EXHIBIT NO. 1
RIGHTS AGREEMENT
by and between
▇▇▇▇ ELECTRONICS CORP.
and
▇▇▇▇▇▇ TRUST AND SAVING BANK
as Rights Agent
Dated as of
December 22, 1997
TABLE OF CONTENTS
SECTION PAGE
1. Certain Definitions............................................... 2
2. Appointment of Rights Agent........................................ 11
3. Issuance of Right Certificates..................................... 11
4. Form of Right Certificates......................................... 14
5. Countersignature and Registration.................................. 15
6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates........................................ 17
7. Exercise of Rights; Exercise Price; Expiration
Date of Rights................................................... 18
8. Cancellation and Destruction of Right Certificates................. 23
9. Reservation and Availability of Shares of
Preferred Stock.................................................. 23
10. Preferred Stock Record Date........................................ 26
11. Adjustment of Exercise Price or Number of Shares................... 27
12. Certification of Adjusted Exercise Price or
Number of Shares................................................. 35
13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.......................................... 36
14. Fractional Rights and Fractional Shares............................ 42
15. Rights of Action................................................... 43
16. Agreement of Right Holders......................................... 44
17. Right Certificate Holder Not Deemed a Stockholder.................. 46
18. Concerning the Rights Agent........................................ 46
19. Merger or Consolidation of, or Change in Name of,
the Rights Agent................................................. 48
i
SECTION PAGE
20. Duties of Rights Agent............................................. 49
21. Change of Rights Agent............................................. 53
22. Issuance of New Right Certificates................................. 55
23. Redemption......................................................... 56
24. Notice of Proposed Actions......................................... 58
25. Notices............................................................ 59
26. Supplements and Amendments......................................... 60
27. Exchange........................................................... 62
28. Successors......................................................... 64
29. Benefits of this Rights Agreement.................................. 64
30. Delaware Contract.................................................. 64
31. Counterparts....................................................... 65
32. Descriptive Headings............................................... 65
33. Severability....................................................... 65
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Certificate of Designations, Preferences
and Rights of Series A Junior Preferred Stock
ii
RIGHTS AGREEMENT
Agreement, dated as of December 22, 1997, by and between ▇▇▇▇ Electronics
Corp., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇ Trust and Savings
Bank, an Illinois banking corporation (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on December 22, 1997, 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 Common Stock, $0.01 par value per share, of the
Company and one Right for each share of class A common stock, $0.01 par value
per share, of the Company in each case as outstanding as of the close of
business on January 8, 1998 (the "Record Date"), each such Right representing
the right to purchase one one-hundredth of a share of Series A Junior Preferred
Stock of the Company ("Preferred Stock") having the rights and preferences set
forth in the form of Certificate of Designations, Preferences and Rights
attached hereto as Exhibit C authorized by the Board of Directors on December
22, 1997, 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
Common Stock and each share of Class A
1
Common Stock which may be issued between the Record Date and the earlier to
occur of the Distribution Date, 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 15% or more of the Voting Stock of the Company
then outstanding; provided, that, an Acquiring Person shall not include
(i) an Exempt Person (as such term is hereinafter defined) or (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
2
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 shall become an Acquiring
Person in the event such Person thereafter acquires Beneficial Ownership
of an additional 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). 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 (as determined in good faith by the
Board of Directors) a sufficient number of shares of Common Stock or Class
A Common 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.
3
(b) "Affiliate" 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 (as such term is hereinafter defined)
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 (as such term is hereinafter defined) of
10% or more of any class of equity security thereof, (ii) with respect to
an association, any officer or director thereof or of a Subsidiary
thereof, (iii) with respect to a partnership, any general partner thereof
or any limited partner thereof who is, directly or indirectly, the
Beneficial Owner of a 10% ownership interest therein, (iv) with respect to
a business trust, any officer or trustee thereof or of any Subsidiary
thereof, (v) with respect to any other trust or an estate, any trustee,
executor or similar fiduciary or any Person who has a 15% or greater
interest as a beneficiary in the income from or principal of such trust or
estate, (vi) with respect to a natural 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.
4
(d) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have
correlative meanings):
(i) which 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) which 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
5
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 security (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) which 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
6
(notwithstanding that they may be Associates of one another or may
be deemed to constitute a group for purposes of Section 13(d) 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 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 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 the State of Illinois 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.,
Illinois time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Illinois time, on the next
succeeding Business Day.
(g) "Common Stock" when used with reference to the Company shall
collectively mean the Common Stock, $0.01 par value, of the Company.
"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
7
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 which shall represent the
right to participate in profits, losses, deductions and credits of such
Person and which shall be entitled to exercise the greatest voting power
per unit of such Person.
(h) "Class A Common Stock" shall mean the Class A Common Stock,
$0.01 par value, of the Company.
(i) "Distribution Date" shall have the meaning set forth in Section
3(b) hereof.
(j) "Exchange Act" shall have the meaning set forth in Section 1(b)
hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary
of the Company, (iii) 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 or (iv) any Person who, as of December 22,
1997, together with all Affiliates and Associates of such Person, was the
Beneficial Owner of 15% or more of the Voting Stock of the Company
outstanding as of such date; provided, however, that any Person described
in this clause (iv) shall no longer be an Exempt Person and shall become
an Acquiring Person if such
8
Person, together with all Affiliates and Associates of such Person, from
December 22, 1997 acquires Beneficial Ownership of an additional 1% or
more of the Voting Stock, unless such acquisition of an additional 1% or
more of the Voting Stock was pursuant to (i) any action or transaction or
series of related actions or transactions approved by the Board of
Directors before such acquisition or (ii) 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.
