such event and the denominator of
which is the number of Rights outstanding immediately after such
event and the Exercise Price after such event shall be the Exercise
Price in effect immediately prior to such event multiplied by such
fraction. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event that any Person (other than an Exempt
Person), alone or together with its Affiliates and Associates, shall
become an Acquiring Person, except pursuant to a Qualifying Tender
Offer, then, subject to the last sentence of Section 23(a) hereof
and except as otherwise provided in this Section 11, each holder of
a Right, except as provided in Section 7(e) hereof, shall thereafter
have the right to receive upon exercise of such Right in accordance
with the terms of this Rights Agreement and payment of the Exercise
Price, the greater of (1) the number of one one-hundredths (1/100)
of a share of Series G Junior Preferred Stock for which such Right
was exercisable immediately prior to the first occurrence of the
event described in this Section 11(a)(ii), or (2) such number of one
one-hundredths (1/100) of a share of Series G Junior Preferred
Stock, based on the per share Fair Market Value of such Series G
Junior Preferred Stock (determined pursuant to Section 11(b) hereof)
on the date of such first occurrence, having a value equal to two
(2) times the Exercise Price; provided, however, that if the
transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this
14
Section 11(a)(ii).
(iii) In the event that the Company does not have available
sufficient authorized but unissued Series G Junior Preferred Stock
to permit the adjustments required pursuant to the foregoing
subparagraph (i) or the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii), the Company shall take all
such action as may be necessary to authorize and reserve for
issuance such number of additional shares of Series G Junior
Preferred Stock as may from time to time be required to be issued
upon the exercise in full of all Rights from time to time
outstanding and, if necessary, shall use its best efforts to obtain
stockholder approval thereof. In lieu of issuing shares of Series G
Junior Preferred Stock in accordance with the foregoing
subparagraphs (i) and (ii), the Company may, if the Board of
Directors based upon the advice of a nationally recognized
investment banking firm determines that such action is necessary or
appropriate and not contrary to the interests of holders of Rights,
elect to issue or pay, upon the exercise of such Rights, cash,
property, shares of Series G Junior Preferred Stock or Common Stock,
or any combination thereof, having an aggregate Fair Market Value
equal to the Fair Market Value of the shares of Series G Junior
Preferred Stock which otherwise would have been issuable pursuant to
Section 11(a)(ii) hereof, which Fair Market Value shall be
determined by such nationally recognized investment banking firm.
For purposes of the preceding sentence, the Fair Market Value of the
Series G Junior Preferred Stock shall be as determined pursuant to
Section 11(b) hereof. Subject to Section 23 hereof, any such
election by the Board of Directors of the Company must be made and
publicly announced within thirty (30) days after the date on which
the event described in Section 11(a)(ii) hereof occurs.
(b) For the purpose of this Rights Agreement, the "Fair Market
Value" of any share of Series G Junior Preferred Stock, Capital Stock or any
other stock or any Right or other security or any other property on any date
shall be determined as provided in this Section 11(b). In the case of a
publicly-traded stock or other security, the Fair Market Value on any date shall
be deemed to be the average of the daily closing prices per share of such stock
or per unit of such other security for the thirty (30) consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the Fair Market Value per share of any share of
Capital Stock is determined during a period which includes any date that is
within thirty (30) Trading Days after (i) the ex-dividend date for a dividend or
distribution on such stock payable in shares of Common Stock or securities
convertible into shares of Common Stock, or (ii) the effective date of any
subdivision, split, combination, consolidation, reverse stock split or
reclassification of such stock, then, and in each such case, the Fair Market
Value shall be appropriately adjusted to take into account ex-dividend or
post-effective date trading. 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 applicable transaction reporting system with respect to
securities listed or admitted to trading on the American Stock Exchange), or, if
the securities are not listed or admitted to trading on the American Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national
15
securities exchange on which such security is listed or admitted to trading; or,
if 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 Nasdaq Stock
Market or such other system then in use; or, if no bids for such security are
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 such security.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a Business Day. If a
security is not publicly held or not so listed or traded, "Fair Market Value"
shall mean the fair value per share of stock or per other unit of such other
security, as determined by a nationally recognized investment banking firm
experienced in the valuation of securities; provided, however, that for purposes
of making the adjustment provided for by Section 11(a)(ii) hereof, the Fair
Market Value of a share of Series G Junior Preferred Stock shall not be less
than one hundred percent (100%) of the product of the Fair Market Value of a
share of Common Stock, as the case may be, multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Series G Junior Preferred
Stock (as such terms are defined in the Certificate of Designations relating to
the Series G Junior Preferred Stock) and shall not exceed one hundred five
percent (105%) of the product of the then Fair Market Value of a share of Common
Stock, as the case may be, multiplied by the higher of the then Dividend
Multiple or Vote Multiple applicable to the Series G Junior Preferred Stock. In
the case of property other than securities, the "Fair Market Value" thereof
shall be determined by a nationally recognized investment banking firm based
upon appraisals or valuation reports determined to be appropriate in accordance
with good business practices and the interests of the holders of Rights. Any
such determination of Fair Market Value shall be described in a statement filed
with the Rights Agent and shall be binding upon the Rights Agent.
(c) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-hundredth (1/100) of a share, as the case
may be.
(d) Irrespective of any adjustment or change in the Exercise Price
or the number of shares of Series G Junior Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Exercise Price and the number of shares to be issued
upon exercise of the Rights as in the initial Right Certificates issued
hereunder but, nevertheless, shall represent the Rights as so adjusted.
(e) Before taking any action that would cause an adjustment reducing
the purchase price per whole share of Series G Junior Preferred Stock upon
exercise of the Rights below the then par value, if any, of the shares of Series
G Junior Preferred Stock, the Company shall use its best efforts to take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and non-assessable
shares of such Series G Junior Preferred Stock at such adjusted purchase price
per share.
