EXHIBIT 10.8
SHAREHOLDER RIGHTS AGREEMENT
BETWEEN
▇▇▇▇▇▇▇▇▇ MORTGAGE, INC.
AND
MELLON INVESTOR SERVICES LLC
AS RIGHTS AGENT
DATED AS OF JANUARY 25, 2001
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . 5
Section 3. Issuance of Right Certificates . . . . . . . . . . . . . . . 6
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . 7
Section 5. Countersignature and Registration . . . . . . . . . . . . . . 8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8. Cancellation and Destruction of Right Certificates. . . . 12
Section 9. Reservation and Availability of Preferred Stock . . . . . 12
Section 10. Preferred Stock Record Date. . . . . . . . . . . . . . . . 13
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights. . . . . . . . . . . . . . . . . . . . . . 14
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 14. Fractional Rights and Fractional Shares. . . . . . . . . . 25
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . 26
Section 16. Agreement of Right Holders. . . . . . . . . . . . . . . . . 26
Section 17. Right Certificate Holder Not Considered a Shareholder . . . . 27
Section 18. Concerning the Rights Agent. . . . . . . . . . . . . . . . 27
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . 29
Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . 31
Section 22. Issuance of New Right Certificates. . . . . . . . . . . . 32
Section 23. Redemption. . . . . . . . . . . . . . . . . .. . . . . . . . . 32
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . . 34
Section 26. Notices. . . . . . . . . . . . . . . . . .. . . . . . . . . . 35
Section 27. Supplements and Amendments. . . . . . . . . . . . . . . . . 36
Section 28. Successors. . . . . . . . . . . . . . . . . .. . . . . . . . . 37
Section 29. Determinations and Actions by the Board of Directors. . . . 37
Section 30. Benefits of this Agreement. . . . . . . . . . . . . . . . . 37
Section 31. Severability. . . . . . . . . . . . . . . . . .. . . . . . . . 37
Section 32. Governing Law. . . . . . . . . . . . . . . . . .. . . . . . . 38
Section 33. Counterparts. . . . . . . . . . . . . . . . . .. . . . . . . . 38
Section 34. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . 38
Section 35. Interpretations; Absence of Presumption. . . . . . . . . . 38
EXHIBITS
Exhibit A Form of Articles Supplementary of Preferred Stock
Exhibit B Form of Right Certificate
Exhibit C Summary of Rights to Purchase Preferred Stock
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SHAREHOLDER RIGHTS AGREEMENT
THIS SHAREHOLDER RIGHTS AGREEMENT (this "Agreement"), dated as of January
25, 2001, is by and between ▇▇▇▇▇▇▇▇▇ Mortgage, Inc., a Maryland corporation
(the "Company"), and Mellon Investor Services LLC, a New Jersey limited
liability company (the "Rights Agent").
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
desires to provide shareholders of the Company with the opportunity to benefit
from the long-term prospects and value of the Company and to ensure that
shareholders of the Company receive fair and equal treatment in the event of any
proposed takeover of the Company;
WHEREAS, effective as of January 25, 2001, the Board of Directors (i)
authorized and declared a dividend distribution of one Right (as defined herein)
for each share of Common Stock (as defined herein) of the Company outstanding as
of the Close of Business (as defined herein) on April 6, 2001 (the "Record
Date"), and (ii) authorized the issuance of one Right for each share of Common
Stock issued (whether originally issued or sold from the Company's treasury)
between the Record Date and the earlier of the Distribution Date or the
Expiration Date (as defined herein), with each Right initially representing the
right to purchase one one-thousandth of a share of Series B Cumulative Preferred
Stock, par value $0.01 per share, of the Company having the rights, powers and
preferences set forth in the Articles Supplementary, in the form of Exhibit A
attached hereto, upon the terms and subject to the conditions hereinafter set
forth (the "Rights"); and
WHEREAS, the Company desires to appoint the Rights Agent to act as rights
agent hereunder, in accordance with the terms and conditions hereof.
NOW, THEREFORE, in consideration of the promises and the agreements herein
set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
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For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 9.8% or
more of the Common Stock then outstanding, but does not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan or
compensation arrangement of the Company or of any Subsidiary of the Company, or
(iv) any Person holding Common Stock organized, appointed or established by the
Company or by any Subsidiary of the Company for or pursuant to the terms of any
employee benefit plan or compensation arrangement described in Section
1(a)(iii), (the Persons described in clauses (i) through (iv) above are referred
to herein as "Exempt Persons").
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Notwithstanding the foregoing, no Person will become an "Acquiring Person"
as a result of a reduction in the number of shares of Common Stock outstanding,
which increases the proportionate number of shares beneficially owned by such
Person from below 9.8% to 9.8% or more of the Common Stock then outstanding.
However, if a Person becomes a Beneficial Owner of 9.8% or more of the Common
Stock then outstanding by reason of share purchases by the Company and, after
those share purchases are made, becomes the Beneficial Owner of any additional
Common Stock (other than pursuant to a share split, share dividend or similar
transaction) and immediately thereafter is the Beneficial Owner of 9.8% or more
of the Common Stock then outstanding, then that Person will be an "Acquiring
Person."
Notwithstanding the foregoing, a Person is not an "Acquiring Person" if the
Board of Directors determines that a Person who would otherwise be an "Acquiring
Person," inadvertently acquired the Common Stock that would otherwise make the
Person an "Acquiring Person," if that Person as promptly as practicable divests
a sufficient number of shares of Common Stock so that Person is a Beneficial
Owner of less than 9.8% of the Common Stock then outstanding.
Notwithstanding the foregoing, no Person will become an "Acquiring Person"
if, prior to the most recent transaction which would have caused such Person to
become an Acquiring Person, a duly authorized officer of the Company provides
written consent following the approval by at least a majority of the Board of
Directors of the transaction which otherwise would have resulted in such Person
becoming an Acquiring Person, provided that a majority of the directors who are
members of the Board of Directors held such office for at least six months prior
to the date of approval.
(b) "Adjustment Shares" has the meaning set forth in Section 11(a)(ii).
(c) "Affiliate" and "Associate" have the respective meanings ascribed to
those terms in Rule 12b-2 of the General Rules and Regulations (the "Rules")
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement, but no Person who is a
director or officer of the Company will be considered an Affiliate or an
Associate of any other director or officer of the Company solely as a result of
his or her position as a director or officer of the Company.
(d) A Person is the "Beneficial Owner" of, and is considered to
"beneficially own," any securities:
(i) which that Person or any of that Person's Affiliates or
Associates, directly or indirectly, beneficially owns (as determined
pursuant to Rule 13d-3 of the Rules under the Exchange Act, as in effect on
the date of this Agreement);
(ii) which that Person or any of that Person's Affiliates or
Associates, directly or indirectly, has;
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(A) the right to acquire (whether that right is exercisable
immediately or only after the passage of time or upon the satisfaction
of any conditions or both) pursuant to any agreement, arrangement or
understanding (whether or not in writing) (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants, options, or otherwise, provided a Person will not
be considered the "Beneficial Owner" of, or to "beneficially own," (1)
securities tendered pursuant to a tender or exchange offer made by or
on behalf of that Person or by or on behalf of any of that Person's
Affiliates or Associates until those tendered securities are accepted
for purchase or exchange; or (2) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event, which
Rights were acquired by that Person or by any of that Person's
Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a), Section 11(a)(i) or Section 22; or
(B) the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing), provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote that security (1)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the Exchange Act and the rules promulgated thereunder, and (2)
is not also then reportable by that Person on Schedule 13D or Schedule
13G under the Exchange Act (or any comparable or successor report); or
(C) the right to dispose of pursuant to any agreement,
arrangement or understanding (whether or not in writing) (other than
customary arrangements with and between underwriters and selling group
members with respect to a bona fide public offering of securities); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which that Person
or any of that Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in Section 1 (d)(ii)(B)) or disposing of any securities of the
Company, provided, (1) no Person engaged in business as an underwriter of
securities will be considered the Beneficial Owner of any securities
acquired through that Person's participation as an underwriter in good
faith in a firm commitment underwriting until the expiration of 40 days
after the date of that acquisition, and (2) no Person who is a director or
an officer of the Company will be considered, as a result of his or her
position as director or officer of the Company, the Beneficial Owner of any
securities of the Company that are beneficially owned by any Exempt Person
or by any other director or officer of the Company.
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(e) "Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in the State of New Mexico or the State of New
Jersey are authorized or obligated by law or executive order to close.
(f) "Capital Stock," when used with reference to any Person other than the
Company organized in corporate form, means: (i) the capital stock or other
equity interest in that Person with the greatest voting power, (ii) the equity
securities or other equity interest having power to control or direct the
management of that Person, or (iii) if that Person is a Subsidiary of another
Person, the capital stock, equity securities or equity interest described in
clauses (i) and (ii) in the Person or Persons which ultimately control the
first-mentioned Person and which have outstanding any such capital stock, equity
securities or equity interest; "Capital Stock," when used with reference to any
Person other than the Company not organized in corporate form, means units of
beneficial interest that (x) represent the right to participate generally in the
profits and losses of that Person (including without limitation any flow-through
tax benefits resulting from an ownership interest in that Person), and (y) are
entitled to exercise the greatest voting power of that Person or, in the case of
a limited partnership, have the power to remove or otherwise replace the general
partner or partners.
(g) "Close of Business" on any date means 5:00 P.M., Santa Fe, New Mexico
time, on that date, but if that date is not a Business Day, it means 5:00 P.M.,
Santa Fe, New Mexico time, on the next succeeding Business Day.
(h) "Common Stock" means the common stock, par value $0.01 per share, of
the Company or any other shares of capital stock of the Company into which the
Common Stock is reclassified or changed.
(i) "Current Value" has the meaning set forth in Section 11(a)(iii).
(j) "Distribution Date" has the meaning set forth in Section 3(a) .