(l) "Exercise Price" shall have the meaning set forth in Sections 4
and 7(b) hereof.
(m) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(n) "Fair Market Value" of any property shall mean the fair market
value of such property as determined in accordance with Section 11(b)
hereof.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(p) "Person" shall mean any individual, firm, corporation or other
entity.
(q) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
9
(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.
(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 members 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
10
any governmental or regulatory authority in respect of any transfer of any
security, instrument or right, including Rights, shares of Common Stock,
shares of Class A Common Stock, and shares of Preferred Stock.
(y) "Voting Stock" shall mean (i) the Common Stock of the Company,
(ii) the Class A Common Stock of the Company, and (iii) 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 and the
Class A 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.
11
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.
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, at the expense of
the Company, 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 Common Stock and to each holder of the Class A Common 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 day after the Stock Acquisition Date or (ii) the tenth 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
12
of 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 Common Stock
and the certificates of Class A Common Stock registered in the names of the
holders of Common Stock and the holders of the Class A Common Stock,
respectively (together with, in the case of certificates for Common Stock and
certificates for Class A Common Stock each outstanding as of the Record Date,
the Summary of Rights) and not by separate Right certificates and the record
holders of such certificates 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 Common Stock or Class A Common
Stock, as the case may be (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 Common Stock or of any
certificate for Class A Common Stock shall constitute the surrender for transfer
of the Right or Rights associated with the Common Stock or the Class A Common
Stock, as the case may be, 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 Common Stock and all
shares of Class A Common Stock that
13
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 Common Stock and shares of Class A Common Stock that become
outstanding after the Distribution Date. Certificates for Common Stock and Class
A Common Stock (including, without limitation, certificates issued upon original
issuance, disposition from the Company's treasury or transfer or exchange of
Common Stock or Class A Common 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 the following legend:
This certificate also evidences and entitles the holder hereof to
the same number of Rights (subject to adjustment) as the number of shares
of [Common Stock/Class A Common Stock] represented by this certificate,
such Rights being on the terms provided under the Rights Agreement between
▇▇▇▇ Electronics Corp. and ▇▇▇▇▇▇ Trust and Savings Bank (the "Rights
Agent"), dated as of December 22, 1997, 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 ▇▇▇▇ Electronics 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. ▇▇▇▇
Electronics Corp. shall mail to the registered holder of this certificate
a copy of the Rights Agreement without charge within five days after
receipt of a written request therefor. Under certain circum-
14
stances 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 Common Stock and
to each record holder of Class A Common Stock, in each case, 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 Right
(subject to adjustment as provided herein) for each share of Common Stock and
for each share of Class A Common 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 Common Stock or
Class A Common 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
15
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 Common
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-hundredth of a share) of Preferred Stock as
shall be 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 Chairman of the Board, 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 an Assistant
Secretary of the Company, either manually or by facsimile
16
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 Certificates 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
17
face by each of the Right Certificates and the date of each of the Right
Certificates.
18
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 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 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 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, combined or
exchanged at the office of the Rights Agent designated therefor.
19
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 Section 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 Section 7(e) and
20
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
Chicago, Illinois, 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) December 21, 2007 (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 shall initially be $115.00 for each one
one-hundredth (1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right. 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
21
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 Preferred Stock of the Company one or more certificates
representing the number of shares of Preferred Stock to be so purchased, and the
Company hereby authorizes and directs such transfer agent to comply with all
such requests, (ii) as provided in Section 14(b), at the election of the
Company, cause depositary receipts to be issued in lieu of fractional shares of
Preferred Stock, (iii) if the election provided for in the immediately preceding
clause (ii) has not been made, requisition from the Company the amount of cash
to be paid in lieu of the issuance of fractional shares in accordance with
Section 14(b) hereof, (iv) after receipt of such Preferred Stock certificates
and, if applicable, depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (v) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate; provided, however, that in the case of a
purchase of securities, other than Preferred Stock, pursuant to Section 13
hereof, the Rights Agent
22
shall promptly take the appropriate actions corresponding in such case to that
referred to in the foregoing clauses (i) through (v) of this Section 7(c).
Notwithstanding the foregoing provisions of this Section 7(c), the Company may
suspend the issuance of shares of Preferred Stock upon exercise of a Right for a
reasonable period, not in excess of 90 days, during which the Company seeks to
register under the Securities Act of 1933, as amended (the "Act"), and any
applicable securities law of any other jurisdiction, the shares of 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 registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or his 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, 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
23
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 the Board of Directors has determined 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 thereof; no Right Certificate shall be issued
at any time upon the transfer of any Rights to an Acquiring Person whose Rights
24
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 cancelled.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate 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 cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this
25
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 cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled 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 Preferred Stock or
out of authorized and issued shares of Preferred Stock held in its treasury,
such number of shares of 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 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 the Common Stock is listed or, if the principal
market for the Common Stock is not on any national securities exchange, to be
eligible for quotation in the National
26
Association of Securities Dealers' Automated Quotation System 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 Preferred Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Exercise Price in respect thereof), be duly
and validly authorized and issued and fully paid and nonassessable 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), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of 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 Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for 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 days, the issuance of shares of Preferred Stock upon
exercise of a Right in order to prepare and file a registration statement under
the Act and
27
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 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 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 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 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
28
has been established to the Company's satisfaction that no such Transfer Tax
is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
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 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 Preferred Stock 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 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.