(f) Anything in this Section 11 to the contrary notwithstanding, in
the event of any reclassification of stock of the Company or any
recapitalization, reorganization or partial liquidation of the Company or
similar transaction, the Company shall be entitled to make such
16
further adjustments in the number of shares of Series G Junior Preferred Stock
which may be acquired upon exercise of the Rights, and such adjustments in the
Exercise Price therefor, in addition to those adjustments expressly required by
the other paragraphs of this Section 11, as shall be necessary or appropriate in
order for the holders of such Rights in such event to be treated equitably and
in accordance with the purpose and intent of this Rights Agreement or in order
that any such event shall not, but for such adjustment, in the opinion of
counsel to the Company, result in the stockholders of the Company being subject
to any United States federal income tax liability by reason thereof.
(g) In the event the Company shall at any time after the Record Date
make any distribution on the shares of Common Stock of the Company, whether by
way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Company or otherwise, in cash or
any debt security, debt instrument, real or personal property or any other
property (other than any shares of Common Stock or other capital stock of the
Company and other than any right or warrant to acquire any such shares,
including any debt security convertible into or exchangeable for any such share,
at less than the Fair Market Value of such shares) and the amount of such cash
dividend or the Fair Market Value of such debt security, debt instrument or
property exceeds one hundred fifty percent (150%) of the aggregate amount of the
cash dividends declared or paid on the Common Stock of the Company in the
fifteen (15) month period immediately preceding such distribution, then and in
each such event, unless such distribution is part of or is made in connection
with a transaction to which Section 11(a)(ii) or Section 13 hereof applies, the
Exercise Price shall be reduced by an amount equal to the cash or the Fair
Market Value of such distribution, as the case may be, per share of Common
Stock. For purposes hereof, the Fair Market Value of any property distributed to
the holders of shares of Common Stock of the Company shall be the Fair Market
Value of such property as determined by a nationally recognized investment
banking firm experienced in the valuation of securities or the other property so
distributed, as the case may be, whose determination shall be final and binding
on the Company, the Rights Agent and the holders of Rights.
Section 12. Certification of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11, 13 or 23(c)
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Series G Junior Preferred Stock a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof. Notwithstanding the foregoing sentence, the failure of the Company to
make such certification or give such notice shall not affect the validity of or
the force or effect of the requirement for such adjustment. Any adjustment to be
made pursuant to Section 11, 13 or 23(c) of this Rights Agreement shall be
effective as of the date of the event giving rise to such adjustment. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
17
(a) Except for any transaction approved by the Board of Directors
prior to such time as any Person becomes an Acquiring Person, in the event that,
at any time on or after the Distribution Date, (x) the Company shall, directly
or indirectly, consolidate with, or merge with and into, any other Person or
Persons (other than an Exempt Person) and the Company shall not be the surviving
or continuing corporation of such consolidation or merger or the Company shall
divide into two or more corporations and the Company shall not survive the
division, or (y) any Person or Persons (other than an Exempt Person) shall,
directly or indirectly, consolidate with, or merge with and into, the Company,
and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Capital Stock shall be changed into or
exchanged for stock or other securities of any other Person (other than an
Exempt Person) or of the Company or cash or any other property, or (z) the
Company or one or more of its Subsidiaries shall, directly or indirectly, sell
or otherwise transfer to any other Person or any Affiliate or Associate of such
Person, in one or more transactions, or the Company or one or more of its
Subsidiaries shall sell or otherwise transfer to any Persons in one or a series
of related transactions, assets or earning power aggregating more than fifty
percent (50%) of the assets or earning power of the Company and its Subsidiaries
(taken as a whole), then, on the first occurrence of any such event, proper
provision shall be made so that (i) each holder of record of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof and payment of the Exercise Price in accordance with
the terms of this Rights Agreement, such number of shares of validly issued,
fully paid, non-assessable and freely tradable Common Stock of the Principal
Party (as defined herein), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall, based on the Fair Market Value
of the Common Stock of the Principal Party on the date of the Consummation of
such consolidation, merger, sale or transfer, equal to two (2) times the
Exercise Price; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Rights Agreement; (iii)
the term "Company" for all purposes of this Rights Agreement shall thereafter be
deemed to refer to such Principal Party; (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock in accordance with the provisions of
Section 9 hereof applicable to the reservation of Series G Junior Preferred
Stock) in connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; provided, however, that, upon the subsequent
occurrence of any merger, consolidation, sale of all or substantially all of the
assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Exercise Price, such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had it, at the
time of such transaction, owned the shares of Common Stock of the Principal
Party purchasable upon the exercise of a Right, and such Principal Party shall
take such steps (including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants and
other property, and (v) the provisions of Section 11(a)(ii) hereof shall be of
no effect following the occurrence of any event described in clause (x), (y) or
(z) above of this
18
Section 13(a).
(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) hereof: (A) the Person
that is the issuer of the securities into which shares of Capital
Stock of the Company are changed or otherwise exchanged or converted
in such merger, consolidation or other fundamental transaction, or,
if there is more than one such issuer, the issuer of the Common
Stock of which has the greatest market value or (B) if no securities
are so issued, (x) the Person that is the other party to the merger,
consolidation or other fundamental transaction and that survives
such merger, consolidation or other fundamental transaction, or, if
there is more than one such Person, the Person the Common Stock of
which has the greatest market value or (y) if the Person that is the
other party to the merger, consolidation or other fundamental
transaction does not survive the merger, consolidation or other
fundamental transaction, the Person that does survive the merger,
consolidation or other fundamental transaction (including the
Company if it survives); and
(ii) in the case of any transaction described in clause (z) of
the first sentence in 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, or, if
each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such
Persons as is the issuer of Common Stock having the greatest market
value of shares outstanding; provided, however, that in any such
case, if the Common Stock of such Person is not at such time and has
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 Stock
of which is and has been so registered, the term "Principal Party"
shall refer to such other Person, or if such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Stocks
of all of which are and have been so registered, the term "Principal
Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation, merger,
other fundamental transaction or sale or transfer of assets or earning power
referred to in Section 13(a) unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock that have not been issued or
reserved for issuance to permit exercise in full of all Rights in accordance
with this Section 13 and unless prior thereto the Company and the Principal
Party involved therein shall have executed and delivered to the Rights Agent an
agreement confirming that the Principal Party shall, upon consummation of such
consolidation, merger, other fundamental transaction or sale or transfer of
assets or earning power, assume this Rights Agreement in accordance with Section
13(a) hereof and that all rights of first refusal or
19
preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any consolidation, merger, other fundamental transaction or sale or
transfer of assets or earning power referred to in Section 13(a) hereof, the
Principal Party will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use
its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the date of expiration of the Rights, and
similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on The Nasdaq Stock Market; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.
