Exhibit 4(a)
AMENDED AND RESTATED
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
February 10, 2003
between
ADVO, INC.
and
MELLON INVESTOR SERVICES LLC
(as successor to Mellon Securities Trust Company)
as Rights Agent
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
TABLE OF CONTENTS
PAGE
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ARTICLE I CERTAIN DEFINITIONS.......................................................... 2
1.1 Certain Definitions.......................................................... 2
ARTICLE II THE RIGHTS................................................................... 9
2.1 Summary of Rights............................................................ 9
2.2 Legend on Common Stock Certificates.......................................... 9
2.3 Exercise of Rights; Separation of Rights..................................... 10
2.4 Adjustments to Exercise Price; Number of Rights.............................. 13
2.5 Date on Which Exercise is Effective.......................................... 15
2.6 Execution, Authentication, Delivery and Dating of Rights Certificates....... 15
2.7 Registration, Registration of Transfer and Exchange.......................... 16
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates.................... 17
2.9 Persons Deemed Owners........................................................ 18
2.10 Delivery and Cancellation of Certificates.................................... 19
2.11 Agreement of Rights Holders.................................................. 19
ARTICLE III ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS............... 20
3.1 Flip-in...................................................................... 20
3.2 Flip-over.................................................................... 24
ARTICLE IV THE RIGHTS AGENT............................................................. 25
4.1 General...................................................................... 25
4.2 Merger or Consolidation or Change of Name of Rights Agent.................... 26
4.3 Duties of Rights Agent....................................................... 28
4.4 Change of Rights Agent....................................................... 32
ARTICLE V MISCELLANEOUS................................................................ 33
5.1 Termination.................................................................. 33
5.2 Expiration................................................................... 34
5.3 Issuance of New Rights Certificates.......................................... 34
5.4 Supplements and Amendments................................................... 35
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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5.5 Fractional Shares............................................................ 35
5.6 Rights of Action............................................................. 36
5.7 Holder of Rights Not Deemed a Stockholder.................................... 37
5.8 Notice of Proposed Actions................................................... 37
5.9 Notices...................................................................... 37
5.10 Suspension of Exercisability................................................. 39
5.11 Costs of Enforcement......................................................... 39
5.12 Successors................................................................... 39
5.13 Benefits of this Agreement................................................... 39
5.14 Determination and Actions by the Board of Directors, etc..................... 40
5.15 Descriptive Headings......................................................... 40
5.16 Governing Law................................................................ 40
5.17 Counterparts................................................................. 41
5.18 Severability................................................................. 41
Exhibit A Form of Rights Certificate (Together with Form of Election to Exercise)
Exhibit B Form of Certificate of Designation and Terms of Series B Junior
Participating Preferred Stock
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AMENDED AND RESTATED
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDER PROTECTION RIGHTS AGREEMENT (as
amended from time to time, this "Agreement"), dated as of February 10, 2003,
between ADVO, INC., a Delaware corporation (the "Company"), and MELLON INVESTOR
SERVICES LLC, a New Jersey limited liability company, as Rights Agent and
successor to Mellon Securities Trust Company (the "Rights Agent", which term
shall include any successor Rights Agent hereunder) amends and restates the
Stockholder Protection Rights Agreement, dated as of February 5, 1993, between
the Company and the Rights Agent.
WITNESSETH:
WHEREAS, the Board of Directors of the Company (a) authorized and
declared a dividend distributed on March 4, 1993 (the "Payment Date") of one
right (a "Right") in respect of each share of Common Stock (as hereinafter
defined) held of record as of the close of business on February 11, 1993 (the
"Record Time") and (b) authorized the issuance of one Right in respect of each
share of Common Stock issued after the Record Time and prior to the Separation
Time (as hereinafter defined) and, to the extent provided in Section 5.3, each
share of Common Stock issued after the Separation Time;
WHEREAS, the Board of Directors of the Company has authorized the
extension of the Expiration Date (as hereinafter defined) and other amendments
to be made pursuant to this Amended and Restated Stockholder Protection Rights
Agreement;
WHEREAS, subject to the terms hereof, each Right entitles the holder
thereof, after the Separation Time, to purchase securities of the Company (or,
in certain cases, of certain other entities) pursuant to the terms and subject
to the conditions set forth herein; and
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner of
15% or more of the outstanding shares of Common Stock; provided, however, that
the term "Acquiring Person" shall not include (i) any Person who shall become
the Beneficial Owner of 15% or more of the outstanding shares of Common Stock
solely as a result of an acquisition by the Company of shares of Common Stock,
until such time thereafter as any such Person shall become the Beneficial Owner
(other than by means of a stock dividend or stock split) of any additional
shares of Common Stock, (ii) any Person who shall become the Beneficial Owner of
15% or more of the outstanding shares of Common Stock but who acquires
Beneficial Ownership of shares of Common Stock without any plan or intention to
seek or affect control of the Company, if such Person promptly enters into an
irrevocable commitment promptly to divest, and thereafter promptly divests
(without exercising or including voting, with respect to such shares),
sufficient shares of Common Stock (or securities convertible into, exchangeable
into or exercisable for Common Stock) so that such Person ceases to be the
Beneficial Owner of 15% or more Stock or more of the outstanding shares of
Common Stock or (iii) any Person who Beneficially Owns shares of Common Stock
consisting solely of one or more of (A) shares of Common Stock Beneficially
Owned pursuant to the grant or exercise of an option granted to such Person by
the Company in connection with an agreement to merge with, or acquire the
Company at a time at
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which there is no Acquiring Person, (B) shares of Common Stock (or securities
convertible into, exchangeable into or exercisable for Common Stock),
Beneficially Owned by such Person or its Affiliates or Associates at the time of
grant of such option or (C) shares of Common Stock (or securities convertible
into, exchangeable into or exercisable for Common Stock) acquired by Affiliates
or Associates of such Person after the time of such grant which, in the
aggregate, amount to less than 1% of the outstanding shares of Common Stock. In
addition, the Company, any wholly owned Subsidiary of the Company and any
employee stock ownership or other employee benefit plan of the Company or of a
wholly owned Subsidiary of the Company shall not be an Acquiring Person.
"Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended (the "Securities Exchange Act"), as such Rule is in effect on the date
of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have
"Beneficial Ownership" of, and to "Beneficially Own", any securities as to which
such Person or any of such Person's Affiliates or Associates is or may be deemed
to be the beneficial owner of pursuant to Rule 13d-3 and 13d-5 under the
Securities Exchange Act, as such Rules are in effect on the date of this
Agreement, as well as any securities as to which such Person or any of such
Person's Affiliates or Associates has the right to become Beneficial Owner
(whether such right is exercisable immediately or only after the passage of time
or the occurrence of conditions) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner", or to have
"Beneficial Ownership" of, or to "Beneficially Own", any security (i) solely
because such
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security has been tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
security is accepted for payment or exchange or (ii) solely because such Person
or any of such Person's Affiliates or Associates has or shares the power to vote
or direct the voting of such security pursuant to a revocable proxy given in
response to a public proxy or consent solicitation made to more than ten holders
of shares of a class of stock of the Company registered under Section 12 of the
Securities Exchange Act and pursuant to, and in accordance with, the applicable
rules and regulations under the Securities Exchange Act, except if such power
(or the arrangements relating thereto) is then reportable under Item 6 of
Schedule 13D under the Securities Exchange Act (or any similar provision of a
comparable or successor report). For purposes of this Agreement, in determining
the percentage of the outstanding shares of Common Stock with respect to which a
Person is the Beneficial Owner, all shares as to which such Person is deemed the
Beneficial Owner shall be deemed outstanding.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of Connecticut or New Jersey are
generally authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m. Connecticut
time on such date (or, if such date is not a Business Day, 5:00 p.m. Connecticut
time on the next succeeding Business Day).