(k) "Exercise Price" has the meaning set forth in Section 4(a).
(1) "Expiration Date" and "Final Expiration Date" have the respective
meanings set forth in Section 7(a).
(m) "Fair Market Value" means the value of any securities or other property
determined in accordance with Section 11(d).
(n) "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
business trust, government or political subdivision, unincorporated
organization, or any other association or entity, and includes, without
limitation, an unincorporated group of persons who, by formal or informal
agreement, have taken any action with a common purpose, as well as any syndicate
or group that may be considered a single "person" under Section 14(d)(2) of the
Exchange Act.
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(o) "Preferred Stock" means the Series B Cumulative Preferred Stock, par
value $0.01 per share, of the Company having the rights and preferences set
forth in Exhibit A.
(p) "Preferred Stock Equivalents" has the meaning set forth in Section
11(b).
(q) "Principal Party" has the meaning set forth in Section 13(b).
(r) "Redemption Price" has the meaning set forth in Section 23.
(s) "Section 11(a)(ii) Event" has the meaning set forth in Section
11(a)(ii).
(t) "Section 11(a)(ii) Trigger Date" has the meaning set forth in Section
11(a)(iii).
(u) "Section 13 Event" means any event described in clause (x), (y) or (z)
of Section 13(a).
(v) "Spread" has the meaning set forth in Section 11(a)(iii).
(w) "Stock Acquisition Date" means the earlier of (i) the date of the first
public announcement (which for purposes of this definition includes, but is not
limited to, the issuance of a press release or the filing of a
publicly-available report or other document with the Securities and Exchange
Commission or any other governmental agency) that a Person has become an
Acquiring Person, whether that public announcement is made by the Company or
otherwise, or (ii) the date on which the Company first has notice, direct or
indirect, or otherwise determines that a person has become an Acquiring Person.
(x) "Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
(y) "Substitution Period" has the meaning set forth in Section 11(a)(iii).
(z) "Triggering Event" means any Section 11(a)(ii) Event or any Section 13
Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
-----------
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions set forth herein, 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. If the
Company appoints one or more Co-Rights Agents, the respective duties of the
Rights Agent and any Co-Rights Agents will be as the Company determines. The
Rights Agent shall have no duty to supervise, and in no event shall be liable
for, the acts or omissions of any such Co-Rights Agent.
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SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
-----------
(a) From the date of this Agreement until the earlier of (i) the Close of
Business on the tenth calendar day after the Stock Acquisition Date, or (ii) the
Close of Business on the tenth Business Day after the date a tender or exchange
offer by any Person, other than an Exempt Person, is first "published or sent or
given" within the meaning of Rule 14d-2(a) of the Exchange Act, or any successor
rule, if, upon consummation thereof, that Person would be the Beneficial Owner
of 9.8% or more of the Common Stock then outstanding (including any date after
the date of this Agreement and prior to the issuance of the Rights) (the earlier
of (i) and (ii), herein referred to as the "Distribution Date"); (x) the Rights
will be evidenced (subject to Section 3(b)) by the certificates for the Common
Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock will be considered also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying Common
Stock. As soon as practicable after the Company has notified in writing the
Rights Agent of the occurrence of the Distribution Date, and provided the Rights
Agent with a list of the record holders of the Common Stock (together with all
other necessary information); the Rights Agent will, at the Company's expense,
send by first-class, postage prepaid mail, to each record holder of the Common
Stock as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company or the Company's transfer agent,
one or more certificates, in substantially the form of Exhibit B (the "Right
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. If an adjustment in the number of
Rights per share of Common Stock has been made pursuant to Section 11(o), the
Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a)) at the time of distribution of the Right
Certificates, so that Right Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. After
the Close of Business on the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) With respect to certificates for the Common Stock issued prior to the
Close of Business on the Record Date, the Rights will be evidenced by those
certificates for the Common Stock on or until the Distribution Date (or the
earlier redemption, expiration or termination of the Rights), and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the transfer of any of the
certificates for the Common Stock outstanding prior to the Close of Business on
the Record Date will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate.
(c) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Preferred Stock in substantially
the form of Exhibit C to each record holder of 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.
(d) Certificates for all Common Stock issued after the Record Date, but
prior to the earlier of the Distribution Date or the redemption, expiration or
termination of the Rights, will be considered also to be certificates for
Rights, and will bear a legend (in addition to any other legends required by law
or by the Company's governing documents), substantially in the form set forth
below:
6
This certificate evidences and entitles the holder hereof to
certain Rights as set forth in a Shareholder Rights Agreement
between ▇▇▇▇▇▇▇▇▇ Mortgage, Inc., a Maryland corporation (the
"Company"), and Mellon Investor Services LLC, a New Jersey
limited liability company, as rights agent (the "Rights Agent"),
dated as of January 25, 2001 (the "Rights Agreement"), the terms
of which are incorporated by reference herein and a copy of which
is on file at the principal offices of the Company and the office
of the Rights Agent designated for such purpose. The Company will
mail a copy of the Rights Agreement without charge to the holder
of this certificate within five days after receipt of a written
request therefor. Under certain circumstances, as set forth in
the Rights Agreement, the Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Company may redeem the Rights at a redemption price of $0.01
per Right, subject to adjustment, under the terms of the Rights
Agreement. Under certain circumstances, Rights issued to or held
by Acquiring Persons or by any Affiliates or Associates thereof
(as defined in the Rights Agreement), and any subsequent holder
of such Rights, may become null and void. The Rights are not
exercisable, and are void so long as held, by a holder in any
jurisdiction where the requisite qualification to the issuance to
such holder, or the exercise by such holder, of the Rights in
such jurisdiction has not been obtained.
The Rights associated with the Common Stock represented by certificates
containing the foregoing legend will be evidenced by those certificates alone
until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), and the transfer of any of those certificates will
also constitute the transfer of the Rights associated with the Common Stock
represented by those certificates. If the Company purchases or acquires any
Common Stock after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Stock will be considered canceled and retired
so that the Company is not entitled to exercise any Rights associated with the
Common Stock that is no longer outstanding. The failure to print the foregoing
legend on any certificate representing Common Stock or any defect therein will
not affect in any manner whatsoever the application or interpretation of Section
7 (e) .
SECTION 4. FORM OF RIGHT CERTIFICATES.
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(a) The Right Certificates (and the forms of assignment and election to
purchase shares, and the forms of certificate and notice applicable thereto to
be printed on the reverse of such certificates) will be substantially in the
form of Exhibit B hereto and may have any marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Company may
consider appropriate and as are not inconsistent with this Agreement, provided
that such marks, legends, summaries and endorsements do not affect the rights,
duties or responsibilities of the Rights Agent, or as may be required to comply
with any applicable law, rule or regulation or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to customary usage. The Right Certificates will be in a machine
printable format and in a form reasonably satisfactory to the Rights Agent.
Subject to Sections 11 and 22, the Right Certificates, whenever distributed,
will be dated as of the Record Date, will show the date of countersignature, and
on their face will entitle the holders thereof to purchase such number of one
one-thousandths of a share of Preferred Stock as are set forth therein at the
price set forth therein (the "Exercise Price"), subject to adjustment to the
number of shares and the Exercise Price.
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(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
that represents Rights beneficially owned by (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any Associate or Affiliate of an Acquiring Person) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights, the Common Stock associated with such Rights
or the Company, or (B) a transfer that the Board of Directors, in its sole
discretion, has determined is part of a plan, arrangement or understanding that
has as a primary purpose or effect the avoidance of Section 7(e); and any Right
Certificate issued pursuant to Section 6, Section 11 or Section 22 upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, will bear a legend substantially in the form set
forth below:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or an Associate of an Acquiring Person (as
those terms are defined in the Rights Agreement). This Right
Certificate and the Rights represented hereby may become null and
void under certain circumstances as specified in Section 7(e) of
the Rights Agreement.
The Company shall give written notice to the Rights Agent promptly after it
becomes aware of the existence and identity of any Acquiring Person or any
Associate or Affiliate thereof. The Company shall instruct the Rights Agent in
writing of the Rights that should be so legended. The failure to print the
foregoing legend on any such Right Certificate or any defect therein will not
affect in any manner whatsoever the application or interpretation of the
provisions of Section 7(e).
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
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(a) The Right Certificates will be executed on behalf of the Company by its
Chief Executive Officer, or its President or any Vice President, and by its
Secretary or any Assistant Secretary, either manually or by facsimile signature.
The Right Certificates will be manually countersigned by an authorized signatory
of the Rights Agent and will not be valid for any purpose unless so
countersigned, and such countersignature upon any Right Certificate will be
conclusive evidence, and the only evidence, that such Right Certificate has been
duly countersigned as required hereunder. If any officer of the Company who has
signed any of the Right Certificates ceases to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the
Company, those Right Certificates, nevertheless, may be countersigned by an
authorized signatory of the Rights Agent, and issued and delivered by the
Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be an authorized officer of the Company;
and any Right Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right Certificate, is an
authorized officer of the Company to sign such Right Certificate, although at
the date of the execution of this Agreement was not an authorized officer of the
Company.
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(b) Following the Distribution Date and receipt by the Rights Agent of
written notice to that effect and all other relevant information referred to in
Section 3(a), the Rights Agent will keep or cause to be kept, at one of its
offices designated as the appropriate place for surrender of Right Certificates
upon exercise or transfer, 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
by each of the Right Certificates and the date of each of the Right
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
----------- -------------------------------------------------------------------
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
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(a) Subject to Section 4(b), Section 7(e) and Section 14, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Right Certificate or Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Certificates, entitling the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or following a Triggering Event,
preferred stock including Preferred Stock, Common Stock, cash, property, equity
securities, debt securities, or any combination thereof) as the Right
Certificate or Certificates surrendered then entitled such holder to purchase
and at the same Exercise Price. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Certificates to be transferred, split up, combined or exchanged, with the
form of assignment and certificate duly executed, at the office or offices of
the Rights Agent designated for that purpose. Neither the Rights Agent nor the
Company is obligated to take any action whatsoever with respect to the transfer
of any such surrendered Right Certificate until the registered holder has
properly completed and signed the certificate contained in the form of
assignment on the reverse side of that Right Certificate and has provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company requests.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and
Section 14, countersign and deliver to the Person entitled thereto a Right
Certificate or Certificates, as the case may be, as so requested. The Company
may require payment by the registered holder of a Right Certificate of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates. The Rights Agent shall have no duty or obligation under this
Section 6 or any other similar provision of this Agreement unless and until it
is satisfied that all such taxes and/or governmental charges have been paid in
full.