In the event that any 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, subject to the provisions of Section 7(e) hereof, thereafter be
exercisable in the manner described in Section 13(a) hereof.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share (determined pursuant to Section 11(b) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then Fair Market Value (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special tax or similar
payment in connection with the issuance to any holder of a Right of Common Stock
of such Principal Party pursuant to the provisions of this Section 13, then, in
such event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed
20
transaction.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights (i.e.,
Rights to acquire less than one one-hundredth (1/100) of a share of Series G
Junior Preferred Stock), unless such fractional Rights result from a transaction
referred to in Section 11(a)(i) hereof. If the Company shall determine not to
issue such fractional Rights, then any such fractions of Rights shall be rounded
up to the nearest whole number.
(b) The Company shall not be required to issue fractions of shares
of Series G Junior Preferred Stock (other than fractions which are integral
multiples of one-hundredth (1/100) of a share) upon exercise of the Rights or to
distribute certificates which evidence fractional shares (other than fractions
which are integral multiples of one-hundredth (1/100) of a share). In lieu of
issuing fractions of shares of Series G Junior Preferred Stock, the Company may,
at its election, round up any fractions of shares of Series G Junior Preferred
Stock to the nearest whole number.
(c) The holder of a Right by the acceptance of a Right expressly
waives his or her right to receive any fractional Right or any fractional shares
of Series G Junior Preferred Stock (other than fractions which are integral
multiples of one one-hundredth (1/100) of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
this Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Capital Stock); and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Capital Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Capital Stock), may, on his or her own behalf and for
his or her 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 or her right to exercise the Rights evidenced by such Right Certificate in
the manner provided in such Right Certificate and in this Rights 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 Rights 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 Rights Agreement.
Section 16. Agreement of Right Holders. Each 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) prior to the Distribution Date, the Rights shall be
evidenced by the certificates for Capital Stock registered in the
name of the holders of Capital
21
Stock (together, as applicable, with the Summary of Rights), which
certificates for Capital Stock shall also constitute certificates
for Rights, and not by separate Right Certificates, and each Right
shall be transferable only simultaneously and together with the
transfer of shares of Capital Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) 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 Capital Stock 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 Capital Stock certificate
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.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Series G Junior Preferred
Stock or any other securities which 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 24 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 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 Rights
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 gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this Rights
Agreement.
(b) The Rights Agent shall be protected against, and shall incur no
liability for or in respect of, any action taken, suffered or omitted by it in
connection with its administration
22
of this Rights Agreement in reliance upon any Right Certificate or certificate
for Series G Junior Preferred Stock 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 an officer of the Company.
(c) Anything in this Agreement to the contrary notwithstanding, 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), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.
(a) 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 or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Rights Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided 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 Rights Agreement any of the Rights 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 Rights 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; 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; in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Rights 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
23
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 Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to 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 the Chief Executive Officer, the
President or any Vice President and by the Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent. Any 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 Rights Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder 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 Rights Agreement or in the
Right Certificates (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 Rights 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 Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a certificate describing 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 shares
of Preferred Stock to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Preferred Stock will, when issued, be
validly authorized and issued, fully paid and non-assessable.
(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 the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer, the President or any Vice President or 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
24
such officer.
(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 pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights 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 reasonable care was exercised in the selection
and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Capital Stock and the Series G Junior
Preferred Stock by registered or certified mail. The Company may remove the
Rights Agent or any successor Rights Agent (with or without cause) upon thirty
(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 Capital Stock and
the Series G Junior Preferred Stock by registered or certified 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.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of thirty (30)
days after 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 or
her Right Certificate for inspection by the Company), then the incumbent Rights
Agent or the holder of record of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of any state thereof, in good standing, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination in the conduct of its corporate trust or stock
transfer business by federal or state authorities and which has at the time of
its appointment as Rights Agent a combined capital and surplus of at least five
million U.S. dollars (US$5,000,000), or (b) an Affiliate controlled by a
corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed, but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor
25
Rights Agent and each transfer agent of the Common Stock and Preferred Stock,
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. Notwithstanding the foregoing provisions, in
the event of resignation, removal or incapacity of the Rights Agent, the Company
shall have the authority to act as the Rights Agent until a successor Rights
Agent shall have assumed the duties of the Rights Agent hereunder.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Rights 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 its Board of Directors to reflect any adjustment
or change in the Exercise Price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement.
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors then in office, redeem all but not less than
all of the then outstanding Rights, at any time prior to the earlier of: (i) the
date on which any Person becomes an Acquiring Person, and (ii) the Final
Expiration Date, at a redemption price of $0.001 per Right, subject to
adjustments as provided in subsection (c) below (the "Redemption Price").
Notwithstanding anything contained in this Rights Agreement to the contrary, the
Rights shall not be exercisable pursuant to Section 11(a)(ii) hereof prior to
the expiration of the Company's right of redemption hereunder.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the effective time of the action
of the Board of Directors ordering the redemption of the Rights and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within ten (10) days after the effective time of the action of the Board
of Directors ordering the redemption of the Rights, 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 Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each notice of redemption will state the
method by which the payment of the Redemption Price will be made. At the option
of the Board of Directors, the Redemption Price may be paid in cash to each
Rights holder or by the issuance of shares of Preferred Stock or Common Stock,
in each case having a Fair Market Value equal to such cash payment.