29
Section 11. Adjustment of Exercise Price or Number of Shares. The Exercise
Price and the number of shares of Preferred Stock which 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 Common Stock and Class A
Common Stock payable in shares of Common Stock and shares of Class A Common
Stock, respectively, (B) subdivide or split the outstanding shares of Common
Stock and the outstanding shares of Class A Common Stock into a greater number
of shares or (C) combine or consolidate the outstanding shares of Common Stock
and the outstanding shares of Class A Common Stock into a smaller number of
shares or effect a reverse split of the outstanding shares of Common Stock and
the outstanding shares of Class A Common Stock, then and in each such event the
number of shares of 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 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
30
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).
(ii) Subject to Section 27 of this Agreement, in the event that any
Person (other than an Exempt Person), alone or together with its Affiliates and
Associates, shall become an Acquiring Person, then, subject to the last sentence
of Section 23(a) 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 of a share of 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 of a share of Preferred Stock, based on the per share Fair Market
Value of the Preferred Stock (determined pursuant to Section 11(b) hereof) on
the date of such first occurrence, having a value equal to twice 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
31
of Section 13 hereof shall apply and no adjustment shall be made pursuant to
this Section 11(a)(ii).
(iii) In the event that the Company does not have available sufficient
authorized but unissued 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 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 Preferred Stock in accordance
with the foregoing subparagraphs (i) and (ii), the Company may, if the Board of
Directors 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 the Rights, cash, property, shares of Preferred or Common Stock, or
any combination thereof, having an aggregate Fair Market Value equal to the Fair
Market Value of the shares of Preferred Stock which otherwise would have been
issuable pursuant to Section 11(a)(ii), which Fair Market Value shall be
determined by an investment banking firm selected by the Board of Directors. For
purposes of the preceding sentence, the Fair Market Value of the Preferred Stock
shall be as determined
32
pursuant to Section 11(b). 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) occurs.
(b) For the purpose of this Rights Agreement, the "Fair Market Value" of
any share of Preferred Stock, Common 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 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 Common Stock is determined during a
period which includes any date that is within 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 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
33
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 New York Stock Exchange), or, if
the securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national 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 National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") 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 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 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"
34
shall mean the fair value per share of stock or per other unit of such other
security, as determined by an independent investment banking firm experienced in
the valuation of securities selected in good faith by the Board of Directors of
the Company, or, if no such investment banking firm is, in the good faith
judgment of the Board of Directors, available to make such determination, in
good faith by the Board of Directors of the Company; 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 Preferred Stock shall not be less than 100% of
the product of the Fair Market Value of a share of Common Stock multiplied by
the higher of the then Dividend Multiple or Vote Multiple applicable to the
Preferred Stock (as defined in the Certificate of Designations relating to the
Preferred Stock) and shall not exceed 105% of the product of the then Fair
Market Value of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock. In the
case of property other than securities, the "Fair Market Value" thereof shall be
determined in good faith by the Board of Directors of the Company based upon
such appraisals or valuation reports of such independent experts as the Board of
Directors of the Company shall in good faith determine to be appropriate in
accordance with good business practices and the interests of the holders of
Rights. Any such determination of
35
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 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 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 Preferred Stock upon exercise of the Rights
below the then par value, if any, of the shares of 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 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
36
liquidation of the Company or similar transaction, the Company shall be entitled
to make such further adjustments in the number of shares of 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 the Board of Directors of the
Company shall determine to be necessary or appropriate in order for the holders
of the 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 and shares of Class A 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, Class A
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
37
dividend or the Fair Market Value of such debt security, debt instrument or
property exceeds 150% of the aggregate amount of the cash dividends declared or
paid on the Common Stock or the Class A Common Stock of the Company in the
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
or Class A Common Stock of the Company, as the case may be. For purposes hereof,
the Fair Market Value of any property distributed to the holders of shares of
Common Stock or Class A Common Stock of the Company shall be the Fair Market
Value of such property as determined by an independent investment banking firm
experienced in the valuation of securities or the other property so distributed,
as the case may be, selected in good faith by the Board of Directors of the
Company, or, if no such investment banking firm is in the good faith judgment of
the Board of Directors available to make such determination, in good faith by
the Board of Directors of the Company, 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
38
in Section 11, 13 or 23(c), the Company shall (i) promptly prepare a certificate
setting forth such adjustment, and a brief statement of the facts giving rise to
such adjustment, (ii) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock a copy of such certificate, and (iii) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25. 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 obligated or responsible for
calculating any adjustment nor shall 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.
(a) In the event that, at any time after the time that any Person becomes
an Acquiring Person, (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
39
corporation of such consolidation or merger, 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 Common Stock
or Class A Common 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 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
tradeable Common Stock of the Principal Party (as defined herein), not subject
to any liens,
40
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 twice
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 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
41
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 Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (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 Common Stock or Class A Common Stock of the
Company are changed or otherwise exchanged or converted in such merger or
consolidation, 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 or consolidation
and that survives such merger or consolidation, 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 or consolidation does
not survive the merger or
42
consolidation, the Person that does survive the merger or consolidation
(including the Company if it survives); and
(ii) in the case of any transaction described in (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 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 or sale or
transfer of assets or earning
43
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 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 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 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 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
44
requirements of the 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 NASDAQ; 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).