"Common Stock" shall mean the shares of common stock, par value $.01
per share, of the Company.
"Exchange Time" shall mean the effective time of any exchange of shares
of Common Stock for Rights pursuant to Section 3.1(c).
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"Exercise Price" shall mean, as of any date, the price at which a
holder may purchase the securities issuable upon exercise of one whole Right.
Until adjustment thereof in accordance with the terms hereof, the Exercise Price
shall equal $165.00.
"Expiration Time" shall mean the earliest of (i) the Exchange Time,
(ii) the Termination Time and (iii) the Close of Business on February 10, 2013.
"Flip-in Date" shall mean any Stock Acquisition Date which is not the
result of a Flip-over Transaction or Event.
"Flip-over Entity," for purposes of Section 3.2, shall mean (i) in the
case of a Flip-over Transaction or Event described in clause (i) of the
definition thereof, the Person issuing any securities into which shares of
Common Stock are being converted or exchanged and, if no such securities are
being issued, the other party to such Flip-over Transaction or Event and (ii) in
the case of a Flip-over Transaction or Event referred to in clause (ii) of the
definition thereof, the Person receiving the greatest portion of the assets or
earning power being transferred in such Flip-over Transaction or Event, provided
in all cases if such Person is a subsidiary of a corporation, the parent
corporation shall be the Flip-over Entity.
"Flip-over Stock" shall mean the capital stock (or similar equity
interest) with the greatest voting power in respect of the election of directors
(or other persons similarly responsible for direction of the business and
affairs) of the Flip-over Entity.
"Flip-over Transaction or Event" shall mean a transaction or series of
transactions after the time when an Acquiring Person has become such in which,
directly or indirectly, (i) the Company shall consolidate or merge or
participate in a share exchange with any other Person if, at the time of the
consolidation, merger or share exchange or at the time the Company enters into
any agreement with respect to any such consolidation, merger or share exchange,
the Acquiring
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Person controls the Board of Directors of the Company and any term of or
arrangement concerning the treatment of shares of capital stock in such
consolidation, merger or share exchange relating to the Acquiring Person is not
identical to the terms and arrangements relating to other holders of the Common
Stock or (ii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer) assets (A) aggregating more
than 50% of the assets (measured by either book value or fair market value) or
(B) generating more than 50% of the operating income or cash flow, of the
Company and its Subsidiaries (taken as a whole) to any Person (other than the
Company or one or more of its wholly owned Subsidiaries) or to two or more such
Persons which are Affiliates or Associates or otherwise acting in concert, if,
at the time of the entry by the Company (or any such Subsidiary) into an
agreement with respect to such sale or transfer of assets, the Acquiring Person
controls the Board of Directors of the Company.
"Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in Section
2.4 hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
closing price on such date. The closing price per share of any securities on any
date shall be the last reported sale price, regular way, or, in case no such
sale takes place or is quoted on such date, the average of the closing bid and
asked prices, regular way, for each share of such securities, in either case as
reported in the principal
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consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange, Inc. or, if the securities
are not listed or admitted to trading on the New York Stock Exchange, Inc., as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange or the Nasdaq
Stock Market on which the securities are listed or admitted to trading or, if
the securities are not listed or admitted to trading on any national securities
exchange or the Nasdaq Stock Market, as reported on any automated quotation
system operated by the National Association of Securities Dealers, Inc. or such
other system then in use, or, if on any such date the securities are not listed
or admitted to trading on any national securities exchange or the Nasdaq Stock
Market or quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
securities selected by the Board of Directors of the Company; provided, however,
that if on any such date the securities are not listed or admitted to trading on
a national securities exchange or traded in the over-the-counter market, the
closing price per share of such securities on such date shall mean the fair
value per share of securities on such date as determined in good faith by the
Board of Directors of the Company, after consultation with a nationally
recognized investment banking firm, and set forth in a certificate delivered to
the Rights Agent and shall be conclusive for all purposes.
"Person" shall mean any individual, firm, partnership, limited
liability company, association, group (as such term is used in Rule 13d-5 under
the Securities Exchange Act, as such Rule is in effect on the date of this
Agreement), corporation or other entity.
"Securities Exchange Act" shall have the meaning set forth in the
definition of "Affiliate" and "Associate."
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"Separation Time" shall mean the Close of Business on the earlier of
(i) the tenth business day (or such later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Separation
Time that would otherwise have occurred) after the date on which any Person
commences a tender or exchange offer which, if consummated, would result in such
Person's becoming an Acquiring Person and (ii) the Flip-in Date; provided, that
if any tender or exchange offer referred to in clause (i) of this paragraph is
cancelled, terminated or otherwise withdrawn prior to the Separation Time
without the purchase of any shares of Common Stock pursuant thereto, such offer
shall be deemed, for purposes of this paragraph, never to have been made.
"Series B Preferred Stock" shall mean the Series B Junior
Participating Preferred Stock, par value $.01 per share, of the Company created
by a Certificate of Designation and Terms in substantially the form set forth in
Exhibit B hereto appropriately completed.
"Stock Acquisition Date" shall mean the first date of public
announcement by the Company (by any means) or by an Acquiring Person (including
by means of filing a Schedule 13D or Schedule 13G under the Securities Exchange
Act (or any comparable or successor report or schedule) or an amendment thereto)
that an Acquiring Person has become such.
"Subsidiary" of any specified Person shall mean any corporation or
other entity of which a majority of the voting power of the equity securities or
a majority of the equity interest is Beneficially Owned, directly or indirectly,
by such Person.
"Termination Time" shall mean the time at which the right to
exercise the Rights shall terminate pursuant to Section 5.1 hereof.
"Trading Day," when used with respect to any securities, shall mean
a day on which the New York Stock Exchange, Inc. is open for the transaction of
business or, if such
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securities are not listed or admitted to trading on the New York Stock Exchange,
Inc., a day on which the principal national securities exchange on which such
securities are listed or admitted to trading is open for the transaction of
business or, if such securities are not listed or admitted to trading on any
national securities exchange, a Business Day.
ARTICLE II
THE RIGHTS
2.1 Summary of Rights. As soon as practicable after the Record Time, the
Company will mail a letter summarizing the terms of the Rights to each holder of
record of Common Stock as of the Record Time, at such holder's address as shown
by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates for the Common Stock
issued after the Record Time but prior to the Separation Time shall evidence one
Right for each share of Common Stock represented thereby and shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in an Amended and Restated Stockholder
Protection Rights Agreement (the "Rights Agreement"), dated as of February
10, 2003 (as such may be amended from time to time, the "Rights
Agreement"), between ADVO, Inc. (the "Company") and Mellon Investor
Services LLC (successor to Mellon Securities Trust Company), as Rights
Agent, the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices of the
Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be terminated, may be exchanged for shares of
Common Stock or other securities or assets of the Company or a Subsidiary
of the Company, may expire, may become null and void (if they are
"Beneficially Owned" by an "Acquiring Person" or an Affiliate or Associate
thereof, as such terms are defined in the Rights Agreement, or by any
transferee of any of the foregoing) or may be evidenced by separate
certificates and may no longer be evidenced by this certificate. The
Company will mail or arrange for the mailing of a copy of the Rights
Agreement to the holder of this certificate without charge within five
days after the receipt of a written request therefor.
Certificates representing shares of Common Stock that are issued and outstanding
at the Record
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Right for each share of Common Stock notwithstanding the absence of the
foregoing legend.