9
(b) Upon receipt by the Company and the Rights Agent of evidence
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 satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate, if mutilated, the
Company will execute and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered owner in lieu
of the lost, stolen, destroyed or mutilated Right Certificate.
SECTION 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF
----------- RIGHTS.
(a) Subject to Section 7(e), the registered holder of any Right Certificate
may exercise the Rights evidenced thereby (except as otherwise provided herein),
in whole or in part, at any time after the Distribution Date upon surrender of
the Right Certificate, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, to the Rights Agent at the office or
offices of the Rights Agent designated for such purpose, together with payment
of the aggregate Exercise Price for the total number of one one-thousandths of a
share of Preferred Stock (or other securities, cash or other assets, as the case
may be) for which the surrendered Rights are then exercised, at or prior to the
earlier of (i) the Close of Business on January 25, 2011 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed in accordance with
Section 23, and (iii) the time at which such Rights are exchanged in accordance
with Section 24 (the earlier of (i), (ii) and (iii), the "Expiration Date").
Except as set forth in Section 7(e) and notwithstanding any other provision
(except Section 7(e)) of this Agreement, any Person who, prior to the
Distribution Date, becomes a record holder of Common Stock may exercise all of
the rights of a registered holder of a Right Certificate with respect to the
Rights associated with such Common Stock in accordance with the provisions of
this Agreement, as of the date such Person becomes a record holder of Common
Stock.
(b) The initial Exercise Price for each one one-thousandth of a share of
Preferred Stock that can be purchased upon the exercise of a Right is $50.00, is
subject to adjustment from time to time as provided in Section 11 and Section
13, and is payable in lawful money of the United States of America in accordance
with Section 7(c) below.
(c) As promptly as practicable following the Distribution Date, the Company
shall deposit with a corporation, trust, bank or similar institution in good
standing, organized under the laws of the United States of America or any State
of the United States of America, that is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by a federal or state authority (such institution is hereinafter
referred to as the "Depository Agent"), certificates representing the Preferred
Stock that may be acquired upon exercise of the Rights, and the Company shall
10
cause such Depository Agent to enter into an agreement pursuant to which the
Depository Agent shall issue receipts representing interests in the Preferred
Stock so deposited. Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the reverse
side thereof duly executed, accompanied by payment of the Exercise Price for the
shares to be purchased and an amount equal to any applicable tax or governmental
charge (as determined by the Rights Agent), in cash, or by certified check or
bank draft payable to the order of the Company, or by wire transfer of
immediately available funds to the account of the Company (if notice of such
wire transfer is given to the Rights Agent by the holder of the related Right),
the Rights Agent shall, subject to Section 20(k), thereupon promptly (i)
requisition from the Depository Agent (or make available, if the Rights Agent is
the Depository Agent) depository receipts or certificates for the number of one
one-thousandths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes the Depository Agent to comply with all such
requests, (ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with Section 14,
(iii) promptly after receipt of such certificates or depository receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt promptly deliver such cash to or upon the order
of the registered holder of such Right Certificate. If the Company is obligated
to issue other securities of the Company, pay cash or distribute other property
pursuant to Section 11(a), the Company will make all arrangements necessary so
that such other securities, cash or other property are available for
distribution by the Rights Agent, if and when necessary to comply with this
Agreement.
(d) If the registered holder of any Right Certificate exercises less than
all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised will be issued by the Rights
Agent and delivered to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event or Section 13 Event,
any Rights beneficially owned by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any Associate or Affiliate of an Acquiring Person) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any Associate or Affiliate of an Acquiring Person) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming an
Acquiring Person and receives those Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in that Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, the Common Stock associated with such Rights
or the Company, or (B) a transfer that the Board of Directors, in its sole
discretion, has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section 7(e), will be
null and void without any further action and no holder of such Rights will have
any rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise. The Company will use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) are complied
with, but neither the Company nor the Rights Agent will have any liability to
any holder of Right Certificates or other Person as a result of its failure to
make any determination with respect to an Acquiring Person or any Affiliate or
Associate of an Acquiring Person or any transferee of any of them hereunder.
11
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company is obligated to undertake any action with respect
to a registered holder of Rights upon the occurrence of any purported exercise
as set forth in this Section 7 unless such registered holder has (i) properly
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise, and (ii) provided all additional evidence of the identity of the
Beneficial Owner, former Beneficial Owner or Affiliates or Associates thereof as
the Company or the Rights Agent shall request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
-----------
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange will, if surrendered to the Company or any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, will be canceled by it, and no
Right Certificates will be issued in lieu thereof except as expressly permitted
by any provision of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent, as instructed in
writing, shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK.
-----------
(a) The Company shall cause to be reserved and kept available out of its
authorized and unissued Preferred Stock or any authorized and issued Preferred
Stock held in its treasury, a number of shares of Preferred Stock that will be
sufficient to permit the exercise in full of all outstanding and exercisable
Rights. Upon the occurrence of any event resulting in an increase in the
aggregate number of shares of Preferred Stock issuable upon exercise of all
outstanding Rights in excess of the number then reserved, the Company shall make
appropriate increases in the number of shares of Preferred Stock so reserved.
(b) The Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all Preferred Stock issued or reserved
for issuance 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 any national securities
exchange, to be eligible for quotation in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or any successor thereto or other
comparable quotation system.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section
11(a)(iii), or as soon as required by law following the Distribution Date, as
12
the case may be, a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause that registration
statement to become effective as soon as practicable after such filing, and
(iii) cause that registration statement to remain effective (with a prospectus
that at all times meets the requirements of the Securities Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable for
such securities, or (B) the Expiration Date. The Company will also take any
action that is appropriate to ensure compliance with the securities or "blue
sky" laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement when the suspension is no longer in effect, in
each case with prompt written notice to the Rights Agent. Notwithstanding any
provision of this Agreement to the contrary, the Rights are not exercisable in
any jurisdiction unless the requisite qualification in that jurisdiction has
been obtained.
(d) The Company shall take all actions as may be necessary to ensure that
all shares of Preferred Stock delivered upon the exercise of the Rights are, at
the time of delivery of the certificates or depository receipts for such shares
(subject to payment of the Exercise Price), duly issued, validly authorized,
fully paid and nonassessable.
(e) The Company shall pay when due and payable any and all taxes and
charges that may be payable in respect of the issuance or delivery of the Right
Certificates or of any certificates for Preferred Stock upon the exercise of
Rights. The Company is not, however, required to pay any tax or charge that may
be payable in respect of any transfer or delivery of Right Certificates to a
Person other than, or in respect of the issuance or delivery of securities in a
name other than that of, the registered holder of the Right Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for securities in a name other than that of the registered holder
upon the exercise of any Rights until such tax or charge has been paid (any such
tax or charge being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax or charge is due.
SECTION 10. PREFERRED STOCK RECORD DATE.
------------
Each Person in whose name any certificate for Preferred Stock is issued
upon the exercise of Rights will, for all purposes, be considered to have become
the holder of record of the Preferred Stock represented thereby on, and such
certificate will be dated, the date upon which the Right Certificate evidencing
those Rights was duly surrendered and payment of the Exercise Price (and any
applicable transfer taxes) was made; provided, if the date of that surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, that Person will be considered to have become the record holder of
such shares on, and that certificate will be dated, the next succeeding Business
Day on which the Preferred Stock transfer books of the Company are open, but if
delivery of Preferred Stock is delayed pursuant to Section 9(c), that Person
will be considered to have become the record holder of that Preferred Stock only
when that Preferred Stock first becomes deliverable. Prior to the exercise of
the Right evidenced thereby, the holder of a Right Certificate is not entitled
to any rights of a shareholder of the Company with respect to stock for which
the Rights are exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and will not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
13
SECTION 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER AND KIND OF SHARES OR
------------ ---------------------------------------------------------------
NUMBER OF RIGHTS.
-------------------
The Exercise Price, the number and kind of shares of stock covered by each
Right, and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a)(i) If the Company at any time after the date of this Agreement (A)
declares a dividend on the Preferred Stock payable in Preferred Stock, (B)
subdivides the outstanding Preferred Stock, (C) combines the outstanding
Preferred Stock into a smaller number of shares of stock, or (D) issues any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e), the
Exercise Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
(including Preferred Stock) issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital
stock (including Preferred Stock), which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification, but in no event may the
consideration to be paid upon the exercise of a Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of the Right. If an event occurs that would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) will be in addition to,
and will be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 24, if any Person, alone or together with its
Affiliates and Associates, becomes an Acquiring Person (a "Section
11(a)(ii) Event"), then promptly following that occurrence, provision shall
be made so that each holder of a Right, except as provided in Section 7(e),
thereafter has a right to receive, upon exercise thereof at the then
current Exercise Price multiplied by the then number of one one-thousandths
of a share of Preferred Stock for which a Right is then exercisable, in
accordance with the terms of this Agreement, in lieu of shares of Preferred
Stock, such number of shares of Common Stock of the Company as equals the
result obtained by (x) multiplying the then current Exercise Price by the
number of one one-thousandths of a share of Preferred Stock for which a
Right is then exercisable, and dividing that product by (y) 50% of the Fair
Market Value (as defined herein) of one share of Common Stock (determined
in accordance with Section 11(d)) on the date of the occurrence of that
Section 11(a)(ii) Event (such number of shares of stock being referred to
as the "Adjustment Shares").