(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
45
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 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 of a share of 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, in lieu of such fractional
46
Rights, there shall be paid to the holders of record of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the Fair Market Value of a whole
Right.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of
one-hundredth 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 of a share). In lieu of issuing fractions of
shares of Preferred Stock, the Company may, at its election, issue depositary
receipts evidencing fractions of shares pursuant to an appropriate agreement
between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall have
all of the rights, privileges and preferences to which they would be entitled as
owners of the Preferred Stock. With respect to fractional shares that are not
integral multiples of one-hundredth of a share, if the Company does not issue
such fractional shares or depositary receipts in lieu thereof, there shall be
paid to the holders of record of Right Certificates at the time such Right
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the Fair Market Value of a share of Preferred Stock.
47
(c) The holder of a Right by the acceptance of a Right expressly waives his
right to receive any fractional Right or any fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth 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 each
of the Common Stock and the Class A Common Stock); and any holder of record of
any Right Certificate (or, prior to the Distribution Date, of the Common Stock
or the Class A Common Stock, as the case may be), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock or the Class A Common Stock, as the case
may be), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this 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
48
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 each of the Common Stock and the Class A Common Stock
registered in the name of the holders of Common Stock and the holders of the
Class A Common Stock, respectively (together, as applicable, with the Summary of
Rights), which certificates for Common Stock and Class A Common 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 Common Stock and Class A Common Stock, as the case may be;
(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
49
to the Distribution Date, the associated Common Stock certificate or Class A
certificate, as the case may be) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates, the associated Common Stock certificate or
the associated Class A 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 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 (except as provided in Section 7(f) hereof), or to give or
withhold consent to any corporate action (except as provided in Section 7(f)
hereof), 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
50
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 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. The costs and expenses of enforcing this right of indemnification
shall also be paid by the Company. The indemnification provided for hereunder
shall survive the expiration of the Rights and the termination of this
Agreement.
(b) The Rights Agent may conclusively rely upon and 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 of this Rights
Agreement in
51
reliance upon any Right Certificate or certificate for 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
the proper person or persons.
(c) Notwithstanding anything in this Agreement to the contrary, in no event
shall the Rights Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), 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
52
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
53
Agreement upon the following terms and conditions, and no implied duties or
obligations shall be read into this Agreement against the Rights Agent, by all
of which the Company and the holders of Right Certificates by their acceptance
thereof shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it may consult
with legal counsel (who may be legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this 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 Chairman of the Board, the President
or any Vice President and by the Treasurer or the 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.
54
(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
55
to whether any shares of Preferred Stock will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of 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
Chairman of the Board, 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 such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than 10
56
Business Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application subject to the proposed action or
omission and/or specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, 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.
57
(j) No provisions of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) The Rights Agent shall not be required to take notice or be deemed to
have notice of any fact, event or determination (including, without limitation,
any dates or events defined in this Agreement or the designation of any Person
as an Acquiring Person, Affiliate or Associate) under this Agreement unless and
until the Rights Agent shall be specifically notified in writing by the Company
of such fact, event or determination.
(l) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
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 30 days' notice in writing mailed to the Company and to each
transfer agent of the
58
Common Stock, the Class A Common Stock and the Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and the 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 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 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
59
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 $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 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
60
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, redeem all but not less than all of the then outstanding
Rights, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Stock Acquisition Date (subject to extension by the
Company as provided in Section 26 hereof) or (ii) the Final Expiration Date, at
a redemption price of $0.01 per Right, subject to adjustments as provided in
subsection (c) below (the "Redemption Price"). Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
pursuant to Section 11(a)(ii) prior to the expiration of the Company's right of
redemption hereunder.
61
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the time so designated by 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 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 (and, at the Company's election pursuant to
Section 14(b) hereof, cash or depositary receipts in lieu of fractions of shares
other than fractions which are integral multiples of one one-hundredth (1/100)
of a share) of Preferred Stock or Common Stock 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 Common
62
Stock and Class A Common Stock in shares of Common Stock and Class A Common
Stock, (B) subdivide or split the outstanding shares of Common Stock and Class A
Common Stock into a greater number of shares or (C) combine or consolidate the
outstanding shares of Common Stock and Class A Common Stock into a smaller
number of shares or effect a reverse split of the outstanding shares of Common
Stock and Class A Common Stock, then, and in each such event, the Redemption
Price shall be appropriately adjusted to reflect the foregoing.
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) or (ii)
to offer to the holders of record of its Common Stock or Class A Common Stock
options, warrants, or other rights to subscribe for or to purchase shares of
Common Stock or Class A Common Stock (including any security convertible into or
exchangeable for Common Stock or Class A Common Stock) or shares of stock of any
class or any other securities, options, warrants, convertible or exchangeable
securities or other rights, or (iii) to effect any reclassification of its
Preferred Stock, Common Stock or Class A Common Stock or any recapitalization or
reorganization of the Company, or (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
63
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or 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,
notice of such proposed action, which shall specify the record date for the
purposes of such transaction referred to in Section 11(a)(i) 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, Class A 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 10 days prior to the record date for determining holders of record of the
Preferred Stock for purposes of such action, and in the case of any such other
action, at least 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 Common Stock,
Class A Common Stock or 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
64
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 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 Right to or on the Company shall be sent by registered or
certified mail and shall be deemed given upon receipt and addressed (until
another address is filed in writing with the Rights Agent) as follows:
▇▇▇▇ Electronics Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Subject to the provisions of Section 21, 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 sent by
registered or certified mail and shall be deemed given upon receipt and
65
addressed (until another address is filed in writing with the Company) as
follows:
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇
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
66
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 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 Common 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. Notwithstanding
anything in this Agreement to the contrary, no supplement or amendment that
changes the rights and duties of the Rights Agent under this Agreement will be
effective against the Rights Agent without the execution of such supplement or
amendment by the Rights Agent.