2.3 Exercise of Rights; Separation of Rights.
(a) Subject to Sections 3.1, 5.1 and 5.10 and subject to adjustment
as herein set forth, each Right will entitle the holder thereof, after the
Separation Time and prior to the Expiration Time, to purchase, for the Exercise
Price, one-hundredth of a share of Series B Preferred Stock.
(b) Until the Separation Time, be exercised and (ii) each Right will
be evidenced by the certificate for the associated share of Common Stock
(together, in the case of certificates issued prior to the Record Time, with the
letter mailed to the record holder thereof pursuant to Section 2.1) and will be
transferable only together with, and will be transferred by a transfer (whether
with or without such letter) of, such associated share.
(c) Subject to the terms hereof, after the Separation Time and prior
to the Expiration Time, the Rights (i) may be exercised and (ii) may be
transferred independent of shares of Common Stock. Promptly following the
Separation Time, and receipt by the Rights Agent of written notice thereof as
well as all other relevant and necessary information which the Rights Agent
requests, the Company will prepare and execute, and the Rights Agent will
countersign and will mail to each holder of record of Common Stock as of the
Separation Time (other than any Person whose Rights have become void pursuant to
Section 3.1(b) of which the Company will notify the Rights Agent in writing of
such), at such holder's address as shown by the records of the Company (the
Company hereby agreeing to furnish copies of such records to the Rights Agent
for this purpose), (x) a certificate (a "Rights Certificate") in substantially
the form of Exhibit A hereto, representing the number of Rights held by such
holder at the Separation Time and having such marks of identification or
designation and such legends,
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summaries or endorsements printed thereon as the Company may deem appropriate,
which do not affect the rights, duties or responsibilities of the Rights Agent
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any national securities exchange or
quotation system on which the Rights may from time to time be listed or traded,
or to conform to usage, and (y) a disclosure statement describing the Rights.
Until such notice is received by the Rights Agent, the Rights Agent may presume
conclusively for all purposes that the Separation Time has not occurred.
(d) Subject to the terms hereof, Rights may be exercised on any
Business Day after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent, at the office of the Rights Agent designated for
such purpose, the Rights Certificate evidencing such Rights with an Election to
Exercise (an "Election to Exercise") substantially in the form attached to the
Rights Certificate duly executed and properly completed, accompanied by payment
in cash, or by certified or official bank check or money order payable to the
order of the Company, of a sum equal to the Exercise Price multiplied by the
number of Rights being exercised and a sum sufficient to cover any tax or charge
which may be payable in respect of any transfer involved in the transfer or
delivery of Rights Certificates or the issuance or delivery of certificates for
shares or depositary receipts (or both) in a name other than that of the holder
of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.3(d), and subject to
the terms hereof, the Rights Agent will thereupon promptly (i)(A) requisition
from a transfer agent stock certificates evidencing such number of shares or
other securities to be purchased (the Company hereby
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irrevocably authorizing its transfer agents to comply with all such
requisitions) and (B) if the Company elects pursuant to Section 5.5 not to issue
certificates representing fractional shares, requisition from the depositary
selected by the Company depositary receipts representing the fractional shares
to be purchased or requisition from the Company the amount of cash to be paid in
lieu of fractional shares in accordance with Section 5.5 and (ii) after receipt
of such certificates, depositary receipts and/or cash, deliver the same to or
upon the order of the registered holder of such Rights Certificate, registered
(in the case of certificates or depositary receipts) in such name or names as
may be designated by such holder.
(f) In case the holder of any Rights shall exercise less than all
the Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be issued by the
Rights Agent to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all such
action as may be necessary to ensure that all shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Exercise Price), be duly and validly authorized,
executed, issued and delivered and fully paid and nonassessable; (ii) take all
such action as may be necessary to comply with any applicable requirements of
the Securities Act of 1933 or the Securities Exchange Act, and the rules and
regulations thereunder, and any other applicable law, rule or regulation, in
connection with the issuance of any shares upon exercise of Rights; and (iii)
pay when due and payable any and all taxes and charges which may be payable in
respect of the original issuance or delivery of the Rights Certificates or of
any shares issued upon the exercise of Rights, provided that the Company shall
not be required to pay any tax or charge which may be payable in respect of any
transfer involved in the transfer or
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delivery of Rights Certificates or the issuance or delivery of certificates for
shares in a name other than that of the holder of the Rights being transferred
or exercised or until it has been established to the Company's or the Rights
Agent's reasonable satisfaction that no such tax or charge is due.
2.4 Adjustments to Exercise Price; Number of Rights.
(a) In the event the Company shall at any time after the Record Time
and prior to the Separation Time (i) declare or pay a dividend on Common Stock
payable in Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares of Common
Stock, (x) the Exercise Price in effect after such adjustment will be equal to
the Exercise Price in effect immediately prior to such adjustment divided by the
number of shares of Common Stock (the "Expansion Factor") that a holder of one
share of Common Stock immediately prior to such dividend, subdivision or
combination would hold thereafter as a result thereof and (y) each Right held
prior to such adjustment will become that number of Rights equal to the
Expansion Factor, and the adjusted number of Rights will be deemed to be
distributed among the shares of Common Stock with respect to which the original
Rights were associated (if they remain outstanding) and the shares issued in
respect of such dividend, subdivision or combination, so that each such share of
Common Stock will have exactly one Right associated with it. Each adjustment
made pursuant to this paragraph shall be made as of the payment or effective
date for the applicable dividend, subdivision or combination.
In the event the Company shall at any time after the Record Time and
prior to the Separation Time issue any shares of Common Stock otherwise than in
a transaction referred to in the preceding paragraph, each such share of Common
Stock so issued shall automatically have
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one new Right associated with it, which Right shall be evidenced by the
certificate representing such share. To the extent provided in Section 5.3,
Rights shall be issued by the Company in respect of shares of Common Stock that
are issued or sold by the Company after the Separation Time.
(b) In the event the Company shall at any time after the Record Time
and prior to the Separation Time issue or distribute any securities or assets in
respect of, in lieu of or in exchange for Common Stock (other than pursuant to a
regular periodic cash dividend or a dividend paid solely in Common Stock)
whether by dividend, in a reclassification or recapitalization (including any
such transaction involving a merger, consolidation or share exchange), or
otherwise, the Company shall make such adjustments, if any, in the Exercise
Price, number of Rights and/or securities or other property purchasable upon
exercise of Rights as the Board of Directors of the Company, in its sole
discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights generally, and the
Company and the Rights Agent shall amend this Agreement as necessary to provide
for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this
Section 2.4 shall be calculated to the nearest cent. Whenever an adjustment to
the Exercise Price is made pursuant to this Section 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (ii) promptly file with
the Rights Agent and with each transfer agent for the Common Stock a copy of
such certificate and (iii) mail a brief summary thereof to each holder of
Rights. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and
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shall have no duty with respect to and not be deemed to have knowledge of any
adjustment unless and until it shall have received such a certificate.
(d) Irrespective of any adjustment or change in the securities
purchasable upon exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the securities so purchasable which
were expressed in the initial Rights Certificates issued hereunder.
2.5 Date on Which Exercise is Effective. Each Person in whose name any
certificate for shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price for such Rights (and any applicable taxes and other governmental
charges payable by the exercising holder hereunder) was made; provided, however,
that if the date of such surrender and payment is a date upon which the stock
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the stock transfer books of the
Company are open.
2.6 Execution, Authentication, Delivery and Dating of Rights
Certificates.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or one of its Vice Presidents,
under its corporate seal produced thereon attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding
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that such individuals or any of them have ceased to hold such offices prior to
the countersignature and delivery of such Rights Certificates.