(c) In the event the Company shall at any time after the date of
this Rights Agreement (A) pay any dividend on the Common Stock in shares of
Common Stock, (B)
26
subdivide or split the outstanding shares of Common Stock into a greater number
of shares, or (C) combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares or effect a reverse split of the outstanding
shares of Common Stock, then, and in each such event, the Redemption Price shall
be appropriately adjusted; provided, however, that such adjustment to the
Redemption Price shall be made only if the amount of the Redemption Price shall
be reduced or increased by at least $0.001 per Right.
Section 24. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall propose
(i) to effect any of the transactions referred to in Section 11(a)(i) or 11(g)
hereof, (ii) to offer to the holders of record of any class of its Common Stock
options, warrants, or other rights to subscribe for or to purchase shares of its
Common Stock (including any security convertible into or exchangeable for Common
Stock) or shares of stock of any class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, (iii) to
effect any reclassification of its Series G Junior Preferred Stock or Common
Stock or any recapitalization or reorganization of the Company, (iv) to effect
any consolidation or merger with or into, 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 fifty percent (50%)
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons, 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 record of a Right Certificate, in accordance with
Section 25 hereof, notice of such proposed action, which shall specify the
record date for the purposes of such transaction referred to in Section 11(a)(i)
hereof or such dividend or distribution, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger, sale
or transfer of assets, liquidation, dissolution, or winding up is to take place
and the record date for determining participation therein by the holders of
record of Common Stock or Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i) or
(ii) above at least ten (10) days prior to the record date for determining
holders of record of the Series G Junior Preferred Stock for purposes of such
action, and in the case of any such other action, at least ten (10) days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of record of Capital Stock or Series G Junior Preferred
Stock, whichever shall be the earlier. The failure to give notice required by
this Section 24 or any defect therein shall not affect the legality or validity
of the action taken by the Company or the vote upon any such action.
(b) In case any of the transactions referred to in Section 11(a)(i),
11(g) or 13 of this Rights Agreement are proposed, then, in any such case, the
Company shall give to each holder of Rights, in accordance with Section 25
hereof, notice of the proposal of such transaction at least ten (10) days prior
to consummating such transaction, which notice shall specify the proposed event
and the consequences of the event to holders of Rights under Section 11(a)(i),
11(g) or 13 hereof, as the case may be, and, upon consummating such transaction,
shall similarly give notice thereof to each holder of Rights.
Section 25. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or
27
Right 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:
iParty Corp.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
With a copy to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right 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:
Continental Stock Transfer & Trust Company
▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Compliance Department
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right 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 Company.
Section 26. Supplements and Amendments. For as long as the Rights
are then redeemable and except as provided in the last sentence of this Section
26, the Company may in its sole and absolute discretion, 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 the Rights. At any time when
the Rights are not then redeemable and except as provided in the last sentence
of this Section 26, the Company may, and the Rights Agent shall if the Company
so directs, supplement or amend this Rights Agreement without the approval of
any holders of Right Certificates (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, or (iii) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable, provided that no such supplement or amendment pursuant to this clause
(iii) shall materially adversely affect the interest of the holders of Right
Certificates. 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 26, the Rights Agent
28
shall execute such supplement or amendment. This Agreement may be amended or
supplemented at any time with the approval of a majority of the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Capital Stock). Notwithstanding anything contained in this Rights Agreement to
the contrary, no supplement or amendment shall be made which changes the
Redemption Price or the Final Expiration Date.
Section 27. Successors. All of the covenants and provisions of this
Rights 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 28. Benefits of this Rights Agreement. Nothing in this
Rights 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 holders of Capital Stock
in their capacity as holders of the Rights) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the holders of
record of the Right Certificates (and, prior to the Distribution Date, the
holders of Capital Stock in their capacity as holders of the Rights).
Section 29. Delaware Contract. This Rights 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 and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 30. Counterparts. This Rights 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 31. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 32. Severability. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
[THE REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
29
[THIS PAGE INTENTIONALLY LEFT BLANK]
30
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement
to be duly executed, all as of the day and year first above written.
iPARTY CORP.
Attest: By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------- ---------------------------
(SEAL) Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
Attest: By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------- ---------------------------
(SEAL) Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
31
EXHIBIT A
SUMMARY OF RIGHTS
Term: 10 years
Exercise price: $2.00 for each one one-hundredth (1/100) of a share of Series G
Junior Preferred Stock (the "Preferred Stock"), subject to certain antidilution
adjustments.
Rights detach and become exercisable: Upon the close of business on the day
which is the earlier of (i) the tenth (10th) day following a public announcement
that a person or group has acquired beneficial ownership of ten percent (10%) or
more of the voting power of the outstanding Capital Stock of the Company and
thereby becomes an Acquiring Person, or (ii) the tenth (10th) business day (or
such later date as may be determined by the Board prior to such time as any
person or group becomes an Acquiring Person) after the date of the commencement
or announcement of a person's or group's intention to commence a tender or
exchange offer the consummation of which would result in the ownership of
fifteen percent (15%) or more of the voting power of the Company's outstanding
Capital Stock (even if no shares are actually purchased pursuant to such offer);
prior thereto, the Rights would not be exercisable, would not be represented by
a separate certificate, and would not be transferable apart from the Capital
Stock. An Acquiring Person would not include (A) the Company, (B) any subsidiary
of the Company, (C) any employee benefit plan or employee stock plan of the
Company or of any subsidiary of the Company, or any trust or other entity
organized, appointed, established or holding Capital Stock for or pursuant to
the terms of any such plan, or (D) any person or group (i) whose ownership of
ten percent (10%) or more of the voting power of the Capital Stock then
outstanding results solely from any action, transaction or transactions approved
by the Board before such person or group became an Acquiring Person, (ii) whose
ownership of ten percent (10%) or more of voting power of the Capital Stock then
outstanding results solely from a reduction in the number of issued and
outstanding shares of Capital Stock pursuant to a transaction or transactions
approved by the Board (provided that any person or group that does not become an
Acquiring Person by reason of clause (i) or (ii) above shall become an Acquiring
Person upon acquisition of an additional one percent (1%) of the voting power of
the Capital Stock unless such acquisition of additional Capital Stock, will not
result in such person or group becoming an Acquiring Person by reason of such
clause (i) or (ii)) or (iii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; iParty LLC; ▇▇▇▇▇ ▇▇▇▇; Roccia
Partners, L.P.; Boston Millenia Partners, LP; HMTF-iPC, LLC; or Taymark; each of
which has identified themselves as a 10% holder or more of Voting Stock of the
Company as of November 9, 2001; provided that each of such Persons shall become
an Acquiring Person in the event such Person hereafter acquires Beneficial
Ownership of more then Five percent (5%) of the Voting Stock of the Company
during any Twelve (12) month period.