Section 27. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for shares of
Common Stock at an exchange ratio of one share per Right,
67
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Voting Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 27
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the
68
shares of Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 27, the Company shall
take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares. In
lieu of such fractional shares, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional shares of Common
Stock would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole share of Common Stock. For the purposes
of this paragraph (d), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock for the Trading Day
immediately prior to the date of exchange pursuant to this Section 27.
69
Section 28. 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 29. 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 Common 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 each
of the Common Stock and the Class A Common Stock in their capacity as holders of
the Rights).
Section 30. 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, except as to the
rights and obligations of the Rights Agent, which shall be governed by the laws
of the State of Illinois.
70
Section 31. 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 32. 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 33. 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 THIS PAGE IS
INTENTIONALLY LEFT BLANK]
71
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.
▇▇▇▇ ELECTRONICS CORP.
(SEAL)
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- ---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
(SEAL)
Attest: /s/ ▇▇▇▇ ▇. Steafer By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------- ---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
72
EXHIBIT A
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.
▇▇▇▇ ELECTRONICS CORP.
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PREFERRED STOCK
On December 22, 1997, the Board of Directors of ▇▇▇▇ Electronics Corp. (the
"Company") declared a dividend distribution of one Preferred Stock Purchase
Right for each outstanding share of Common Stock, par value $0.01 per share (the
"Common Stock"), of the Company and for each outstanding share of Class A Common
Stock, par value $0.01 per share (the "Class A Common Stock"), of the Company.
The distribution is payable as of January 8, 1998 to stockholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth (1/100) of a share of preferred stock of the Company,
designated as Series A Junior Preferred Stock (the "Preferred Stock") at a price
of $115 per one one-hundredth (1/100) of a share ("Exercise Price"). The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and ▇▇▇▇▇▇ Trust and Savings Bank, as
Rights Agent (the "Rights Agent").
AS DISCUSSED BELOW, INITIALLY THE RIGHTS WILL NOT BE EXERCISABLE,
CERTIFICATES WILL NOT BE SENT TO STOCKHOLDERS AND THE RIGHTS WILL AUTOMATICALLY
TRADE WITH THE COMMON STOCK AND THE CLASS A COMMON STOCK.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date")
which is the earlier of (i) the tenth day following a public announcement that a
person or group of affiliated or associated persons, with certain exceptions set
forth below, has acquired beneficial ownership of 15% or more of the outstanding
voting stock of the Company (an "Acquiring Person") and (ii) the tenth business
day (or such later date as may be determined by the Board of Directors prior to
such time as any person or group of affiliated or associated persons becomes an
Acquiring
1
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 15% or more of the Company's outstanding
voting 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 Company's
Common Stock or Class A Common Stock, as the case may be, but will instead be
evidenced, with respect to any of the certificates representing Common Stock or
Class A Common Stock, in each case, outstanding as of January 8, 1998, by such
certificate with a copy of this Summary of Rights attached thereto. An Acquiring
Person does 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 Common Stock for or pursuant to the terms of any such
plan, (D)any person who, as of December 22, 1997, was the beneficial owner of
15% or more of the shares of voting stock of the Company then outstanding
(provided, however, that any such person shall become an Acquiring Person if
such person, from December 22, 1997, acquires beneficial ownership of an
additional 1% or more of the shares of voting stock of the Company, unless such
acquisition results from (i) any action or transaction approved by the Board of
Directors before such acquisition or (ii) a reduction in the number of issued
and outstanding shares of voting stock of the Company pursuant to a transaction
or transactions approved by the Board of Directors) or (E) any person or group
whose ownership of 15% or more of the shares of voting stock of the Company then
outstanding results solely from (i) any action or transaction or transactions
approved by the Board of Directors before such person or group became an
Acquiring Person or (ii) a reduction in the number of issued and outstanding
shares of voting stock of the Company pursuant to a transaction or transactions
approved by the Board of Directors (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 1% of the Company's
voting stock unless such acquisition of additional voting stock will not result
in such person or group becoming an Acquiring Person by reason of such clause
(i) or (ii)).
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock and Class A Common Stock certificates issued after
January 8, 1998 will
2
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates or Class A Common
Stock certificates outstanding as of January 8, 1998, with or without a copy of
this Summary of Rights attached thereto, will also constitute the transfer of
the Rights associated with the Common Stock or Class A Common Stock (as the case
may be) represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of each of the Common Stock
and the Class A Common Stock as of the close of business on the Distribution
Date and such separate certificates alone will evidence the Rights from and
after the Distribution Date.
The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on December 21, 2007, unless earlier redeemed by
the Company as described below.