Promptly after the Company learns of the Separation Time, the
Company will deliver Rights Certificates executed by the Company to the Rights
Agent for countersignature and, subject to Section 3.1(b), the Rights Agent
shall manually countersign and deliver such Rights Certificates to the holders
of the Rights pursuant to Section 2.3(c) hereof; provided however that if the
Rights Agent has not received written notice of the Separation Time as well as
all other relevant information which it has requested, the Rights Agent shall
not be obligated to countersign or deliver any such Rights Certificate. No
Rights Certificate shall be valid for any purpose unless manually countersigned
by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.7 Registration, Registration of Transfer and Exchange.
(a) After the Separation Time, and receipt by the Rights Agent of
written notice thereof and all other relevant information which the Rights Agent
may request, the Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company will provide for the registration and transfer of Rights. The Rights
Agent is hereby appointed "Rights Registrar" for the purpose of maintaining the
Rights Register for the Company and registering Rights and transfers of Rights
after the Separation Time as herein provided. In the event that the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times after the Separation Time.
After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights Certificate,
and subject to the provisions of
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Section 2.7(c) and (d), the Company will execute, and the Rights Agent will
countersign and deliver, in the name of the holder or the designated transferee
or transferees, as required pursuant to the holder's instructions, one or more
new Rights Certificates evidencing the same aggregate number of Rights as did
the Rights Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b), all Rights
issued upon any registration of transfer or exchange of Rights Certificates
shall be the valid obligations of the Company, and such Rights shall be entitled
to the same benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Rights Agent,
duly and properly executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment of a sum
sufficient to cover any tax or charge that may be imposed in relation thereto.
The Rights Agent shall have no duty or obligation under this Section 2.7 unless
and until it is satisfied that all such taxes and/or charges have been paid.
(d) The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become null and void under Section
3.1(b), been exchanged under Section 3.1(c) or been terminated under Section
5.1.
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates.
(a) If any mutilated Rights Certificate is surrendered to the Rights
Agent prior to the Expiration Time, then, subject to Sections 3.1(b) and 5.1,
the Company shall execute and
-17-
the Rights Agent shall countersign and deliver in exchange therefor a new Rights
Certificate evidencing the same number of Rights as did the Rights Certificate
so surrendered.
(b) If there shall be delivered to the Company and the Rights Agent
prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to Sections 3.1(b) and 5.1 and in the absence of
written notice to the Company or the Rights Agent that such Rights Certificate
has been acquired by a bona fide purchaser, the Company shall execute and upon
its written request the Rights Agent shall countersign and deliver, in lieu of
any such destroyed, lost or stolen Rights Certificate, a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so destroyed,
lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.8, the Company may require the payment of a sum sufficient
to cover any tax or charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent) connected
therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.8
in lieu of any destroyed, lost or stolen Rights Certificate shall evidence an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights
Certificate (or, prior to the Separation Time, the associated Common Stock
certificate) for registration of transfer, the Company, the Rights Agent and any
agent of the Company or the Rights Agent may
-18-
deem and treat the Person in whose name such Rights Certificate (or, prior to
the Separation Time, such Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby for all purposes
whatsoever and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary. As used in this Agreement, unless the context otherwise
requires, the term "holder" of any Rights shall mean the registered holder of
such Rights (or, prior to the Separation Time, the associated shares of Common
Stock).
2.10 Delivery and Cancellation of Certificates. All Rights Certificates
surrendered upon exercise or for registration of transfer or exchange shall, if
surrendered to any Person other than the Rights Agent, be delivered to the
Rights Agent and, in any case, shall be promptly cancelled by the Rights Agent.
The Company may at any time deliver to the Rights Agent for cancellation any
Rights Certificates previously countersigned and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Rights Certificates
so delivered shall be promptly cancelled by the Rights Agent. No Rights
Certificates shall be countersigned in lieu of or in exchange for any Rights
Certificates cancelled as provided in this Section 2.10, except as expressly
permitted by this Agreement. The Rights Agent shall destroy all cancelled Rights
Certificates and deliver a certificate of destruction to the Company.
2.11 Agreement of Rights Holders. Every holder of Rights by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of Rights that:
(a) prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of, the associated
share of Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
-19-
(c) prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Stock certificate) for registration
of transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become null and void; and
(e) this Agreement may be supplemented or amended from time to time
pursuant to Section 2.4(b) or 5.4 hereof.
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in.
(a) In the event that prior to the Expiration Time a Flip-in Date
shall occur, the Company shall take such action as shall be necessary to ensure
and provide that, except as provided in this Section 3.1, each Right shall
constitute the right to purchase from the Company, upon exercise thereof in
accordance with the terms hereof (but subject to Section 5.10), that number of
shares of Common Stock having an aggregate Market Price on the Stock Acquisition
Date equal to twice the Exercise Price for an amount in cash equal to the
Exercise Price (such right to be appropriately adjusted in order to protect the
interests of the holders of Rights generally in the event that on or after such
Stock Acquisition Date an event of a type analogous
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to any of the events described in Section 2.4 (a) or (b) shall have occurred
with respect to the Common Stock).
(b) Notwithstanding the foregoing, any Rights that are or were
Beneficially Owned on or after the Stock Acquisition Date by an Acquiring Person
or an Affiliate or Associate thereof or by any transferee, direct or indirect,
of any of the foregoing shall become null and void and any holder of such Rights
(including transferees) shall thereafter have no right to exercise or transfer
such Rights under any provision of this Agreement. If any Rights Certificate is
presented for assignment or exercise and the Person presenting the same will not
complete or has not properly completed the certification set forth at the end of
the form of assignment or notice of election to exercise and provide such
additional evidence of the identity of the Beneficial Owner and its Affiliates
and Associates (or former Beneficial Owners and their Affiliates and Associates)
as the Company or the Rights Agent shall reasonably request, then the Company
shall be entitled conclusively to deem the Beneficial Owner thereof to be an
Acquiring Person or an Affiliate or Associate thereof or a transferee of any of
the foregoing and accordingly will deem the Rights evidenced thereby to be null
and void and not transferable or exercisable.
(c) The Board of Directors of the Company may, at its option, at any
time after a Flip-in Date and prior to the time that an Acquiring Person becomes
the Beneficial Owner of more than 50% of the outstanding shares of Common Stock,
elect to exchange all (but not less than all) the then outstanding Rights (which
shall not include Rights that have become null and void pursuant to the
provisions of Section 3.1(b)) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted in order to protect
the interests of holders of Rights generally in the event that after the
Separation Time an event of a
-21-
type analogous to any of the events described in Section 2.4(a) or (b) shall
have occurred with respect to the Common Stock (such exchange ratio, as adjusted
from time to time, being hereinafter referred to as the "Exchange Ratio").
Immediately upon the action of the Board of Directors of the Company
electing to exchange the Rights, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right (other
than Rights that have become null and void pursuant to Section 3.1(b)) will
thereafter represent only the right to receive a number of shares of Common
Stock equal to the Exchange Ratio. Promptly after the action of the Board of
Directors electing to exchange the Rights, the Company shall give written notice
thereof (specifying the steps to be taken to receive shares of Common Stock in
exchange for Rights) to the Rights Agent and the holders of the Rights (other
than Rights that have become null and void pursuant to Section 3.1(b))
outstanding immediately prior thereto by mailing such notice in accordance with
Section 5.9.