14
(iii) In lieu of issuing any Common Stock in accordance with Section
11(a)(ii), the Company, acting by resolution of the Board of Directors may,
and if the number of authorized but unissued shares of Common Stock is not
sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a), and the Rights
become so exercisable, the Company, acting by resolution of the Board of
Directors, shall: (A) determine the excess of the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (Y)
the Exercise Price attributable to each Right (such excess being referred
to as the "Spread"), and (B) with respect to all or a portion of each Right
(subject to Section 7(e)), make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Exercise Price, (1) cash,
(2) preferred stock, including but not limited to Preferred Stock, (3)
other equity securities of the Company, (4) debt securities of the Company,
(5) other assets of the Company, or (6) any combination of the foregoing
which, when added to any Common Stock issued upon such exercise, has an
aggregate value equal to the Current Value, with such aggregate value
determined in good faith by the Board of Directors, but if the Company has
not made adequate provision to deliver the value determined in accordance
with clause (B) above within 30 days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall deliver, upon surrender of a Right for
exercise and without requiring payment of the Exercise Price, Common Stock
(to the extent available) and then, if necessary, cash, which shares and
cash have an aggregate value equal to the Spread. If the Board of Directors
determines in good faith that it is likely that sufficient additional
Common Stock could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended to the extent
necessary, but not to more than 90 days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek shareholder approval for the
authorization of such additional shares of stock (that period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action must be taken pursuant to the first or second
sentence of this Section 11(a)(iii), the Company (x) shall provide, subject
to Section 7(e), that such action will apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of
additional shares or to decide the appropriate form of distribution to be
made pursuant to that first sentence and to determine the value thereof. On
any such suspension, the Company shall promptly notify the Rights Agent in
writing of such suspension and shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended and
another public announcement when the suspension is no longer in effect
(with prompt written notice to the Rights Agent that such suspension is no
longer in effect). For purposes of this Section 11(a)(iii), the value of a
share of Common Stock will be the Fair Market Value (as determined pursuant
to Section 11(d)) of a share of Common Stock on the Section 11(a)(ii)
Trigger Date.
15
(b) If the Company fixes a record date for the issuance of rights, options
or warrants to all holders of Preferred Stock entitling them (for a period
expiring within 45 calendar days after that record date) to subscribe for or
purchase Preferred Stock (or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock ("Preferred Stock
Equivalents")) or securities convertible into Preferred Stock or Preferred Stock
Equivalents at a price per share of Preferred Stock or per Preferred Stock
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Stock or Preferred Stock Equivalents) less than the Fair Market
Value (as determined pursuant to Section 11(d)) per share of Preferred Stock on
that record date, the Exercise Price to be in effect after that record date will
be determined by multiplying the Exercise Price in effect immediately prior to
that record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on that record date, plus the number of
shares of Preferred Stock which the aggregate offering price of the total number
of shares of Preferred Stock or Preferred Stock Equivalents to be offered (and
the aggregate initial conversion price of the convertible securities to be so
offered) would purchase at that Fair Market Value and the denominator of which
shall be the number of shares of Preferred Stock outstanding on that record
date, plus the number of additional shares of Preferred Stock and Preferred
Stock Equivalents to be offered for subscription or purchase (or into which the
convertible securities to be so offered are initially convertible), but in no
event will the consideration to be paid upon the exercise of a Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of the Right. If the subscription price may be paid in a
consideration part or all of which is in a form other than cash, the value of
such consideration will be the Fair Market Value thereof determined in
accordance with Section 11(d). Preferred Stock owned by or held for the account
of the Company will not be considered outstanding for the purpose of any such
computation. Those adjustments will be made successively whenever any such
record date is fixed and if any such rights or warrants are not so issued, the
Exercise Price will be adjusted to be the Exercise Price that would then be in
effect if the applicable record date had not been fixed.
(c) If the Company fixes a record date for the making of a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness, cash (other than a
regular periodic cash dividend), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in capital stock other than
Preferred Stock) or convertible securities, subscription rights or warrants
(excluding those referred to in Section 11(b)), the Exercise Price to be in
effect after that record date will be determined by multiplying the Exercise
Price in effect immediately prior to that record date by a fraction, the
numerator of which will be the Fair Market Value (as determined pursuant to
Section 11(d)) of one one-thousandth of a share of Preferred Stock on that
record date, less the Fair Market Value (as determined pursuant to Section
11(d)) of the portion of the cash, assets or evidences of indebtedness to be so
distributed or of such convertible securities, subscription rights or warrants
applicable to one one-thousandth of a share of Preferred Stock and the
denominator of which will be the Fair Market Value (as determined pursuant to
Section 11(d)) of one one-thousandth of a share of Preferred Stock, but in no
event will the consideration to be paid upon the exercise of a Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of the Right. Those adjustments will be made successively
whenever any such record date is fixed, and if any such distribution is not so
made, the Exercise Price will again be adjusted to be the Exercise Price that
would be in effect if the applicable record date had not been fixed.
16
(d) For the purpose of this Agreement, the "Fair Market Value" of any share
of Preferred Stock, Common Stock or any other share or any Right or other
security or any other property will be determined as provided in this Section
11(d).
(i) In the case of a publicly-traded stock or other security, the Fair
Market Value on any date will 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 defined herein) immediately prior to, but not
including, such date; however, if the Fair Market Value per share of any
share of stock is determined during a period following the announcement by
the issuer of such stock of (x) a dividend or distribution on such stock
payable in shares of such stock or securities convertible into shares of
such stock, or (y) any subdivision, combination or reclassification of such
stock, and prior to, but not including, the expiration of the 30 Trading
Day period after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification,
then, and in each such case, the Fair Market Value will be properly
adjusted to take into account ex-dividend trading. The closing price for
each day will be the last sale price, regular way, or, if no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to trading on 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 principal consolidated 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 last quoted high bid and
low asked prices) in the over-the-counter market, as reported by NASDAQ or
such other system then in use; or, if on any such date 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. If on any such
date no market maker is making a market in such security, the Fair Market
Value of such security on such date will be determined reasonably and with
utmost good faith to the holders of the Rights by the Board of Directors,
but if at the time of such determination there is an Acquiring Person, the
Fair Market Value of such security on such date will be determined by a
nationally recognized investment banking firm selected by the Board of
Directors, which determination will be described in a reasonably detailed
statement filed with the Rights Agent and will be binding on the Rights
Agent and the holders of the Rights. The term "Trading Day" means a day on
which 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, in the over-the-counter market, as
reported by NASDAQ or such other system then in use, 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.
17
(ii) If a security is not publicly held or not so listed or traded,
"Fair Market Value" means the fair value per share of stock or per other
unit of such security, determined reasonably and with utmost good faith to
the holders of the Rights by the Board of Directors, but if at the time of
such determination there is an Acquiring Person, the Fair Market Value of
such security on such date will be determined by a nationally recognized
investment banking firm selected by the Board of Directors, which
determination will be described in a reasonably detailed statement filed
with the Rights Agent and will be binding on the Rights Agent and the
holders of the Rights.
(iii) In the case of Preferred Stock, the Fair Market Value per share
(or one one-thousandth of a share) of Preferred Stock shall be determined
in the same manner as set forth above in clause (i) of this Section 11(d).
If the Fair Market Value per share (or one one-thousandth of a share) of
Preferred Stock cannot be determined in the manner provided above in clause
(i) of this Section 11(d) or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of this Section 11(d),
the Fair Market Value per share of Preferred Stock shall be conclusively
deemed to be an amount equal to 1,000 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date
of this Agreement) multiplied by the Fair Market Value per share of the
Common Stock and the Fair Market Value per one one-thousandth of a share of
Preferred Stock shall be equal to the Fair Market Value per share of the
Common Stock (as appropriately adjusted). If neither the Common Stock nor
the Preferred Stock is publicly held or so listed or traded, Fair Market
Value per share shall be determined in accordance with clause (ii) of this
Section 11(d).
(iv) In the case of property other than securities, the Fair Market
Value thereof will be determined reasonably and with utmost good faith to
the holders of Rights by the Board of Directors, but if at the time of such
determination there is an Acquiring Person, the Fair Market Value of such
property on such date will be determined by a nationally recognized
investment banking firm selected by the Board of Directors, which
determination will be described in a reasonably detailed statement filed
with the Rights Agent and will be binding upon the Rights Agent and the
holders of the Rights.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Exercise Price will be required unless that adjustment would require an increase
or decrease of at least 1% in the Exercise Price, but any adjustment that by
reason of this Section 11(e) is not required to be made will be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 11 will be made to the nearest cent or to the nearest ten-thousandth of
a share, as the case may be, or to such other figure as the Board of Directors
considers appropriate. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 must be made no later than the
earlier of (i) three (3) years from the date of the transaction that mandates
that adjustment, or (ii) the Expiration Date.
18
(f) If as a result of any provision of Section 11(a) or Section 13(a), the
holder of any Right becomes entitled to receive any shares of capital stock of
the Company other than Preferred Stock, thereafter the number of such other
shares so receivable upon exercise of any Right will be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the shares contained in Section 11(a), (b),
(c), (d), (e), (g) through (k) and (m), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock will apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder will evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-thousandths of a
share of Preferred Stock (or other securities or amount of cash or combination
thereof) purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in Section
11(i), upon each adjustment of the Exercise Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of one one-thousandths of
a share of Preferred Stock (calculated to the nearest hundred thousandth)
obtained by (i) multiplying (x) the number of one one-thousandths of a share of
Preferred Stock for which a Right may be exercisable immediately prior to this
adjustment by (y) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price, and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(i) The Company may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of Rights in substitution for any adjustment
in the number of shares of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights will be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
hundred-thousandth) obtained by dividing the Exercise Price in effect
immediately prior to adjustment of the Exercise Price by the Exercise Price in
effect immediately after adjustment of the Exercise Price. The Company shall
provide prompt written notice of such adjustment to the Rights Agent and shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
19
amount of the adjustment to be made. This record date may be the date on which
the Exercise Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders are entitled after
such adjustment. Right Certificates to be so distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Exercise Price), and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or the
number of one one-thousandths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Exercise Price per share and the number of shares
which were expressed in the initial Right Certificates issued hereunder without
prejudice to any adjustment or change.