The Preferred Stock is nonredeemable and, unless otherwise provided in
connection with the creation of a subsequent series of preferred stock,
subordinate to any other series of the Company's preferred stock. The Preferred
Stock may not be issued except upon exercise of Rights. Each share of Preferred
Stock will be entitled to receive when, as and if declared, a quarterly dividend
in an amount equal to the greater of $1.00 per share or 100 times the cash
dividends per share declared on the Company's Common Stock and Class A Common
Stock. In addition, Preferred Stock is entitled to 100 times any non-cash
dividends (other than dividends payable in equity securities) declared on the
Common Stock and the Class A Common Stock, in like kind. In the event of the
liquidation of the Company, the holders of Preferred Stock will be entitled to
receive, for each share of Preferred Stock, a payment in an amount equal to the
greater of $11,500 or 100 times the payment made per share of Common Stock and
Class A Common Stock. Each share of Preferred Stock will have 100 votes, voting
together with the Common Stock and the Class A Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock or Class A
Common Stock is exchanged, each share of Preferred Stock will be entitled to
receive 100 times the amount received per share of Common Stock or Class A
Common Stock, as the case may be. The rights of Preferred Stock as to dividends,
liquidation and voting are protected by anti-dilution provisions.
3
The number of shares of Preferred Stock issuable upon exercise of the
Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision or combination of, the Common Stock and the
Class A Common Stock. The Exercise Price for the Rights is subject to adjustment
in the event of extraordinary distributions of cash or other property to holders
of Common Stock and to holders of Class A Common Stock.
Unless the Rights are earlier redeemed, in the event that, after the time
that a Person becomes an Acquiring Person, the Company were to be acquired in a
merger or other business combination (in which any shares of Common Stock or
Class A Common Stock are changed into or exchanged for other securities or
assets) or more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) were to be sold or transferred in one or a
series of related transactions, the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right will from and
after such date have the right to receive, upon payment of the Exercise Price,
that number of shares of common stock of the acquiring company having a market
value at the time of such transaction equal to two times the Exercise Price.
In addition, unless the Rights are earlier redeemed, in the event that a
person or group becomes the beneficial owner of 15% or more of the Company's
voting stock, the Rights Agreement provides that proper provisions will be made
so that each holder of record of a Right, other than the Acquiring Person (whose
Rights will thereupon become null and void), will thereafter have the right to
receive, upon payment of the Exercise Price, that number of shares of the
Preferred Stock having a market value at the time of the transaction equal to
two times the Exercise Price (such market value to be determined with reference
to the market value of the Company's Common Stock as provided in the Rights
Agreement).
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
voting stock, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will have become void),
in whole or in part, at an exchange ratio of one share of Common Stock per Right
(subject to adjustment).
Fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth
4
of a share) may, at the election of the Company, be evidenced by depositary
receipts. The Company may also issue cash in lieu of fractional shares which are
not integral multiples of one one-hundredth of a share.
At any time on or prior to the close of business on the earlier of (i) the
tenth day after the time that a person has become an Acquiring Person (or such
later date as a majority of the Board of Directors may determine) or (ii)
December 21, 2007, the Company may redeem the Rights in whole, but not in part,
at a price of $0.01 per Right (the "Redemption Price"). Immediately upon the
effective time of the action of the Board of Directors of the Company
authorizing redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
For as long as the Rights are then redeemable, the Company may, except with
respect to the redemption price or date of expiration of the Rights, amend the
Rights in any manner, including an amendment to extend the time period in which
the Rights may be redeemed. At any time when the Rights are not then redeemable,
the Company may amend the Rights in any manner that does not materially
adversely affect the interests of holders of the Rights as such.
Until a Right is exercised, the holder, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated December
22, 1997. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement which is
incorporated in this summary description herein by reference.
5
EXHIBIT B
[Form of Right Certificate]
Certificate No. W- ______ Rights
NOT EXERCISABLE AFTER DECEMBER 21, 2007 OR EARLIER IF REDEEMED. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND UNDER CERTAIN
OTHER CIRCUMSTANCES, AT $.01 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
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 December 22, 1997 (the "Rights Agreement") between ▇▇▇▇ Electronics Corp., a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇ Trust and Savings Bank, an
Illinois banking 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. (Illinois time) on December 21, 2007 at the
office of the Rights Agent
1
designated in the Rights Agreement for such purpose, or its successor as Rights
Agent, in Chicago, Illinois, one one-hundredth (1/100) of a fully paid
nonassessable share of Series A Junior Preferred Stock (the "Preferred Stock")
of the Company at a purchase price of $115.00, 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 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 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
2
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 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 $0.01 per Right.
No fractional shares of 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 cause depositary receipts to be
3
issued and/or a cash payment may be made, as provided in the Rights Agreement.
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 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 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.
4
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ------------ ---, -------.
ATTEST: ▇▇▇▇ ELECTRONICS CORP.
------------------------------ By:
-------------------------------
Secretary Name:
Title:
Countersigned:
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By
-----------------------------
Authorized Signature
5
[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:
6
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.
7
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder desires to exercise
the Right Certificate.)
TO ----------------------:
The undersigned hereby irrevocably elects to exercise
-------------
Rights represented by this Right Certificate to purchase the shares of
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:
8
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 face of this
Right Certificate)
Signature Guaranteed:
9
EXHIBIT C
FORM OF
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES A JUNIOR PREFERRED STOCK
OF
▇▇▇▇ ELECTRONICS CORP.