"Flip-Over" Feature (protection in a merger): Once the Rights become
exercisable, unless they are earlier redeemed, if
(i) the Company were to be merged into or consolidated with another
entity (whether or not related to a ten percent (10%) stockholder),
(ii) the Company were to merge with another entity (whether or not
related to a ten percent (10%) stockholder) and be the surviving
corporation, but any shares of the Company's Capital Stock were
changed into or exchanged for other securities or assets, or
(iii) more than fifty percent (50%) of the Company's assets or earning
power were to be sold in one or a series of related transactions,
then each Right then outstanding would "flip-over" and would require that its
holder be entitled to buy, at the Exercise Price, that number of shares of
common stock of the acquiring company which at the time of the merger or sale
would have a market value of two (2) times the exercise price of the Right
(i.e., a discount of fifty percent (50%)). Thus, if an acquiring company's
common stock at the time of the merger or sale were trading at $37.50 per share,
each Right, assuming an exercise price of $75, would entitle its holder to
purchase four (4) shares of such acquiring company's common stock for such
exercise price. Any business combination not providing for the issuance of
common stock of the acquiring company in compliance with such provisions would
be prohibited.
"Flip-In" Feature: Unless the Rights are earlier redeemed, if a person or group
becomes an Acquiring Person (other than pursuant to a Qualifying Tender Offer),
each Right not owned by such Acquiring Person would become exercisable, at the
Exercise Price, for that number of shares of Series G Junior Preferred Stock
which at the time of such transaction would have a market value of two (2) times
the Exercise Price of the Right.
Redemption: The Rights would be redeemable by the Board at a price of $0.001 per
Right at any time prior to the earlier of (i) the date on which a person or
group acquires beneficial ownership of ten percent (10%) or more of the voting
power of the Company's Capital Stock and (ii) their final expiration date. Thus,
the Rights would not interfere with a negotiated merger or a "white knight"
transaction even after a tender offer on unfavorable terms had been commenced.
Unless redeemed, the Rights could, however, interfere with a "white knight"
transaction which could not be effected by the time a person or group acquires
beneficial ownership of at least ten percent (10%) of the Company's Capital
Stock.
2
SERIES G JUNIOR PREFERRED STOCK
The Company's Series G Junior Preferred Stock purchasable upon
exercise of the Rights will be non-redeemable. The terms of the Series G Junior
Preferred Stock as described below will be set forth in a Certificate of
Designations approved and adopted by resolution of the Board, without any action
by the stockholders of the Company, pursuant to the power vested in the Board in
the Company's Restated Certificate of Incorporation, as currently in effect.
Unless otherwise provided by the Board in connection with the creation of a
subsequent series of preferred stock, the Series G Junior Preferred Stock will
be subordinate to all other series of the Company's preferred stock.
Dividends: Upon issuance, each share of Series G Junior Preferred
Stock will be entitled to receive when, as and if declared, a cash
dividend in an amount equal to one hundred (100) times the dividend,
if any, declared on the Common Stock.
Liquidation Preference: In the event of liquidation, the holders of
the Series G Junior Preferred Stock will be entitled to receive a
liquidation payment for each share of Series G Junior Preferred
Stock in an amount equal to the greater of $2.00 per one
one-hundredth (1/100) share or one hundred (100) times the payment
made per share of Common Stock.
Voting: Each share of Series G Junior Preferred Stock will have one
hundred (100) votes and will vote together with the Common Stock.
Mergers, Consolidations, etc.: In the event of any merger,
consolidation or other transaction in which shares of the Company's
Common Stock are exchanged, each share of Series G Junior Preferred
Stock will be entitled to receive one hundred (100) times the amount
received by each share of Common Stock.
Dilution Adjustments: The rights of the Series G Junior Preferred
Stock as to dividends, liquidation and voting would be protected by
antidilution provisions.
3
EXHIBIT B
Form of Right Certificate
Certificate No. R-_________ Rights
NOT EXERCISABLE AFTER NOVEMBER 9, 2011 OR EARLIER IF REDEEMED. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND UNDER CERTAIN
OTHER CIRCUMSTANCES, AT $0.001 PER RIGHT (SUBJECT TO ADJUSTMENT), ON THE
TERMS SET FORTH OR REFERRED TO IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO BELOW),
RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR
AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID
AND MAY NOT BE TRANSFERRED TO ANY PERSON.
RIGHT CERTIFICATE
iPARTY CORP.
This certifies that ______________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of November 9, 2001 (the "Rights Agreement") between iParty Corp., a
Delaware corporation (the "Company"), and Continental Stock Transfer & Trust
Company, a New York corporation (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M. (New York time) on November 9, 2011 at
the office of the Rights Agent designated in the Rights Agreement for such
purpose, or its successor as Rights Agent, in New York, New York, one
one-hundredth (1/100) of a fully paid nonassessable share of Series G Junior
Preferred Stock (the "Series G Junior Preferred Stock") of the Company at a
purchase price of Two dollars (US$ 2.00), as the same may from time to time be
adjusted in accordance with the Rights Agreement (the "Exercise Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the number of
shares of Series G Junior Preferred Stock which 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 and, upon the happening of certain events,
securities other than shares of Series G Junior Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided 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
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 of the Rights Agent,
the Company and the holders of record of Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Series G Junior
Preferred Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right 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 or under certain
other circumstances at a redemption price of $0.001 per Right.