Each Person in whose name any certificate for shares is issued upon
the exchange of Rights pursuant to this Section 3.1(c) or Section 3.1(d) shall
for all purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of any applicable taxes and charges payable by the holder was made; provided,
however, that if the date of such surrender and payment is a date upon which the
stock transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the stock transfer books of the
Company are open.
-22-
(d) Whenever the Company shall become obligated under Section 3.1(a)
or (c) to issue shares of Common Stock upon exercise of or in exchange for
Rights, the Company, at its option, may substitute therefor shares of Series B
Preferred Stock, at a ratio of one one-hundredth of a share of Series B
Preferred Stock for each share of Common Stock so issuable.
(e) In the event that there shall not be sufficient treasury shares
or authorized but unissued shares of Common Stock or Series B Preferred Stock of
the Company to permit the exercise or exchange in full of the Rights in
accordance with Section 3.1(a) or (c), the Company shall either (i) call a
meeting of stockholders seeking approval to cause sufficient additional shares
to be authorized (provided that if such approval is not obtained the Company
will take the action specified in clause (ii) of this sentence) or (ii) take
such action as shall be necessary to ensure and provide, to the extent permitted
by applicable law and any agreements or instruments in effect on the Stock
Acquisition Date to which it is a party, that each Right shall thereafter
constitute the right to receive, (x) at the Company's option, either (A) in
return for the Exercise Price, debt or equity securities or other assets (or a
combination thereof) having a fair value equal to twice the Exercise Price, or
(B) without payment of consideration (except as otherwise required by applicable
law), debt or equity securities or other assets (or a combination thereof)
having a fair value equal to the Exercise Price, or (y) if the Board of
Directors of the Company elects to exchange the Rights in accordance with
Section 3.1(c), debt or equity securities or other assets (or a combination
thereof) having a fair value equal to the product of the Market Price of a share
of Common Stock on the Flip-in Date times the Exchange Ratio in effect on the
Flip-in Date, where in any case set forth in (x) or (y) above the fair value of
such debt or equity securities or other assets shall be as determined in good
faith by the Board of Directors of the
-23-
Company, after consultation with a nationally recognized investment banking firm
(which determination shall be described in a statement filed with the Rights
Agent).
3.2 Flip-over.
(a) Prior to the Expiration Time, the Company shall not enter into
any agreement with an Acquiring Person (or any of its Affiliates or Associates)
with respect to, consummate or permit to occur any Flip-over Transaction or
Event unless and until it shall have entered into a supplemental agreement with
the Flip-over Entity, for the benefit of the holders of the Rights, providing
that, upon consummation or occurrence of the Flip-over Transaction or Event (i)
each Right shall thereafter constitute the right to purchase from the Flip-over
Entity, upon exercise thereof in accordance with the terms hereof, that number
of shares of Flip-over Stock of the Flip-over Entity having an aggregate Market
Price on the date of consummation or occurrence of such Flip-over Transaction or
Event equal to twice the Exercise Price for an amount in cash equal to the
Exercise Price (such right to be appropriately adjusted in order to protect the
interests of the holders of Rights generally in the event that after such date
of consummation or occurrence an event of a type analogous to any of the events
described in Section 2.4(a) or (b) shall have occurred with respect to the
Flip-over Stock) and (ii) the Flip-over Entity shall thereafter be liable for,
and shall assume, by virtue of such Flip-over Transaction or Event and such
supplemental agreement, all the obligations and duties of the Company pursuant
to this Agreement. The provisions of this Section 3.2 shall apply to successive
Flip-over Transactions or Events.
(b) Prior to the Expiration Time, unless the Rights will be
terminated pursuant to Section 5.1 hereof in connection therewith, the Company
shall not enter into any agreement with respect to, consummate or permit to
occur any Flip-over Transaction or Event if at the time
-24-
thereof there are any rights, warrants or securities outstanding or any other
arrangements, agreements or instruments that would eliminate or otherwise
diminish in any material respect the benefits intended to be afforded by this
Agreement to the holders of Rights upon consummation of such transaction.
ARTICLE IV
THE RIGHTS AGENT
4.1 General.
(a) The Company hereby appoints the Rights Agent to act as agent for
the Company in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the 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 (including,
without limitation, the reasonable fees and expenses of legal counsel), incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent (which gross negligence, bad faith or willful misconduct must be
determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction), for any action taken, suffered or omitted by
the Rights Agent in connection with the acceptance, administration, exercise and
performance of its duties under this Agreement, including without limitation the
costs and expenses of defending against any claim of liability. The costs and
expenses incurred by the Rights Agent in enforcing this right of
-25-
indemnification shall be paid by the Company. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage. Any and all liability
of the Rights Agent under this Agreement will be limited to the amount of fees
paid by the Company to the Rights Agent pursuant to this Agreement. This Section
4.1 and Section 4.3 hereof shall survive the termination of this Agreement, the
exercise or expiration of the Rights and the resignation or removal of the
Rights Agent.
(b) The Rights Agent shall be authorized and protected and shall
incur no liability for or in respect of any action taken, suffered or omitted by
it in connection with its acceptance and administration of this Agreement and
the exercise and performance of its duties hereunder, in reliance upon any
certificate for securities (or registration on the stock transfer books of the
Company) purchasable upon exercise of Rights, Rights Certificate, certificate
for other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, written request,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
counsel. The Rights Agent shall not be deemed to have knowledge of any event of
which it was supposed to receive notice thereof hereunder, and the Rights Agent
shall be fully protected and shall incur no liability for failing to take any
action in connection therewith unless and until it has received such notice.
4.2 Merger or Consolidation or Change of Name of Rights Agent.
-26-
(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 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, provided that such
Person would be eligible for appointment as a successor Rights Agent under the
provisions of Section 4.4 hereof. In case at the time such successor Rights
Agent succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates have not been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
-27-
4.3 Duties of Rights Agent. The Rights Agent undertakes to perform only
the duties and obligations expressly imposed by this Agreement (and no implied
duties or obligations) upon the following terms and conditions, by all of which
the Company and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company or an employee of the Rights Agent), and the
advice or opinion of such 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, suffered or omitted by it in accordance with
such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact or matter
(including without limitation, the identity of an Acquiring Person and the
determination of Market Price) be proved or established by the Company prior to
taking, suffering or omitting to take any action hereunder, the Rights Agent may
request that the Company prove or establish such fact or matter, and such fact
or matter (unless other evidence in respect thereof is herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by a person believed by the Rights Agent to be the Chairman
of the Board, the President or any Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate 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, suffered or
omitted by it under the provisions of this Agreement in reliance upon such
certificate. Any request by the Rights Agent for a certificate from the Company
may, at the option of the Rights Agent, set forth in writing any
-28-
action proposed to be taken, suffered or omitted by the Rights Agent under this
Agreement and the date on and/or after which such action shall be taken or
suffered or such omission shall be effective. The Rights Agent shall not be
liable for any action taken or suffered by, or omission of, the Rights Agent in
accordance with a proposal included in any such request on or after the date
specified in such request (which date shall not be less than five (5) Business
Days after the date any officer of the Company actually receives such request,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received a certificate in response to
such request specifying the action to be taken, suffered or omitted.
(c) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer without first
consulting with the Company.
(d) The Rights Agent will be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct
(which gross negligence, bad faith or willful misconduct must be determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction).
(e) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
-29-
(f) The Rights Agent will not have any liability for or be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any certificate for securities
purchasable upon exercise of Rights or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void
hereunder) or any adjustment required under the provisions of Section 2.4, 3.1
or 3.2 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights after receipt of
the certificate contemplated by Section 2.4 describing any such adjustment upon
which the Rights Agent may rely); nor will it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any securities purchasable upon exercise of Rights or any Rights or as to
whether any securities purchasable upon exercise of Rights will, when issued, be
duly and validly authorized, executed, issued and delivered and fully paid and
nonassessable.