Pursuant to Section 151 of the
Delaware General Corporation Law
I, [Name], [Office] of ▇▇▇▇ Electronics Corp., a corporation organized and
existing under the Delaware General Corporation Law (the "Company"), in
accordance with the provisions of Section 151 of such law, DO HEREBY CERTIFY
that pursuant to the authority conferred upon the Board of Directors by Article
IV of the Certificate of Incorporation of the Company, the Board of Directors on
December 22, 1997 adopted the following resolution which creates a series of
670,000 shares of Preferred Stock designated as Series A Junior Preferred Stock,
as follows:
RESOLVED, that pursuant to Section 151 of the Delaware General Corporation
Law and the authority vested in the Board of Directors of the Company in
accordance with the provisions of ARTICLE IV of the Certificate of Incorporation
of the Company, a series of Preferred Stock of the Company be, and hereby is,
created, and the powers, designations, preferences and relative, participating,
optional or other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof, be, and hereby are, as
follows:
1
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting such series shall be 670,000.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment
hereinafter set forth, the holders of shares of Series A 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, (i) cash dividends in an amount per
share (rounded to the nearest cent) equal to 100 times the aggregate per share
amount of all cash dividends declared or paid on the Common Stock, $0.01 par
value per share, of the Company (the "Common Stock") and on the Class A Common
Stock, $0.01 par value per share, of the Company (the "Class A Common Stock")
and (ii) a preferential cash dividend (the "Preferential Dividends"), if any, in
preference to the holders of each of the Common Stock and the Class A Common
Stock, on the first day of February, May, August and November of each year (each
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, payable in an amount (except in the case of the first
Quarterly Dividend Payment if the date of the first issuance of Series A
Preferred
2
Stock is a date other than a Quarterly Dividend Payment date, in which case such
payment shall be a prorated amount of such amount) equal to $1.00 per share of
Series A Preferred Stock less the per share amount of all cash dividends
declared on the Series A Preferred Stock pursuant to clause (i) of this sentence
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Company shall, at any time after the issuance of any share or fraction of a
share of Series A Preferred Stock, make any distribution on the shares of Common
Stock or Class A 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, Class A 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),
3
then, and in each such event, the Company shall simultaneously pay on each then
outstanding share of Series A Preferred Stock of the Company a distribution, in
like kind, of 100 times such distribution paid on a share of Common Stock or
Class A Common Stock, as the case may be (subject to the provisions for
adjustment hereinafter set forth). The dividends and distributions on the Series
A 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 or Class A Common Stock, as
the case may be, applicable to the determination of the Dividends, which shall
be 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 December 22, 1997 declare or pay any
dividend or make any distribution on Common Stock or Class A Common Stock
payable in shares of Common Stock or Class A Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock or Class A Common Stock into a greater or
lesser number of shares of Common Stock or Class A Common Stock, then in each
such case the Dividend Multiple
4
thereafter applicable to the determination of the amount of Dividends which
holders of shares of Series A 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 or
Class A Common Stock, as the case may be, outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock or
Class A Common Stock, respectively, 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 or
Class A Common Stock, as the case may be, in respect of which a Dividend is
required to be paid. No cash or non-cash dividend or distribution on the Common
Stock or Class A 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 or Class A
Common Stock unless a Dividend in respect of such dividend or distribution on
the Common Stock or Class A Common Stock shall be simultaneously paid, or set
aside for payment, on the Series A Preferred Stock.
(C) Preferential Dividends shall begin to accrue on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of
5
issuance of any shares of Series A Preferred Stock. Accrued but unpaid
Preferential Dividends shall cumulate but shall not bear interest. Preferential
Dividends paid on the shares of Series A Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the holders of the Common Stock and
the Class A Common Stock. The number of votes which a holder of Series A
Preferred Stock is entitled to cast, as the same may be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the "Vote Multiple".
In the event the Company shall at any time after December 22, 1997 declare or
pay any dividend on Common Stock and Class A Common Stock payable in shares of
Common Stock and Class A Common Stock, respectively, or effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding shares
of
6
Common Stock and Class A Common Stock into a greater or lesser number of shares
of Common Stock and Class A Common Stock, respectively, 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 A 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 and Class A Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock and Class A
Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or By-laws, the holders of shares of each of the Series A
Preferred Stock, the Common Stock and the Class A Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the
Company.
(C) In the event that the Preferential Dividends accrued on the
Series A Preferred Stock for four or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or irrevocably set
aside for payment, the holders of record of Preferred Stock of the Company of
all series (including the Series A
7
Preferred Stock), other than any series in respect of which such right is
expressly withheld by the Restated Certificate of Incorporation or the
authorizing resolutions included in any Certificate of Designations therefor,
shall have the right, at the next meeting of stockholders called for the
election of directors, to elect two members to the Board of Directors, which
directors shall be in addition to the number required by the By-laws prior to
such event, to serve until the next Annual Meeting and until their successors
are elected and qualified or their earlier resignation, removal or incapacity or
until such earlier time as all accrued and unpaid Preferential Dividends upon
the outstanding shares of Series A Preferred Stock shall have been paid (or
irrevocably set aside for payment) in full. The holders of shares of Series A
Preferred Stock shall continue to have the right to elect directors as provided
by the immediately preceding sentence until all accrued and unpaid Preferential
Dividends upon the outstanding shares of Series A Preferred Stock shall have
been paid (or set aside for payment) in full. Such directors may be removed and
replaced by such stockholders, and vacancies in such directorships may be filled
only by such stockholders (or by the remaining director elected by such
stockholders, if there be one) in the manner permitted by law; provided,
however, that any such action by stockholders shall be taken at a meeting of
8
stockholders and shall not be taken by written consent thereto.