No fractional shares of Series G Junior Preferred Stock (other than
fractions which are integral multiples of one one-hundredth (1/100) of a share)
are required to be issued upon the exercise of any Right or Rights evidenced
hereby, and in lieu thereof the Company may round up any fractions to the
nearest whole number.
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 G Junior
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at a 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 Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
2
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _____________, 2001.
ATTEST: iPARTY CORP.
_____________________________ By:_________________________________
Secretary ▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By:__________________________
Name:
Title:
3
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 Certificates.)
FOR VALUE RECEIVED__________________________________________________
hereby sells, assigns and transfers unto________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
Rights evidenced by 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: ________________.
_________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate |_| is |_| is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(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 thereof (as such terms are defined in the Rights
Agreement).
Dated: _________________________ _________________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO iPARTY CORP.:
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Right Certificate to purchase the shares of Series G
Junior Preferred Stock issuable upon the exercise of such Rights and requests
that certificates for such share(s) be issued in the following name:
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 remaining 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: _____________. ______________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the fact of this
Right Certificate)
Signature Guaranteed:
EXHIBIT C
CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
SERIES G JUNIOR PREFERRED STOCK
(par value $.001 per share)
of
iPARTY CORP.
a Delaware Corporation
----------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
----------
The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted by the Board of Directors (the "Board of Directors") of iParty Corp., a
Delaware corporation (the "Corporation"), at a meeting held on November 9, 2001:
RESOLVED, that one series of the class of authorized preferred stock,
$.001 par value, per share of the Corporation is hereby created and that the
designations, powers, preferences and relative, participating, optional or other
special rights of the shares of such series, and qualifications, limitations or
restrictions thereof, are hereby fixed as follows (this instrument hereinafter
referred to as the "Designation"):
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series G Junior Preferred Stock" and the number of shares
constituting such series initially shall be 388,664. Notwithstanding the
foregoing, however, if more than a total of 388,664 shares of Series G Junior
Preferred Stock shall be issuable upon the exercise of Series G Junior Rights
(the "Series G Junior Rights") issued pursuant to the Rights Agreement, dated as
of November 9, 2001, between the Company and Continental Stock Transfer & Trust
Company, as Rights Agent (as such agreement may be amended from time to time,
the "Rights Agreement"), the Board of Directors of the Company shall direct by
resolution or resolutions that the total number of shares of Series G Junior
Preferred Stock authorized to be issued be increased (to the extent that the
Articles of Incorporation, as amended, then permits) to the largest number of
whole shares (rounded up to the nearest whole number) issuable upon exercise of
such Series G Junior Rights.
Section 2. Dividends and Distributions.
(a) Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Series G Junior Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, ratably with the holders of
Common Stock or other junior securities of the Company, (i) cash dividends in an
amount per share (rounded to the nearest cent) equal to one hundred (100) times
the aggregate per share amount of all cash dividends declared or paid on the
Company's Common Stock, par value $0.001 per share (the "Common Stock"). In the
event the Company shall, at any time after the issuance of any share or fraction
of a share of Series G Junior Preferred Stock, make any distribution on the
shares of Common Stock of the Company, whether by way of a dividend or a
reclassification of stock, a recapitalization, reorganization or partial
liquidation of the Company or otherwise, which is payable in cash or any debt
security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence, a
distribution of shares of Common Stock or other capital stock of the Company or
a distribution of rights or warrants to acquire any such share, including any
debt security convertible into or exchangeable for any such share, at a price
less than the Fair Market Value (as hereinafter defined) of such share), then,
and in each such event, the Company shall simultaneously pay on each then
outstanding share of Series G Junior Preferred Stock of the Company a
distribution, in like kind, of one hundred (100) times such distribution paid on
a share of Common Stock (subject to the provisions for adjustment hereinafter
set forth). The dividends and distributions on the Series G Junior Preferred
Stock to which holders thereof are entitled pursuant to clause (i) of the first
sentence of this paragraph and pursuant to the second sentence of this paragraph
are hereinafter referred to as "Dividends" and the multiple of such cash and
non-cash dividends on the Common Stock applicable to the determination of the
Dividends, which shall be one hundred (100) initially but shall be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the
"Dividend Multiple." In the event the Company shall at any time after November
9, 2001 declare or pay any dividend or make any distribution on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Dividend Multiple thereafter applicable to the determination of
the amount of Dividends which holders of shares of Series G Junior Preferred
Stock shall be entitled to receive shall be the Dividend Multiple applicable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Company shall declare each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash dividend
or distribution on the Common Stock in respect of which a Dividend is required
to be paid shall be paid or set aside for payment on the Common Stock unless a
Dividend in respect of such dividend or distribution on the Common Stock shall
be simultaneously paid, or set aside for payment, on the Series G Junior
Preferred Stock.
Section 3. Voting Rights. The holders of shares of Series G Junior
Preferred Stock shall have the following voting rights:
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of Series G Junior Preferred Stock shall entitle the holder thereof
to one hundred (100) votes on all matters submitted to a vote of the holders of
the Common Stock. The number of votes which a holder of Series G Junior
Preferred Stock is entitled to cast, as the same may be adjusted from time
2
to time as hereinafter provided, is hereinafter referred to as the "Vote
Multiple." In the event the Company shall at any time after November 9, 2001
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or split or a combination, consolidation or reverse
split of the outstanding shares of Common Stock into a greater or lesser number
of shares of Common Stock, then in each such case the Vote Multiple thereafter
applicable to the determination of the number of votes per share to which
holders of shares of Series G Junior Preferred Stock shall be entitled after
such event shall be the Vote Multiple immediately prior to such event multiplied
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Capital Stock that were outstanding immediately prior to
such event.