(k) Before taking any action that would cause an adjustment reducing the
Exercise Price below the then stated par value, if any, of the shares of Common
Stock and below one one-thousandth of the then par value of the Preferred Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action that may, in the opinion of its counsel, be reasonably necessary in order
that the Company may validly and legally issue duly authorized, validly issued,
fully paid and nonassessable Preferred Stock or Common Stock at the adjusted
Exercise Price.
(1) In any case in which this Section 11 requires that an adjustment in the
Exercise Price be made effective as of a record date for a specified event, the
Company may, upon prompt written notice to the Rights Agent, elect to defer
until the occurrence of such event the issuing to the holder of any Right
exercised after such record date the number of one one-thousandths of a share of
Preferred Stock or other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of one one-thousandths of
a share of Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment; however, the Company shall deliver to such holder a
due ▇▇▇▇ or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Stock; issuance wholly for cash of any Preferred
Stock at less than Fair Market Value, issuance wholly for cash of Preferred
Stock or securities which by their terms are convertible into or exchangeable
for Preferred Stock, share dividends or issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of the
Preferred Stock, shall not be taxable to such shareholders.
20
(n) The Company shall not, at any time after the Distribution Date and so
long as the Rights have not been redeemed pursuant to Section 23 or exchanged
pursuant to Section 24, (i) consolidate with (other than with a Subsidiary of
the Company in a transaction which complies with the last sentence of this
Section 11(n)), (ii) merge with or into, or (iii) sell or transfer (or permit
any Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries taken as a whole, to any other
Person or Persons (other than the Company or any of its Subsidiaries in one or
more transactions each of which complies with the last sentence of this Section
11(n)) if (x) at the time of or immediately after such consolidation, merger or
sale there are any rights, warrants or other instruments outstanding or
agreements or arrangements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale the shareholders of a Person who constitutes, or would constitute, the
"Principal Party" for the purposes of Section 13(a) have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates; however, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company. The
Company further covenants and agrees that after the Distribution Date it will
not, except as permitted by Section 23 or Section 27, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(o) Notwithstanding anything in this Agreement to the contrary, if the
Company at any time after the date of this Agreement and prior to the
Distribution Date (i) declares or pays any dividend on the outstanding Common
Stock payable in Common Stock, or (ii) effects a subdivision, combination or
consolidation of the outstanding Common Stock (by reclassification or otherwise
than by payment of dividends in Common Stock) into a greater or lesser number of
shares of Common Stock, then in any such case (A) the number of one
one-thousandths of a share of Preferred Stock purchasable after such event upon
proper exercise of each Right will be determined by multiplying the number of
one one-thousandths of a share of Preferred Stock so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately after such event, and (B) each share of Common Stock outstanding
immediately after such event will have issued with respect to it that number of
Rights which each share of Common Stock of the Company outstanding immediately
prior to such event had issued with respect to it. The adjustments provided for
in this Section 11(o) will be made successively whenever any such dividend is
declared or paid or any such subdivision, combination or consolidation is
effected.
(p) The exercise of Rights under Section 11(a)(ii) will only result in the
loss of rights under Section 11(a)(ii) to the extent so exercised and will not
otherwise affect the rights of holders of Right Certificates under this Rights
Agreement, including rights to purchase securities of the Principal Party
following a Section 13 Event that has occurred or may thereafter occur, as set
forth in Section 13. Upon exercise of a Right Certificate under Section
11(a)(ii), the Rights Agent shall return such Right Certificate duly marked to
indicate that such exercise has occurred.
21
SECTION 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES.
-----------
Upon any adjustment pursuant to Section 11 or Section 13, the Company shall
(a) promptly prepare a certificate setting forth such adjustment and a brief,
reasonably detailed, statement of the facts, computations and methodology
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Stock and the Common Stock a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Right
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing Common Stock) in accordance with Section 26. The Rights
Agent will be fully authorized and protected in relying on any such certificate
and on any adjustment contained therein and will not be considered to have
knowledge of any such adjustment unless and until it has received such
certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
----------- ---------------------------------------------------------------
POWER.
------
(a) If, following the Distribution Date, directly or indirectly, (x) the
Company consolidates with, or merges with and into, an Acquiring Person (or any
Affiliate or Associate of an Acquiring Person), and the Company is not the
continuing or surviving corporation of such consolidation or merger, (y) an
Acquiring Person (or any Affiliate or Associate of an Acquiring Person)
consolidates with the Company, or merges with and into the Company and the
Company is the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Stock is changed into or
exchanged for stock or other securities of an Acquiring Person (or of any
Affiliate or Associate of an Acquiring Person) or cash or any other property, or
(z) the Company sells, mortgages or otherwise transfers (or one or more of its
Subsidiaries sells, mortgages or otherwise transfers), in one transaction or a
series of related transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to an Acquiring Person (or to any Affiliate or Associate of an Acquiring
Person), then, and in each such case, the Company shall cause provision to be
made so that: (i) each holder of a Right, except as provided in Section 7(e),
has the right to receive, upon the exercise thereof at the then current Exercise
Price multiplied by the then number of one one-thousandths of a share of
Preferred Stock for which a Right is then exercisable (or if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-thousandths of a share for which a Right
was exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Exercise Price in effect immediately prior to such first
occurrence) in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid and nonassessable shares of freely
tradeable Capital Stock of the Principal Party (as defined herein), free and
clear of rights of call or first refusal, liens, encumbrances, transfer
restrictions or other adverse claims, as are equal to the result obtained by (1)
multiplying the then current Exercise Price by the number of one one-thousandths
of a share of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event, (or if a Section 11(a)(ii) Event
22
has occurred prior to the first occurrence of a Section 13 Event, multiplying
the number of such one one-thousandths of a share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Exercise Price in effect immediately prior to such first
occurrence), and dividing that product by (2) 50% of the Fair Market Value
(determined pursuant to Section 11(d)) per share of the Capital Stock of such
Principal Party on the date of consummation of such consolidation, merger, sale
or transfer; (ii) such Principal Party is thereafter liable for, and assumes, by
virtue of such consolidation, merger, sale, mortgage or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" thereafter refers to such Principal Party, it being specifically
intended that Section 11 apply to such Principal Party, and (iv) such Principal
Party takes such steps including, but not limited to, the reservation of a
sufficient number of shares of its Capital Stock to permit exercise of all
outstanding Rights in accordance with this Section 13(a) and the making of
payments in cash or other securities in accordance with Section 11(a)(iii)) in
connection with such consummation as may be necessary to assure that the
provisions hereof are thereafter applicable, as nearly as reasonably may be, in
relation to the shares its Capital Stock thereafter deliverable upon the
exercise of the Rights.
(b) "Principal Party" means:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Stock is converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer of
Capital Stock that has the highest aggregate Fair Market Value (determined
pursuant to Section i(d)), and if no securities are so issued, the Person
that is the other party to the merger or consolidation, or, if there is
more than one such Person, the Person the Capital Stock of which has the
highest aggregate Fair Market Value (determined pursuant to Section 11(d));
and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets or
earning power transferred pursuant to such transaction or transactions or
if the Person receiving the largest portion of the assets or earning power
cannot be determined, that Person the Capital Stock of which has the
highest aggregate Fair Market Value (determined pursuant to Section 11(d));
but in any such case, (1) if the Capital 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 ("Registered Capital Stock"), or such
Person is not a corporation, and such Person is a direct or indirect Subsidiary
or Affiliate of another Person who has Registered Capital Stock outstanding,
"Principal Party" refers to such other Person; (2) if the Capital Stock of such
Person is not Registered Capital Stock or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person but is not a
direct or indirect Subsidiary of another Person which has Registered Capital
Stock outstanding, "Principal Party" refers to the ultimate parent entity of
such first-mentioned Person; (3) if the Capital Stock of such Person is not
Registered Capital Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Capital Stock outstanding, "Principal Party"
refers to whichever of such other Persons is the issuer of the Registered
Capital Stock having the highest aggregate Fair Market Value (determined
23
pursuant to Section 11(d)); and (4) if the Capital Stock of such Person is not
Registered Capital Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and none of such
other Persons has Registered Capital Stock outstanding, "Principal Party" refers
to whichever ultimate parent entity is the corporation having the greatest
shareholders' equity or, if no such ultimate parent entity is a corporation,
"Principal Party" refers to whichever ultimate parent entity is the entity
having the greatest net assets.
(c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) unless prior thereto (x) the Principal
Party has a sufficient number of authorized shares of its Capital Stock, which
have not been issued or reserved for issuance, to permit the exercise in full of
the Rights in accordance with this Section 13, and (y) the Company and each
Principal Party and each other Person who may become a Principal Party as a
result of such consolidation, merger, sale or transfer shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in Section 13(a) and (b) and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in Section 13(a), the Principal Party at its own expense will:
(i) prepare and file a registration statement under the Securities Act
with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, cause such registration statement to
become effective as soon as practicable after such filing and cause such
registration statement to remain effective (with a prospectus that at all
times meets the requirements of the Securities Act) until the Expiration
Date;
(ii) qualify or register the Rights and the securities purchasable
upon exercise of the Rights under the blue sky laws of such jurisdictions
as may be necessary or appropriate;
(iii) 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
(iv) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration under the Exchange Act.