(g) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(h) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or
-30-
any Assistant Secretary or the Treasurer or any Assistant Treasurer of the
Company, and to apply to such persons for advice or instructions in connection
with its duties, and such instructions shall be full authorization and
protection to the Rights Agent and the Rights Agent shall incur no liability for
or in respect of any action taken, suffered or omitted by it in accordance with
instructions of any such person or for any delay in acting while waiting for
such instructions.
(i) The Rights Agent and any Affiliate, stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in Common Stock,
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
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent or any such Affiliate, shareholder, director, officer or employee from
acting in any other capacity for the Company or for any other Person.
(j) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself (through
its directors, officers and employees) or by or through its attorneys or agents,
and the Rights Agent will 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 Persons resulting from any such act, default, neglect or
misconduct, absent gross negligence, bad faith or willful misconduct (which
gross negligence, bad faith or willful misconduct must be determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction) in the selection and continued employment thereof.
(k) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its
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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
reasonably assured to it.
4.4 Change of Rights Agent. The Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice (or such lesser notice
as is acceptable to the Company) in writing mailed to the Company and to each
transfer agent of Common Stock known to the Rights Agent by registered or
certified mail, and to the holders of the Rights in accordance with Section 5.9.
The Company may remove the Rights Agent upon 30 days' notice in writing, mailed
to the Rights Agent and to each transfer agent of the Common Stock by registered
or certified mail, and to the holders of the Rights in accordance with Section
5.9. If the Rights Agent should resign or be removed or otherwise become
incapable of acting, the Company will appoint a successor to the Rights Agent.
If the Company fails to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of any Rights (which holder shall, with such notice, submit such
holder's Rights Certificate for inspection by the Company), then the holder of
any Rights may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a Person organized and doing business
under the laws of the United States or of any State of the United States, in
good standing, which is authorized under such laws to exercise the powers of the
Rights Agent contemplated by this Agreement 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 such Person. After appointment, the
successor Rights Agent will be vested with the same powers, rights, duties and
-32-
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company will file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock, and mail a notice thereof in
writing to the holders of the Rights. Failure to give any notice provided for in
this Section 4.4, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
ARTICLE V
MISCELLANEOUS
5.1 Termination.
(a) The Board of Directors of the Company may, at its option upon
prompt written notice thereof to the Rights Agent, at any time prior to the
Flip-in Date, elect to terminate the Rights without any payment to any holder
thereof.
(b) Immediately upon the action of the Board of Directors of the
Company electing to terminate the Rights (or, if the resolution of the Board of
Directors electing to terminate the Rights states that the termination will not
be effective until the occurrence of a specified future time or event, upon the
occurrence of such future time or event), without any further action and without
any notice (other than notice to the Rights Agent as set forth in Section 5.1(a)
hereof), the right to exercise the Rights will terminate and each Right will
thereafter be null and void.
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5.2 Expiration. The Rights and this Agreement shall expire at the
Expiration Time and no Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except if the Rights are exchanged, as
provided in Section 3.1 (c), 3.1 (d), 3.1(e) or 3.2.
5.3 Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the number or kind or class of shares of stock purchasable upon exercise of
Rights made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock by the Company
following the Separation Time and prior to the Termination Time or Expiration
Time pursuant to the terms of securities convertible or redeemable into shares
of Common Stock or to warrants or to options exercisable for shares of Common
Stock, in each case issued or granted prior to, and outstanding at, the
Separation Time, the Company shall issue to the holders of such shares of Common
Stock, Rights Certificates representing the appropriate number of Rights in
connection with the issuance or sale of such shares of Common Stock; provided,
however, in each case, (i) no such Rights Certificate shall be issued, if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or to the Person to whom such Rights Certificates would be issued, (ii)
no such Rights Certificates shall be issued if, and to the extent that,
appropriate adjustment shall have otherwise been made in lieu of the issuance
thereof, and (iii) the Company shall have no obligation to distribute Rights
Certificates to any Acquiring Person or Affiliate or Associate of an Acquiring
Person or any transferee of any of the foregoing.
-34-
5.4 Supplements and Amendments. Subject to this Section 5.4, the Company
and the Rights Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Rights (i) prior to the Flip-in Date, in
any respect and (ii) after the Flip-in Date, to make any changes that the
Company may deem necessary or desirable and which shall not materially adversely
affect the interests of the holders of Rights generally or in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be inconsistent with any other provisions herein or otherwise defective. The
Rights Agent will, upon the delivery of a certificate from an appropriate
officer of the Company that states that the proposed supplement or amendment
complies with this Section 5.4, duly execute and deliver any supplement or
amendment hereto requested by the Company which satisfies the terms of the
preceding sentence; provided however, that the Rights Agent shall not be
obligated to enter into any supplement or amendment that adversely affects the
Rights Agent's own rights, duties, obligations or immunities under this
Agreement.
5.5 Fractional Shares. If the Company elects not to issue certificates
representing fractional shares upon exercise of Rights, the Company shall, in
lieu thereof, in the sole discretion of the Board of Directors, either (a)
evidence such fractional shares by depositary receipts issued pursuant to an
appropriate agreement between the Company and a depositary selected by it,
providing that each holder of a depositary receipt shall have all of the rights,
privileges and preferences to which such holder would be entitled as a
beneficial owner of such fractional share, or (b) sell such shares on behalf of
the holder of such Rights and pay to the registered holder of such Rights the
appropriate fraction of the price per share received upon such sale.
-35-
5.6 Rights of Action. (a) Subject to the terms of this Agreement
(including Section 3.1(b)), rights of action in respect of this Agreement, other
than rights of action vested solely in the Rights Agent, are vested in the
respective holders of the Rights; and any holder of any Rights, without the
consent of the Rights Agent or of the holder of any other Rights, may, on such
holder's own behalf and for such holder's own benefit and the benefit of other
holders of Rights, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, such
holder's right to exercise such holder's Rights in the manner provided in such
holder's Rights 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 by the Company of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations by the Company of, the obligations of any Person subject
to this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, judgment, decree or ruling (whether interlocutory or
final) issued by a court or by a governmental, regulatory, self-regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, that the Company must use all reasonable efforts to have any such
injunction, order, judgment, decree or ruling lifted or otherwise overturned as
soon as possible.
-36-
5.7 Holder of Rights Not Deemed a Stockholder. No holder, as such, of any
Rights shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of shares or any other securities which may at any time be issuable
on the exercise of such Rights, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 5.8 hereof), or to receive dividends or subscription rights,
or otherwise, until such Rights shall have been exercised or exchanged in
accordance with the provisions hereof.
5.8 Notice of Proposed Actions. In case the Company shall propose after
the Separation Time and prior to the Expiration Time (i) to effect or permit (in
cases where the Company's permission is required) occurrence of any Flip-in Date
or Flip-over Transaction or Event or (ii) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to
the Rights Agent and to each holder of a Right, in accordance with Section 5.9
hereof, a notice of such proposed action, which shall specify the Flip-in Date
or the date on which such Flip-over Transaction or Event, liquidation,
dissolution, or winding up is to take place, and such notice shall be so given
at least 20 Business Days prior to the date of the taking of such proposed
action,
5.9 Notices. Notices or demands authorized or required by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights to or on
the Company shall be sufficiently given or made if delivered or sent by
facsimile or by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
-37-
ADVO, Inc.