(b) Except as otherwise provided herein, in the Company's Restated
Certificate of Incorporation or Bylaws, in each case as the same may be amended,
the holders of shares of Series G Junior Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Company.
(c) Except as otherwise required by the Company's Restated
Certificate of Incorporation or Bylaws or set forth herein, in each case as the
same may be amended, holders of Series G Junior Preferred Stock shall have no
other special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set forth
herein) for the taking of any corporate action.
Section 4. Certain Restrictions.
(a) Whenever Dividends are in arrears or the Company shall be in
default of payment thereof, thereafter and until all accrued and unpaid
Dividends, whether or not declared, on shares of Series G Junior Preferred Stock
outstanding shall have been paid or set irrevocably aside for payment in full,
and in addition to any and all other rights which any holder of shares of Series
G Junior Preferred Stock may have in such circumstances, the Company shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration,
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series G Junior
Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Series G Junior Preferred Stock, unless dividends
are paid ratably on the Series G Junior Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled if the full dividends accrued thereon were
to be paid;
(iii) except as permitted by subparagraph (iv) of this
paragraph 4(a), redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series G Junior Preferred Stock, provided that the Company
3
may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the Company
ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series G Junior Preferred Stock;
or
(iv) purchase or otherwise acquire for consideration any
shares of Series G Junior Preferred Stock, or any shares of stock
ranking on a parity with the Series G Junior Preferred Stock (either
as to dividends or upon liquidation, dissolution or winding up),
except in accordance with a purchase offer made to all holders of
such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series or classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Company shall not permit any Subsidiary (as hereinafter
defined) of the Company to purchase or otherwise acquire for consideration any
shares of stock of the Company unless the Company could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner. A "Subsidiary" of the Company shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors of such
corporation or other entity or other persons performing similar functions are
beneficially owned, directly or indirectly, by the Company or by any corporation
or other entity that is otherwise controlled by the Company.
(c) The Company shall not issue any shares of Series G Junior
Preferred Stock except upon exercise of Rights issued pursuant to the Rights
Agreement, a copy of which is on file with the Secretary of the Company at its
principal executive office and shall be made available to stockholders of record
without charge upon written request therefor addressed to said Secretary.
Notwithstanding the foregoing sentence, nothing contained in the provisions
hereof shall prohibit or restrict the Company from issuing for any purpose any
series of Preferred Stock with rights and privileges similar to, different from,
or greater than, those of the Series G Junior Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series G Junior
Preferred Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares upon their retirement and cancellation shall become authorized
but unissued shares of Preferred Stock, without designation as to series, and
such shares may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
no distribution shall be made (i) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series G Junior Preferred Stock unless the holders of shares of Series G
Junior Preferred Stock shall have received for each share of Series G Junior
Preferred Stock, subject to adjustment as hereinafter provided, (A) Two dollars
(US$2.00) per one one-hundredth (1/100) of a share plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment or, (B) if greater than the
4
amount specified in clause (i)(A) of this sentence, an amount equal to one
hundred (100) times the aggregate amount to be distributed per share to holders
of Common Stock, as the same may be adjusted as hereinafter provided, and (ii)
to the holders of stock ranking on a parity upon liquidation, dissolution or
winding up with the Series G Junior Preferred Stock, unless simultaneously
therewith distributions are made ratably on the Series G Junior Preferred Stock
and all other shares of such parity stock in proportion to the total amounts to
which the holders of shares of Series G Junior Preferred Stock are entitled
under clause (i)(A) of this sentence and to which the holders of such parity
shares are entitled, in each case upon such liquidation, dissolution or winding
up. The amount to which holders of Series G Junior Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the Company pursuant to
clause (i)(B) of the foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount" and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Company applicable pursuant to said clause to
the determination of the Participating Liquidation Amount, as said multiple may
be adjusted from time to time as hereinafter provided, is hereinafter referred
to as the "Liquidation Multiple." In the event the Company shall at any time
after November 9, 2001 declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or split or a combination,
consolidation or reverse split of the outstanding shares of Common Stock into a
greater or lesser number of shares of Common Stock, then, in each such case, the
Liquidation Multiple thereafter applicable to the determination of the
Participating Liquidation Amount to which holders of Series G Junior Preferred
Stock shall be entitled after such event shall be the Liquidation Multiple
applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Certain Reclassifications and Other Events.
(a) In the event that holders of shares of Common Stock of the
Company receive after November 9, 2001, in respect of their shares of Common
Stock, any share of capital stock of the Company (other than any share of Common
Stock of the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise (a "Transaction"),
then, and in each such event, the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series G Junior Preferred Stock shall be adjusted so that after such event the
holders of Series G Junior Preferred Stock shall be entitled, in respect of each
share of Series G Junior Preferred Stock held, in addition to such rights in
respect thereof to which such holder was entitled immediately prior to such
adjustment, to (i) such additional dividends as equal the Dividend Multiple in
effect immediately prior to such Transaction multiplied by the additional
dividends which the holder of a share of Common Stock shall be entitled to
receive by virtue of the receipt in the Transaction of such capital stock, (ii)
such additional voting rights as equal the Vote Multiple in effect immediately
prior to such Transaction multiplied by the additional voting rights which the
holder of a share of Common Stock shall be entitled to receive by virtue of the
receipt in the Transaction of such capital stock, and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Company as
equal the Liquidation Multiple in effect immediately prior to such Transaction
multiplied by the additional amount which the holder of a share of Common Stock
shall be entitled to receive upon liquidation,
5
dissolution or winding up of the Company by virtue of the receipt in the
Transaction of such capital stock, as the case may be, all as provided by the
terms of such capital stock.