(D) Except as otherwise required by the Certificate of Incorporation
or By-laws or set forth herein, holders of Series A 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 and Class A
Common Stock as set forth herein) for the taking of any corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in arrears or
the Company shall be in default of payment thereof, thereafter and until all
accrued and unpaid Preferential Dividends and Dividends, whether or not
declared, on shares of Series A 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 A 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 A Preferred Stock;
9
(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 A
Preferred Stock, unless dividends are paid ratably on the Series A
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 A Preferred Stock, provided
that the Company 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 A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except in
10
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 and 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 A Preferred
Stock except upon exercise of Rights issued pursuant to that certain Rights
Agreement dated as of December 22, 1997 between the Company and ▇▇▇▇▇▇ Trust and
Savings Bank, as Rights Agent, a copy of which is on file
11
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
A Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled 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 A Preferred Stock unless the holders of shares of Series A
Preferred Stock
12
shall have received for each share of Series A Preferred Stock, subject to
adjustment as hereinafter provided, (A) $11,500 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 amount specified in clause
(i)(A) of this sentence, an amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock or Class A 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
A Preferred Stock, unless simultaneously therewith distributions are made
ratably on the Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of shares of
Series A 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 A
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 and Class A Common
Stock
13
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 December 22, 1997 declare or pay any
dividend on Common Stock and Class A Common Stock payable in shares of Common
Stock and Class A Common Stock, respectively, or effect a subdivision or split
or a combination, consolidation or reverse split of the outstanding shares of
Common Stock and Class A Common Stock into a greater or lesser number of shares
of Common Stock and Class A Common Stock, respectively, then, in each such case,
the Liquidation Multiple thereafter applicable to the determination of the
Participating Liquidation Amount to which holders of Series A 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 and Class A Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock and Class A Common Stock that were outstanding
immediately prior to such event.
14
Section 7. Certain Reclassifications and Other
Events.
(A) In the event that holders of shares of Common Stock or Class A
Common Stock of the Company receive after December 22, 1997 in respect of their
shares of Common Stock or Class A Common Stock, respectively, any share of
capital stock of the Company (other than any share of Common Stock or Class A
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 A Preferred Stock shall be adjusted so that after such event
the holders of Series A Preferred Stock shall be entitled, in respect of each
share of Series A 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 or Class A Common Stock, as the case
may be, 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
15
immediately prior to such Transaction multiplied by the additional voting rights
which the holder of a share of Common Stock or Class A Common Stock, as the case
may be, 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 or Class A Common Stock, as the case
may be, shall be entitled to receive upon liquidation, 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 or Class A
Common Stock of the Company receive after December 22, 1997 in respect of their
shares of Common Stock or Class A Common Stock any right or warrant to purchase
Common Stock or Class A Common Stock (including as such a right, for all
purposes of this paragraph, any security convertible into or exchangeable for
Common Stock or Class A Common Stock) at a purchase price per share less than
the Fair Market Value of a share of Common Stock or Class A Common Stock on the
date of issuance of such right or warrant, then and in each such event the
dividend rights,
16
voting rights and rights upon the liquidation, dissolution or winding up of the
Company of the shares of Series A 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 or Class A
Common Stock, as the case may be, outstanding immediately before such issuance
of rights or warrants plus the number of shares of Common Stock or Class A
Common Stock, as the case may be, which could be purchased, at the Fair Market
Value of the Common Stock or Class A Common Stock, as the case may be, 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 or Class A
Common Stock of the Company receive after December 22, 1997 in respect of their
shares of Common Stock
17
or Class A Common Stock any right or warrant to purchase capital stock of the
Company (other than shares of Common Stock or Class A Common Stock, as the case
may be), 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 or Class A Common Stock, as the case may be), 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 A Preferred
Stock shall each be adjusted so that after such event each holder of a share of
Series A Preferred Stock shall be entitled, in respect of each share of Series A
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 or Class A Common Stock, as the case may be, 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
18
(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 or
Class A Common Stock, as the case may be, 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 or Class A Common Stock, as the case may be, 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 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 or Class A Common Stock, as the case may be, of the Company as
contemplated by this paragraph immediately after the distribution thereof and
the purchase price per share for
19
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 or Class A Common Stock) on any date shall be deemed to be the
average of the daily closing price per share thereof over the 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 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,
20
regular way (in either case, as reported in the applicable transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange), or, if the shares are not listed or admitted to trading on the
New York 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 National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") 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
21
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 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 or Class A 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 A Preferred Stock shall at the same time
be similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock or Class A 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.
22
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A 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 A 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 A 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 A Preferred Stock in any other manner permitted by law, the
provisions hereof and the Certificate of Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the Certificate
of Incorporation of the Company or a Certificate of Designations relating to a
subsequent series of preferred stock of the Company, the Series A Preferred
23
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 Certificate of
Incorporation of the Company shall not be amended in any manner which would
adversely affect the rights, privileges or powers of the Series A Preferred
Stock without, in addition to any other vote of stockholders required by law,
the affirmative vote of the holders of two-thirds or more of the outstanding
shares of Series A Preferred Stock, voting together as a single class.
[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK]
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 ____________, 199___.
▇▇▇▇ ELECTRONICS CORP.
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
ATTEST:
--------------------------
25