(d) If 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 (other than to holders of Rights pursuant to this
Section 13), in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, Capital Stock of such Principal
Party at less than the then current Fair Market Value (determined pursuant to
Section 11(d)) or securities exercisable for, or convertible into, Capital Stock
24
of such Principal Party at less than such Fair Market Value, or (ii) providing
for any special payment, tax or similar provisions in connection with the
issuance of the Capital 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 have
executed and delivered to the Rights Agent a supplemental agreement providing
that that provision of such Principal Party has been canceled, waived or
amended, or that the authorized securities will be redeemed, so that that
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
This Section 13 will similarly apply to successive mergers or
consolidations or sales or other transfers.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
------------
(a) The Company is not required to issue fractions of Rights, except prior
to the Distribution Date as provided in Section 11(o), or to distribute Right
Certificates which evidence fractional Rights. If the Company elects not to
issue such fractional Rights, the Company shall pay, in lieu of such fractional
Rights, to the registered holders of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the Fair Market Value of a whole Right, as determined
pursuant to Section 11(d).
(b) The Company is not required to issue fractions of shares of Preferred
Stock (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock). Fractions of shares of Preferred Stock in integral multiples
of one one-thousandth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the shares of Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of Preferred Stock, the
Company may pay to the registered holders of Right Certificates at the time such
Rights are exercised, as herein provided, an amount in cash equal to the same
fraction of the Fair Market Value of one one-thousandth of a share of Preferred
Stock. For purposes of this Section 14(b), the Fair Market Value of one
one-thousandth of a share of Preferred Stock shall be determined pursuant to
Section 11(d) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Rights expressly waives
the holder's right to receive any fractional Right or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
25
(d) Whenever a payment for fractional Rights or fractional shares is to be
made by the Rights Agent, the Company shall (i) promptly prepare and deliver to
the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payment and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any Section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
SECTION 15. RIGHTS OF ACTION.
----------- ------------------
All rights of action in respect of this Agreement, other than rights of
action vested in the Rights Agent pursuant to Sections 18 and 20, are vested in
the respective registered holders of the Right Certificates (or, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Right Agent or of the holder of
any other Right Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in such registered holder's own behalf and for such registered
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Right evidenced by such Right Certificate in
the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and are entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement. Holders of Rights are entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS.
----------- ------------------------------
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, each Right will be transferable only
simultaneously and together with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office or
offices of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f), the Company and the Rights Agent may
deem and treat the Person in whose name a Right Certificate (or, prior to the
Distribution Date, the associated certificate representing Common Stock) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated certificate representing Common Stock made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and, subject
to the last sentence of Section 7(e), neither the Company nor the Rights Agent
shall be affected by any notice to the contrary; and
26
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent will have any liability to any holder of a Right or
other Person as the result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining performance of such
obligations; however, the Company must use its reasonable efforts to have any
such order, decree or ruling lifted or otherwise overturned as soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT CONSIDERED A SHAREHOLDER.
----------- ----------------------------------------------------------
No holder, as such, of any Right Certificate is entitled to vote, receive
dividends or be considered for any purpose a holder of Preferred Stock or any
other securities of the Company that may at any time be issuable on the exercise
of the Rights represented thereby, nor will 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 shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate 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 disbursements and
other disbursements incurred in the preparation, delivery, amendment,
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, damage, judgment,
fine, penalty, claim, demand, settlement, cost or expense, incurred without
gross negligence, bad faith or willful misconduct (each as finally determined by
a final, non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction) on the part of the Rights Agent, for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement or the exercise and performance of its duties
hereunder, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. The provisions of this
Section 18 and Section 20 below shall survive the termination of this Agreement,
the exercise or expiration of the Rights and the resignation or removal of the
Rights Agent. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.
27
(b) The Rights Agent shall be authorized and protected and will incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with the acceptance and administration of this Agreement or the
exercise and performance of its duties hereunder in reliance upon any Right
Certificate or certificate representing Common Stock, Preferred Stock, or 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 and executed by the proper Person or Persons. The Rights Agent
shall not be deemed to have any duty or notice unless and until the Company has
provided the Rights Agent with actual written notice.
(c) Anything in this Agreement to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, punitive, indirect, incidental 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 possibility
of such loss or damage. Any liability of the Rights Agent under this Agreement
shall be limited to the amount of fees paid by the Company to the Rights Agent.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
------------ ----------------------------------------------------------
(a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any Person succeeding to the corporate trust or shareholder
services business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
if such Person would be eligible for appointment as a successor Rights Agent
under Section 21. If at the time such successor Rights Agent succeeds to the
agency created by this Agreement, any of the Right Certificates have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver the Right
Certificates so countersigned; and if at that time any of the Right Certificates
have not been countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases those Right Certificates will have
the full force provided in the Right Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent is changed and at such time
any of the Right Certificates have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and if at that time any of the Right
Certificates have not been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates will have the full force provided in the
Right Certificates and in this Agreement.
28
SECTION 20. DUTIES OF RIGHTS AGENT.
------------ -------------------------
The Rights Agent undertakes the duties and obligations expressly imposed by
this Agreement (and no implied duties or obligations) upon the following terms
and conditions, by which the Company and the holders of Right Certificates, by
their acceptance thereof, are bound:
(a) The Rights Agent may consult with legal counsel selected by it (who may
be legal counsel for the Company), and the advice or opinion of that counsel
will be full and complete authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability for or in respect of any action taken
or omitted by it in good faith and in accordance with such advice or opinion.
(b) Whenever in the exercise and performance of its duties under this
Agreement the Rights Agent considers it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of Fair Market Value) be proved or established by the Company
prior to taking or suffering or omitting to take any action hereunder, that fact
or matter (unless other evidence in respect thereof is herein specifically
prescribed) may be considered to be conclusively proved and established by a
certificate signed by a person believed by the Rights Agent to be the Chairman
of the Board of Directors, the President, a Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company and
delivered to the Rights Agent. Any such certificate will be full and complete
authorization and protection to the Rights Agent for any action taken, suffered
or omitted in good faith by it under this Agreement in reliance upon such
certificate.
(c) The Rights Agent will be liable hereunder only for its own gross
negligence, bad faith or willful misconduct (each as finally determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction).
(d) The Rights Agent is not liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or required to verify the
same, but all such statements and recitals are and will be considered to have
been made by the Company only.
(e) The Rights Agent shall not be liable for, nor shall it be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereon); nor is it responsible for any breach by the Company
of any covenant or condition contained in this Agreement or in any Right
Certificate, nor is it responsible for any change in the exercisability of the
Rights (including the Rights becoming null and void pursuant to Section 7(e)) or
any adjustment required under Section 11, Section 13 or Section 24(c) or
responsible for the manner, method or amount of any such adjustment or the
29
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 furnished in
accordance with Section 12); nor is it responsible for any determination by the
Board of Directors of the Fair Market Value of the Rights or Preferred Stock;
nor will it by any act hereunder be considered to make any representation or
warranty as to the authorization or reservation of any Common Stock or Preferred
Stock or any Right Certificate or as to whether any Common Stock or Preferred
Stock will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company 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 this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person believed
by the Rights Agent to be the Chairman of the Board of Directors, the President,
a Vice President, the Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer of the Company, and is authorized to apply to such officers
for advice or instructions in connection with its duties, and it will not be
liable for any action taken, suffered or omitted to be taken by it in good faith
in accordance with the advice or instructions of any such officer. The Rights
Agent shall be fully protected and authorized in relying upon the most recent
advice or instructions received by 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, suffered or
omitted by the Rights Agent under this Agreement and the date on or after which
that action will be taken or suffered or such omission will be effective. The
Rights Agent will not be liable for any action taken or suffered by, or omission
of, the Rights Agent in accordance with a proposal included in such application
on or after the date specified in such application (which date may not be less
than five Business Days after the date any officer of the Company actually
receives such application, unless any such officer has consented in writing to
an earlier date) unless, prior to taking or suffering any such action (or the
effective date in the case of an omission), the Rights Agent has received
written instructions in response to such application specifying the action to be
taken, suffered or omitted.
(h) The Rights Agent and any shareholder, affiliate, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein precludes the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(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 or any other Person resulting from any
such act, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct (each as finally determined by a court of competent
jurisdiction) in the selection and continued employment thereof.
30
(j) No provision of this Agreement requires 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 it believes
that repayment of such funds or adequate indemnification against such risk or
liability is not assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been properly completed or indicates an affirmative response to clause (1) or
clause (2) thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company.
SECTION 21. CHANGE OF RIGHTS AGENT.
------------
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon thirty (30) days' notice in writing
mailed to the Company by first class mail. The Company may remove the Rights
Agent or any successor Rights Agent (with or without cause) upon thirty (30)
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Stock and Preferred
Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent resigns or is removed or
otherwise becomes incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company fails to make such appointment within a period
of thirty (30) days after giving notice of such removal, or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit that holder's Right Certificate for inspection by the
Company), then the incumbent Rights Agent or the registered holder 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, must be (a) a Person organized and doing business
under the laws of the United States of America or of any other state of the
United States of America, in good standing, which is authorized under such laws
to exercise stock transfer or corporate trust powers or to conduct shareholder
services business and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000, or (b) an Affiliate of a
Person described in clause (a) of this sentence. After appointment, the
successor Rights Agent will be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed, but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
that purpose. 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 the 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, will 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.
31
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
------------ --------------------------------------
Notwithstanding any provision of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in any 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 or other securities or property purchasable under the
Right Certificates made in accordance with this Agreement. In addition, in
connection with the issuance or sale of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to Common Stock so issued or sold pursuant to the exercise
of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereafter issued by the Company,
and (b) may, in any other case, if considered necessary or appropriate by the
Board of Directors, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sales; however, (i) no such Right
Certificate will be issued if, and to the extent that, the Company will be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificate will be
issued if, and to the extent that, appropriate adjustments otherwise have been
made in lieu of the issuance thereof.
SECTION 23. REDEMPTION.