(b) In the event that holders of shares of Common Stock of the
Company receive after November 9, 2001, in respect of their shares of Common
Stock, any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the Fair
Market Value of a share of Common Stock on the date of issuance of such right or
warrant, then and in each such event the dividend rights, voting rights and
rights upon the liquidation, dissolution or winding up of the Company of the
shares of Series G Junior Preferred Stock shall each be adjusted so that after
such event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple
shall each be the product of the Dividend Multiple, the Vote Multiple and the
Liquidation Multiple, as the case may be, in effect immediately prior to such
event multiplied by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of shares
of Common Stock which could be purchased, at the Fair Market Value of the Common
Stock at the time of such issuance, by the maximum aggregate consideration
payable upon exercise in full of all such rights or warrants.
(c) In the event that holders of shares of Common Stock of the
Company receive after November 9, 2001, in respect of their shares of Common
Stock, any right or warrant to purchase capital stock of the Company (other than
shares of Common Stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock of
the Company (other than Common Stock), at a purchase price per share less than
the Fair Market Value of such shares of capital stock on the date of issuance of
such right or warrant, then and in each such event the dividend rights, voting
rights and rights upon liquidation, dissolution or winding up of the Company of
the shares of Series G Junior Preferred Stock shall each be adjusted so that
after such event each holder of a share of Series G Junior Preferred Stock shall
be entitled, in respect of each share of Series G Junior Preferred Stock held,
in addition to such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive (i) such additional dividends as
equal the Dividend Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the holder of a share of
Common Stock shall be entitled upon exercise of such right or warrant by virtue
of the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction (as hereinafter defined), and (ii) such
additional voting rights as equal the Vote Multiple in effect immediately prior
to such event multiplied, first, by the additional voting rights to which the
holder of a share of Common Stock shall be entitled upon exercise of such right
or warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction, and (iii) such
additional distributions upon liquidation, dissolution or winding up of the
Company as equal the Liquidation Multiple in effect immediately prior to such
event multiplied, first, by the additional amount which the holder of a share of
Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Company upon exercise of such right or warrant by virtue of
the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction. For purposes of this paragraph, the "Discount
Fraction" shall be a fraction the numerator
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of which shall be the difference between the Fair Market Value of a share of the
capital stock subject to a right or warrant distributed to holders of shares of
Common Stock of the Company as contemplated by this paragraph immediately after
the distribution thereof and the purchase price per share for such share of
capital stock pursuant to such right or warrant and the denominator of which
shall be the Fair Market Value of a share of such capital stock immediately
after the distribution of such right or warrant.
(d) For purposes of this Certificate of Designations, the "Fair
Market Value" of a share of capital stock of the Company (including a share of
Common Stock) on any date shall be deemed to be the average of the daily closing
price per share thereof over the thirty (30) consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; provided, however,
that, in the event that such Fair Market Value of any such share of capital
stock is determined during a period which includes any date that is within
thirty (30) Trading Days after (i) the ex-dividend date for a dividend or
distribution on stock payable in shares of such stock or securities convertible
into shares of such stock, or (ii) the effective date of any subdivision, split,
combination, consolidation, reverse stock split or reclassification of such
stock, then, and in each such case, the Fair Market Value shall be appropriately
adjusted by the Board of Directors of the Company to take into account
ex-dividend or post-effective date trading. 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 applicable transaction reporting system with
respect to securities listed or admitted to trading on the American Stock
Exchange), or, if the shares are not listed or admitted to trading on the
American Stock Exchange, as reported in the applicable transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the shares are listed or admitted to trading or, if the 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 Nasdaq National
Market System or such other system then in use, or if on any such date the
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 shares selected by the Board of Directors of the Company. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which the shares are listed or admitted to trading is open for the transaction
of business or, if the shares are not listed or admitted to trading on any
national securities exchange, on which the New York Stock Exchange or such other
national securities exchange as may be selected by the Board of Directors of the
Company is open. If the shares are not publicly held or not so listed or traded
on any day within the period of thirty (30) Trading Days applicable to the
determination of Fair Market Value thereof as aforesaid, "Fair Market Value"
shall mean the fair market value thereof per share as determined in good faith
by the Board of Directors of the Company. In either case referred to in the
foregoing sentence, the determination of Fair Market Value shall be described in
a statement filed with the Secretary of the Company.
Section 8. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series G Junior Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other
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property (payable in like kind), as the case may be, for which or into which
each share of Common Stock is changed or exchanged multiplied by the highest of
the Vote Multiple, the Dividend Multiple or the Liquidation Multiple in effect
immediately prior to such event.
Section 9. Effective Time of Adjustments.
(a) Adjustments to the Series G Junior Preferred Stock required by
the provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(b) The Company shall give prompt written notice to each holder of a
share of Series G Junior Preferred Stock of the effect of any adjustment to the
voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Company of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
Section 10. No Redemption. The shares of Series G Junior Preferred
Stock shall not be redeemable at the option of the Company or any holder
thereof. Notwithstanding the foregoing sentence of this Section, the Company may
acquire shares of Series G Junior Preferred Stock in any other manner permitted
by law, and the provisions hereof and the Restated Certificate of Incorporation
of the Company, in each case as the same may be amended.
Section 11. Ranking. Unless otherwise provided in a Certificate of
Designations relating to a subsequent series of preferred stock of the Company,
the Series G Junior Preferred Stock shall rank junior to all other series of the
Company's preferred stock as to the payment of dividends and the distribution of
assets on liquidation, dissolution or winding up and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the Restated
Certificate of Incorporation, as amended, of the Company shall not be amended in
any manner which would adversely affect the rights, privileges or powers of the
Series G Junior Preferred Stock without, in addition to any other vote of
stockholders required by law, the affirmative vote of the holders of two-thirds
(2/3) or more of the outstanding shares of Series G Junior Preferred Stock,
voting together as a single class.
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IN WITNESS WHEREOF, I have executed and subscribed this Certificate
of Designations and do affirm the foregoing as true under the penalties of
perjury this ____ day of _____, 2001.
By:______________________________
▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
ATTEST:
By:_________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
Secretary
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