βββ ββββββ ββββ
βββββββ, βββββββββββ βββββ
Attention: Senior Vice President,
Legal and Public Affairs,
General Counsel and Secretary
Facsimile: (βββ) βββ-ββββ
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by facsimile or by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
Mellon Investor Services LLC
βββ ββββββββ βββββ
βββββ ββββ
ββββ ββββββββ, βββββββββββ βββββ
Attention: Relationship Manager
Facsimile: (βββ) βββ-ββββ
with a copy to:
Mellon Investor Services LLC
ββ ββββββββββ ββββ
ββββββββββ ββββ, βββ ββββββ βββββ-ββββ
Attention: General Counsel
Facsimile: (βββ) βββ-ββββ
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice.
-38-
5.10 Suspension of Exercisability. To the extent that the Company
determines in good faith that some action will or need be taken pursuant to
Section 3.1 (a), (b), (d) or (e) or to comply with federal or state securities
laws, the Company may suspend the exercisability of the Rights for a period of
up to ninety (90) days following the date of the occurrence of the Separation
Time or the Flip-in Date in order to take such action or comply with such laws.
In the event of any such suspension, the Company shall issue as promptly as
practicable a public announcement (with prompt written notice thereof to the
Rights Agent) stating that the exercisability or exchangeability of the Rights
has been temporarily suspended. Notice thereof pursuant to Section 5.9 shall not
be required.
Failure to give a notice pursuant to the provisions of this Agreement
shall not affect the validity of any action taken hereunder.
5.11 Costs of Enforcement. The Company agrees that if the Company or any
other Person the securities of which are purchasable upon exercise of Rights
fails to fulfill any of its obligations pursuant to this Agreement, then the
Company or such Person will reimburse the holder of any Rights for the costs and
expenses (including legal fees) incurred by such holder in actions to enforce
such holder's rights pursuant to any Rights or this Agreement.
5.12 Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
5.13 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
holders of the Rights any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the holders of the Rights.
-39-
5.14 Determination and Actions by the Board of Directors, etc. The Board
of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company 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. 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 of the Company in good faith, shall (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 the Board of Directors of the Company to any
liability to the holders of the Rights. The Rights Agent is entitled always to
assume the Company's Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.
5.15 Descriptive Headings. Descriptive headings appear herein for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
5.16 Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR
ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY WITHIN SUCH
STATE; PROVIDED HOWEVER, THAT ALL PROVISIONS REGARDING THE RIGHTS, DUTIES AND
OBLIGATIONS OF THE RIGHTS AGENT SHALL BE
-40-
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.
5.17 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
5.18 Severability. If any term or provision hereof or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
-41-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ADVO, INC.
By: /s/ βββββ β. βββββββ
--------------------------------
βββββ β. βββββββ
Senior Vice President,
Legal and Public Affairs,
General Counsel and Secretary
MELLON INVESTOR SERVICES LLC
By: /s/ ββββ β. ββββββββ
-------------------------
Name: ββββ β. ββββββββ
Title: Assistant Vice President/
Client Service Manager
-42-
EXHIBIT A
[Form of Rights Certificate]
Certificate No. W- Rights
-------
THE RIGHTS ARE SUBJECT TO TERMINATION OR MANDATORY EXCHANGE, AT THE OPTION
OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. RIGHTS
BENEFICIALLY OWNED BY ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES
OF ANY OF THE FOREGOING WILL BE NULL AND VOID.
Rights Certificate
ADVO, INC.
This certifies that , or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Amended and Restated Stockholder Protection Rights Agreement,
dated as of February 10, 2003 (as amended from time to time, the "Rights
Agreement"), between ADVO, Inc., a Delaware corporation (the "Company"), and
Mellon Investor Services LLC, a New Jersey limited liability company, as Rights
Agent (the "Rights Agent", which term shall include any successor Rights Agent
under the Rights Agreement), to purchase from the Company at any time after the
Separation Time (as such term is defined in the Rights Agreement) and prior to
the close of business on February 10, 2013, one one-hundredth of a fully paid
share of Series B Junior Participating Preferred Stock, par value $.01 per share
(the "Series B Preferred Stock"), of the Company (subject to adjustment as
provided in the Rights Agreement) at the Exercise Price referred to below, upon
presentation and surrender of this Rights Certificate with the Form of Election
to Exercise duly executed and
A-1
properly completed at the office of the Rights Agent designated for such
purpose. The Exercise Price shall initially be $165.00 per Right and shall be
subject to adjustment in certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the
Rights evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Series B Preferred Stock, all as provided in the Rights
Agreement.
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor evidencing an aggregate number of Rights equal to the aggregate number of
Rights evidenced by the Rights Certificate or Rights Certificates surrendered.
If this Rights Certificate shall be exercised in part, the registered holder
shall be entitled to receive, upon surrender hereof, another Rights Certificate
or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, each Right
evidenced by this Certificate may be (a) terminated, without any payment to the
holder, by the Company under
A-2
certain circumstances, at its option, or (b) exchanged by the Company under
certain circumstances, at its option, for one share of Common Stock, par value
$.01 per share (the "Common Stock"), or one one-hundredth of a share of Series B
Preferred Stock, per Right (or, in certain cases, other securities or assets of
the Company), subject in each case to adjustment in certain events as provided
in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of any
securities which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Rights evidenced by
this Rights Certificate shall have been exercised or exchanged as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been counter-signed by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Date:
-----------------------
ATTEST: ADVO, INC.
By
------------------------ --------------------------
[Secretary or [Chairman of the Board,
Assistant Secretary] President or Vice President]
A-3
[SEAL]
Countersigned:
MELLON INVESTOR SERVICES LLC
By
---------------------------
[Authorized Signature]
A-4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and
---------------------------
transfers unto
---------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney,
------------------
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: , 20
----------- ---
Signature Guaranteed:
--------------------------------------------
Signature (Signature must correspond to name
as written upon the face of this Rights
Certificate in every particular, without
alteration or enlargement or any change
whatsoever)
Signatures must be guaranteed by an "eligible guarantor institution"
as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended. Guarantees by a notary public are not acceptable.
--------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
shares of capital stock of the Company, that the Rights evidenced by this Rights
Certificate are not, and, to the knowledge of the undersigned, have never been,
Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).
---------------------------------
Signature
--------------------------------------------------------------------------------
A-5
NOTICE
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be null and void and not
transferable or exercisable.
A-6
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: ADVO, INC.
The undersigned hereby irrevocably elects to exercise
--------------------
whole Rights represented by the attached Rights Certificate to purchase the
shares of Series B Preferred Stock issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of:
------------------------------
Address:
------------------------------
------------------------------
Social Security or Other Taxpayer
Identification Number:
------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
------------------------------
Address:
------------------------------
------------------------------
Social Security or Other Taxpayer
Identification Number:
------------------------------
Dated: , 20
---------- --
Signature Guaranteed:
---------------------------------------------
Signature
(Signature must correspond to name as written
upon the face of the attached Rights
Certificate in every particular, without
alteration or enlargement or any change
whatsoever)
A-7
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended. Guarantees by a notary public are not acceptable.
--------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of
Rights and shares of capital stock of the Company, that the Rights evidenced by
the attached Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
------------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in
connection with a purported exercise, the Company will deem the Beneficial Owner
of the Rights evidenced by the attached Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
or a transferee of any of the foregoing and accordingly will deem the Rights
evidenced by such Rights Certificate to be null and void and not transferable or
exercisable.