----------- -----------
(a) The Board of Directors may, at its option, redeem all but not less than
all of the then outstanding Rights at a redemption price of $0.01 per Right,
appropriately adjusted to reflect any dividend declared or paid on the Common
Stock in Common Stock or any subdivision or combination of the outstanding
Common Stock or similar event occurring after the date of this Agreement (such
redemption price, as adjusted from time to time, being hereinafter referred to
as the "Redemption Price"). The Rights may be redeemed only until the earlier to
occur of (i) the Close of Business, on the calendar day after the Stock
Acquisition Date, or (ii) the Close of Business on the Final Expiration Date.
(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights, and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights will be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give prompt written notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to the Rights Agent and 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 that is mailed in the manner herein provided shall be
32
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or Section 24 or in
connection with the purchase of Common Stock prior to the Distribution Date.
(c) The Company may, at its option, pay the Redemption Price in cash,
Common Stock (based on the Fair Market Value of the Common Stock as of the time
of redemption), or any other form of consideration considered appropriate by the
Board of Directors.
(d) For a period of 180 days from the date of the Distribution Date, the
right to redeem the Rights set forth in this Section 23 shall only be
exercisable by the Board of Directors if a majority of the directors who are
members of such Board held such office for at least six months prior to the
beginning of the period.
SECTION 24. EXCHANGE.
------------ ---------
(a) The Board of Directors may, at its option, at any time on or after the
occurrence of a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which will not include Rights that have
become null and void pursuant to the provisions of Section 7(e)) for Common
Stock at an exchange ratio of one share of the Common Stock of the Company per
Right, appropriately adjusted to reflect any share split, share dividend or
similar transaction occurring after the date hereof (the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors is not 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 Common Stock.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24 and without
any further action and without any notice, the right to exercise such Rights
will terminate and the only right thereafter of a holder of such Rights will 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 notice of any such exchange in accordance with Section 26, but the
failure to give, or any defect in, such notice will not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
the Rights Agent and 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
that is mailed in the manner herein provided will be considered given, whether
or not the holder receives the notice. Each such notice of exchange will state
the method by which the exchange of the Common 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 will 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)) held by each holder of Rights.
33
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or Preferred Stock Equivalents) for
Common Stock exchangeable for Rights, at the initial rate of one one-thousandth
of a share of Preferred Stock (or Preferred Stock Equivalents) for each share of
Common Stock, as appropriately adjusted to reflect adjustments in the economic
rights of the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each share of Common
Stock will have the same economic rights as one share of Common Stock.
(d) If the Company elects to make any exchange pursuant to this Section 24
and, at the time of that exchange, there is not sufficient Common Stock or
Preferred Stock (or Preferred Stock Equivalents) issued but not outstanding or
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all actions as may be
necessary to authorize additional Common Stock or Preferred Stock (or Preferred
Stock Equivalents) for issuance upon exchange of the Rights.
(e) The Company will not be required to issue fractions of shares of Common
Stock or to distribute certificates which evidence fractional shares of Common
Stock. If the Company elects not to issue those fractional shares of Common
Stock, the Company shall pay, in lieu of those fractional shares of Common
Stock, to the registered holders of the Right Certificates with regard to which
those fractional shares of Common Stock would otherwise be issuable, an amount
in cash equal to the same fraction of the Fair Market Value of a whole share of
Common Stock of the Company. For the purposes of this paragraph (e), the Fair
Market Value of a whole share of Common Stock of the Company shall be the
closing price of a share of Common Stock of the Company (as determined pursuant
to the second sentence of Section 11(d)(i)) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
(f) For a period of 180 days from the date of the Distribution Date, the
right to exchange the Rights set forth in this Section 24 shall only be
exercisable by the Board of Directors if a majority of the directors who are
members of such Board held such office for at least six months prior to the
beginning of the period.
SECTION 25. NOTICE OF CERTAIN EVENTS.
------------ ----------------------------
(a) If the Company proposes at any time after the Distribution Date (i) to
pay any dividend payable in shares of any class to the holders of Preferred
Stock or to make any other distribution to the holders of Preferred Stock (other
than a regular periodic cash dividend), or (ii) to offer to the holders of
Preferred Stock rights or warrants to subscribe for or to purchase any
additional Preferred Stock or shares of capital stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding Preferred Stock), or (iv) to effect any consolidation or merger into
or with, or to effect any sale, mortgage or other transfer (or to permit one or
more of its Subsidiaries to effect any sale, mortgage or other transfer), in one
transaction or a series of related transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person (other than a Subsidiary of the Company in one or more transactions
each of which is not prohibited by the last sentence of Section 11(n)), or (v)
to effect the liquidation, dissolution or winding up of the Company, or (vi) to
34
declare or pay any dividend on the Common Stock payable in Common Stock or to
effect a subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock) then
in each such case, the Company shall give to each holder of a Right Certificate
and to the Rights Agent, in accordance with Section 26, a notice of that
proposed action, that specifies the record date for the purposes of that share
dividend, distribution of rights or warrants, or the date on which that
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Stock or Preferred Stock, if any record
date is to be fixed, and that notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the Preferred Stock for purposes of that
action, and in the case of any other similar action, at least twenty (20) days
prior to the date of the taking of that proposed action or the date of
participation therein by the holders of the Common Stock or Preferred Stock,
whichever is earlier; but no notice shall be required pursuant to this Section
25 if any Subsidiary of the Company effects a consolidation or merger with or
into, or effects a sale or other transfer of assets or earnings power to, any
other Subsidiary of the Company in a manner not inconsistent with the provisions
of this Agreement.
(b) If any Section 11(a)(ii) Event occurs, then the Company shall, as soon
as practicable thereafter, give to each registered holder of a Right Certificate
and to the Rights Agent, in accordance with Section 26, a notice of the
occurrence of that event, which will specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii).
SECTION 26. NOTICES.
----------- --------
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Right Certificate to or on the Company will
be sufficiently given or made if sent by first-class mail, postage prepaid,
facsimile transmission or by nationally recognized overnight courier addressed
(until another address is filed in writing with the Rights Agent) as follows:
▇▇▇▇▇▇▇▇▇ Mortgage, Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Subject to Section 21, any notice or demand authorized by this Agreement to be
given or made by the Company or by the holder of any Right Certificate to or on
the Rights Agent will be sufficiently given or made if sent by first-class mail,
postage prepaid, facsimile transmission or by nationally-recognized overnight
courier addressed (until another address is filed in writing with the Company)
as follows:
35
Mellon Investor Services LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Relationship Manager
With a copy to:
Mellon Investor Services LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing Common
Stock) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to that holder at the address of that holder as shown on the
registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
----------- -----------------------------
(a) Prior to the earlier of (i) the Distribution Date, and (ii) the date on
which the Rights can no longer be redeemed in accordance with Section 23, the
Company and the Rights Agent will, if the Company so directs, supplement or
amend any provision of this Agreement as the Company may deem necessary or
desirable without the approval of any holders of certificates representing
Common Stock. From and after the earlier date referred to in the immediately
preceding sentence, the Company and the Rights Agent will, if the Company so
directs, supplement or amend this Agreement without the approval of any holder
of Right Certificates only in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to change or supplement the provisions hereof in
any manner which the Company may deem necessary or desirable and which will not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or any Affiliate or Associate of an Acquiring Person);
however, from and after the Distribution Date this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at the time the
Rights are not redeemable, or (B) any other time period unless that lengthening
is for the purpose of protecting, enhancing or clarifying the rights of, and the
benefits to, the holders of Rights (other than an Acquiring Person or any
Affiliate or Associate of an Acquiring Person). Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with this Section 27, the
Rights Agent shall execute the proposed supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights will be considered
coincident with the interests of the holders of Common Stock. Notwithstanding
any other provision hereof, the Rights Agent's consent must be obtained
regarding any amendment or supplement pursuant to this Section 27 that alters or
increases the Rights Agent's rights, duties, liabilities or obligations.
36
(b) For a period of 180 days from the date of the Distribution Date, the
right to supplement or amend this Agreement set forth in this Section 27 shall
only be exercisable by the Board of Directors if a majority of the directors who
are members of such Board held such office for at least six months prior to the
beginning of the period.
SECTION 28. SUCCESSORS.
------------ ----------
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent will bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.
------------ ----------------------------------------------------------
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of the outstanding Common Stock of which
any Person is the Beneficial Owner, will be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the Rules under the Exchange Act as in effect
on the date hereof. The Board of Directors has the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including without limitation,
the right and power to (i) interpret the provisions of this Agreement, and (ii)
make all determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the Rights or
to amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith will (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject any
member of the Board of Directors to any liability to the holders of the Rights
or to any other person. The Rights Agent shall always be entitled to assume that
the Company's Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.
SECTION 30. BENEFITS OF THIS AGREEMENT.
------------ ------------------------------
Nothing in this Agreement will be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock) any legal
or equitable right, remedy or claim under this Agreement. This Agreement is for
the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
37
SECTION 31. SEVERABILITY.
------------ -------------
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement will remain in full force and effect and will in
no way be affected, impaired or invalidated; but, notwithstanding anything in
this Agreement to the contrary, if any term, provision, covenant or restriction
is held by such court or authority to be invalid, void or unenforceable and the
Board of Directors determines in its good faith judgment that severing the
invalid language from the Agreement would adversely affect the purpose or effect
of the Agreement, the right of redemption set forth in Section 23 will be
reinstated and will not expire until the Close of Business on the tenth day
following the date of that determination by the Board of Directors.
SECTION 32. GOVERNING LAW.
------------
This Agreement, each Right and each Right Certificate issued hereunder will
be considered to be a contract made under the laws of Maryland and for all
purposes will be governed by and construed in accordance with the laws of
Maryland applicable to contracts to be made and to be performed entirely within
Maryland; provided, however, that all provisions regarding the rights, duties
and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
SECTION 33. COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts and each
counterpart will for all purposes be considered to be an original, and all
counterparts will together constitute but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS.
------------
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and will not control or affect the meaning or construction
of any of the provisions of this Agreement.
SECTION 35. INTERPRETATIONS; ABSENCE OF PRESUMPTION.
------------
(a) For the purposes hereof, (i) words in the singular include the plural
and vice versa and words of one gender shall be held to include the other gender
as the context requires, (ii) the terms "hereof," "herein," and "herewith" and
words of similar import, unless otherwise stated, refer to this Agreement as a
whole (including all of the Exhibits hereto) and not to any particular provision
of this Agreement, and Section, paragraph, and Exhibit references are to the
Sections, paragraphs and Exhibits in and to this Agreement unless otherwise
specified, (iii) the word "including" and words of similar import when used in
this Agreement mean "including, without limitation," unless otherwise specified,
and (iv) the word "or" shall not be exclusive, but means "and/or."
38
(b) This Agreement will be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
IN WITNESS WHEREOF, this Agreement has been executed in one or more
counterparts by or on behalf of each of the parties hereto as of the date first
above written.
▇▇▇▇▇▇▇▇▇ MORTGAGE, INC.,
a Maryland corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
MELLON INVESTOR SERVICES LLC,
a New Jersey limited liability company,
as Rights Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Business Development
39
EXHIBIT A
FORM OF
ARTICLES SUPPLEMENTARY OF RIGHTS AND PREFERENCES
OF A CLASS OF PREFERRED STOCK
OF
▇▇▇▇▇▇▇▇▇ MORTGAGE, INC.
BEING FILED SEPARATELY AS EXHIBIT 3.1.4
A-1
EXHIBIT B
FORM OF RIGHT CERTIFICATE
BEING FILED SEPARATELY AS EXHIBIT 4.5
B-1
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On January 25, 2001, the Board of Directors of ▇▇▇▇▇▇▇▇▇ Mortgage, Inc., a
Maryland corporation (the "Company"), approved a Shareholder Rights Agreement
(the "Rights Agreement"). A copy of the Rights Agreement, including the
exhibits thereto, 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.
SUMMARY OF THE RIGHTS
Pursuant to the Rights Agreement, the Board of Directors declared a
dividend distribution of one Preferred Stock Purchase Right (a "Right") for each
outstanding share of common stock, par value $0.01 per share, of the Company
(the "Common Stock") to shareholders of record as of the close of business on
April 6, 2001 (the "Record Date"). In addition, one Right will automatically
attach to each share of Common Stock issued between the Record Date and the
Distribution Date (as defined herein). Each Right entitles the registered holder
thereof to purchase from the Company a unit (a "Preferred Unit") consisting of
one one-thousandth of a share of Series B Cumulative Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), at a cash exercise price of $50.00 per
Preferred Unit (the "Exercise Price"), subject to adjustment.
Initially, the Rights are not exercisable and are attached to and trade
with the Common Stock outstanding as of, and all Common Stock issued after, the
Record Date. The Rights will separate from the Common Stock, separate
certificates will be distributed to holders of the Common Stock and the Rights
will become exercisable upon the earlier of (i) the close of business on the
10th calendar day following the earlier of (a) the date of the first public
announcement that a person or a group of affiliated or associated persons has
acquired beneficial ownership of 9.8% or more of the outstanding Common Stock
(an "Acquiring Person"), or (b) the date on which the Company first has notice
or otherwise determines that a person has become an Acquiring Person (the
earlier of (a) and (b), the "Stock Acquisition Date"), or (ii) the close of
business on the 10th business day following the commencement of a tender offer
or exchange offer that would result, upon its consummation, in a person or group
becoming the Beneficial Owner of 9.8% or more of the outstanding Common Stock
(the earlier of (i) and (ii), the "Distribution Date"). The Rights Agreement
exempts from the definition of Acquiring Person any person who the Board of
Directors determines acquired 9.8% or more of the Common Stock inadvertently, if
that person promptly divests itself of enough Common Stock to reduce the number
of shares beneficially owned by that person to below the 9.8% threshold. The
Rights Agreement also exempts from the definition of Acquiring Person any person
in connection with which the Board of Directors approved the transaction which
otherwise would have resulted in that person becoming an Acquiring Person.
Until the Distribution Date (or the earlier redemption, exchange or
expiration of the Rights), (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with those Common Stock
certificates, (ii) new Common Stock certificates issued after the Record Date
will include a notation incorporating the Rights Agreement by reference, and
(iii) the surrender for transfer of any certificate for Common Stock will also
constitute the transfer of the Rights associated with the Common Stock
represented by that certificate.
C-1
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on January 25, 2011, unless previously redeemed or
exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Right Certificates will
be mailed to holders of record of Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise determined by the Board of
Directors, only Common Stock issued prior to the Distribution Date will be
issued with Rights.
If a Stock Acquisition Date occurs, provision will be made so that each
holder of a Right (other than an Acquiring Person or associates or affiliates
thereof, whose Rights will become null and void) thereafter has the right to
receive upon exercise that number of shares of Common Stock having a market
value of two times the exercise price of the Right (that right being referred to
as the "Subscription Right"). If, at any time following the Distribution Date:
(i) the Company consolidates with, or merges with and into, any Acquiring Person
or any associate or affiliate thereof, and the Company is not the continuing or
surviving corporation, (ii) any Acquiring Person or any associate or affiliate
thereof consolidates with the Company, or merges with and into the Company and
the Company is the continuing or surviving corporation of that merger and, in
connection with that merger, all or part of the Common Stock is changed into or
exchanged for stock or other securities of any other person or cash or any other
property, or (iii) 50% or more of the Company's assets or earning power is sold,
mortgaged or otherwise transferred, each holder of a Right will thereafter have
the right to receive, upon exercise, capital stock of the acquiring company
having a market value equal to two times the exercise price of the Right (that
right being referred to as the "Merger Right"). Each holder of a Right will
continue to have the Merger Right whether or not that holder has exercised the
Subscription Right, but Rights that are or were beneficially owned by an
Acquiring Person may (under certain circumstances specified in the Rights
Agreement) become null and void.
At any time after a Stock Acquisition Date occurs, the Board of Directors
may, at its option, exchange Common Stock or Preferred Units for all or any part
of the then outstanding and exercisable Rights (which excludes Rights held by an
Acquiring Person) at an initial exchange ratio of one share of Common Stock or
one Preferred Unit per Right. However, the Board of Directors generally will not
be empowered to effect any such exchange at any time after any person becomes
the Beneficial Owner of 50% or more of the Common Stock.
The Exercise Price payable, and the number of Preferred Units or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a share
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to in (i) and (ii)).
C-2
With certain exceptions, no adjustment in the Exercise Price will be
required until cumulative adjustments amount to at least 1% of the Exercise
Price. The Company is not obligated to issue fractional Preferred Units. If the
Company elects not to issue fractional Preferred Units, in lieu thereof an
adjustment in cash will be made based on the fair market value of the Preferred
Stock on the last trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of $0.01
per Right (payable in cash, Common Stock or other consideration considered
appropriate by the Board of Directors) by the Board of Directors only until the
earlier of the close of business on (i) the calendar day after the Stock
Acquisition Date, or (ii) the expiration date of the Rights Agreement.
Immediately upon any action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and thereafter the only right of the holders
of Rights will be to receive the redemption price.
The Rights Agreement may be amended by the Board of Directors in its sole
discretion until the earlier of the Distribution Date and the date on which the
rights become nonredeemable, as described above. After the earlier of those two
dates, the Board of Directors may, subject to certain limitations set forth in
the Rights Agreement, amend the Rights Agreement only to cure any ambiguity,
defect or inconsistency, to shorten or lengthen any time period, or to make
changes that do not adversely affect the interests of Rights holders (excluding
the interests of an Acquiring Person or associates or affiliates thereof).
Until a Right is exercised, the holder will have no rights as a shareholder
of the Company (beyond those as an existing shareholder), including the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income if the Rights become exercisable for
Preferred Units, other securities of the Company or other consideration, or for
common stock of an acquiring company.
DESCRIPTION OF PREFERRED STOCK
The Preferred Stock that may be acquired upon exercise of the Rights will
not be redeemable and will generally rank junior to any other outstanding
Preferred Stock of the Company, including the Company's Series A 9.68%
Cumulative Convertible Preferred Stock. Each share of Preferred Stock will have
a preferential quarterly dividend of the greater of (i) $1.00 per share, and
(ii) an amount equal to 1,000 times the aggregate per share amount of any
dividend declared on the Common Stock, other than a dividend payable in Common
Stock or a subdivision of the outstanding Common Stock.
If the Company liquidates, each holder of a share of Preferred Stock will
receive a preferred liquidation payment equal to the greater of (i) $1,000 per
share, and (ii) an amount per share equal to 1,000 times the aggregate amount to
be distributed per share of Common Stock.
Each share of the Preferred Stock will entitle the holder thereof to 1,000 votes
on all matters submitted to a vote of the shareholders of the Company, subject
to adjustment under certain circumstances. Except as otherwise provided by law
the holders of the Preferred Stock, the Common Stock and any other capital stock
of the Company possessing general voting rights will vote as a single class. In
the event of an arrearage in payment of six quarterly dividends (regardless of
whether declared by the Board of Directors) the Board of Directors will increase
by two directors to be elected by the holders of outstanding shares of the
Preferred Stock.
C-3
On any merger, consolidation or other transaction in which Common Stock is
exchanged, each Preferred Unit will be entitled to receive the per share amount
paid in respect of each share of Common Stock.
The rights of holders of the Preferred Stock to dividends and upon
liquidation, and in connection with mergers and consolidations, are protected by
customary anti-dilution provisions.
Because of the nature of the Preferred Stock dividend and liquidation
rights, the economic value of each Preferred Unit issuable upon the exercise of
a Right should approximate the economic value of a share of Common Stock.
C-4