A-8
EXHIBIT B
FORM OF CERTIFICATE OF DESIGNATION AND TERMS OF
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK OF ADVO, INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
We, the undersigned, [Authorized Officer] and [Authorized Officer],
the , and , respectively, of
ADVO, Inc., a Delaware corporation (the "Corporation"), do hereby certify as
follows:
Pursuant to authority granted by Article IV of the Restated
Certificate of Incorporation of the Corporation, as amended, and in accordance
with the provisions of Section 151 of the General Corporation Law of the State
of Delaware, the Board of Directors of the Corporation has adopted the following
resolutions fixing the designation and certain terms, powers, preferences and
other rights of a new series of the Corporation's Preferred Stock, par value
$.01 per share, and certain qualifications, limitations and restrictions
thereon:
RESOLVED, that there is hereby established a series of
Preferred Stock, par value $.01 per share, of the Corporation, and
the designation and certain terms, powers, preferences and other
rights of the shares of such series, and certain qualifications,
limitations and restrictions thereon, are hereby fixed as follows:
(i) The distinctive serial designation of this series
shall be "Series B Junior Participating Preferred Stock"
(hereinafter called "this Series"). Each share of this Series
shall be identical in all respects with the other shares of
this Series except as to the dates from and after which
dividends thereon shall be cumulative.
(ii) The number of shares in this Series shall initially
be 500,000, which number may from time to time be increased or
decreased (but not below the number then outstanding) by the
Board of Directors. Shares of this Series purchased by the
Corporation shall be cancelled and shall revert to authorized
but unissued shares of Preferred Stock undesignated as to
series. Shares of this Series may be issued in fractional
B-1
shares, which fractional shares shall entitle the holder, in
proportion to such holder's fractional share, to all rights of
a holder of a whole share of this Series.
(iii) The holders of full or fractional shares of this
Series shall be entitled to receive, when and as declared by
the Board of Directors, but only out of funds legally
available therefor, dividends, (A) on each date that dividends
or other distributions (other than dividends or distributions
payable in Common Stock of the Corporation) are payable on or
in respect of Common Stock comprising part of the Reference
Package (as defined below), in an amount per whole share of
this Series equal to the aggregate amount of dividends or
other distributions (other than dividends or distributions
payable in Common Stock of the Corporation) that would be
payable on such date to a holder of the Reference Package and
(B) on the last day of March, June, September and December in
each year, in an amount per whole share of this Series equal
to the excess (if any) of $ * over the aggregate
dividends paid per whole share of this Series during the three
month period ending on such last day. Each such dividend shall
be paid to the holders of record of shares of this Series on
the date, not exceeding sixty days preceding such dividend or
distribution payment date, fixed for the purpose by the Board
of Directors in advance of payment of each particular dividend
or distribution. Dividends on each full and each fractional
share of this Series shall be cumulative from the date such
full or fractional share is originally issued; provided that
any such full or fractional share originally issued after a
dividend record date and on or prior to the dividend payment
date to which such record date relates shall not be entitled
to receive the dividend payable on such dividend payment date
or any amount in respect of the period from such original
issuance to such dividend payment date.
The term "Reference Package" shall initially mean 100
shares of Common Stock, par value $.01 per share ("Common
Stock"), of the Corporation. In the event the Corporation
shall at any time after the close of business on ,20 *
(A) declare or pay a dividend on any Common Stock payable in
Common Stock, (B) sub-divide any Common Stock or (C) combine
any Common Stock into a smaller number of shares,
--------------
* Insert an amount equal to 1/4 of 1% of the Exercise Price divided by
the number of shares of Preferred Stock purchasable upon exercisable of one
Right (i.e., a guaranteed 1% dividend). Where a Right is exercisable for one
one-hundredth of a share, this simplifies to one-forth the Exercise Price.
* For a certificate of designation relating to shares to be issued
pursuant to Section 2.3 of the Rights Agreement insert the Separation Time. For
a certificate of designation relating to shares to be issued pursuant to Section
3.1(d) of the Rights Agreement, insert the Flip-in Date.
B-2
then and in each such case the Reference Package after such
event shall be the Common Stock that a holder of the Reference
Package immediately prior to such event would hold thereafter
as a result thereof.
Holders of shares of this Series shall not be entitled
to any dividends, whether payable in cash, property or stock,
in excess of full cumulative dividends, as herein provided on
this Series.
So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any
other stock ranking junior to this Series as to dividends and
upon liquidation) shall be declared or paid or set aside for
payment or other distribution declared or made upon the Common
Stock or upon any other stock ranking junior to this Series as
to dividends or upon liquidation, nor shall any Common Stock
nor any other stock of the Corporation ranking junior to or on
a parity with this Series as to dividends or upon liquidation
be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for
a sinking fund for the redemption of any shares of any such
stock) by the Corporation (except by conversion into or
exchange for stock of the Corporation ranking junior to this
Series as to dividends and upon liquidation), unless, in each
case, the full cumulative dividends (including the dividend to
be due upon payment of such dividend, distribution,
redemption, purchase or other acquisition) on all outstanding
shares of this Series shall have been, or shall
contemporaneously be, paid.
(iv) In the event of any merger, consolidation,
reclassification or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case the shares of this Series shall at the same time be
similarly exchanged or changed in an amount per whole share
equal to the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may
be, that a holder of the Reference Package would be entitled
to receive as a result of such transaction.
(v) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether
voluntary or involuntary, the holders of full and fractional
shares of this Series shall be entitled, before any
distribution or payment is made on any date to the holders of
the Common Stock or any other stock of the Corporation ranking
junior to this Series upon liquidation, to be paid in full an
amount per whole share of this Series equal to the greater of
(A) $ * or (B) the aggregate
--------------
* Insert an amount equal to 100 times the Exercise Price in effect as
of the Separation Time.
B-3
amount distributed or to be distributed prior to such date in
connection with such liquidation, dissolution or winding up to
a holder of the Reference Package (such greater amount being
hereinafter referred to as the "Liquidation Preference"),
together with accrued dividends to such distribution or
payment date, whether or not earned or declared. If such
payment shall have been made in full to all holders of shares
of this Series, the holders of shares of this Series as such
shall have no right or claim to any of the remaining assets of
the Corporation.
In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay
in full all amounts to which such holders are entitled
pursuant to the first paragraph of this Section (v), no such
distribution shall be made on account of any shares of any
other class or series of Preferred Stock ranking on a parity
with the shares of this Series upon such liquidation,
dissolution or winding up unless proportionate distributive
amounts shall be paid on account of the shares of this Series,
ratably in proportion to the full distributable amounts for
which holders of all such parity shares are respectively
entitled upon such liquidation, dissolution or winding up.
Upon the liquidation, dissolution or winding up of the
Corporation, the holders of shares of this Series then
outstanding shall be entitled to be paid out of assets of the
Corporation available for distribution to its stock-holders
all amounts to which such holders are entitled pursuant to the
first paragraph of this Section (v) before any payment shall
be made to the holders of Common Stock or any other stock of
the Corporation ranking junior upon liquidation to this
Series.
For the purposes of this Section (v), the consolidation
or merger of, or binding share exchange by, the Corporation
with any other corporation shall not be deemed to constitute a
liquidation, dissolution or winding up of the Corporation.
(vi) The shares of this Series shall not be redeemable.
(vii) In addition to any other vote or consent of
stockholders required by law or by the Restated Certificate of
Incorporation, as amended, of the Corporation, each whole
share of this Series shall, on any matter, vote as a class
with any other capital stock comprising part of the Reference
Package and voting on such matter and shall have the number of
votes thereon that a holder of the Reference Package would
have.
B-4
IN WITNESS WHEREOF, the undersigned have signed and attested this
certificate on the day of ___________, 20__.
-------------------------------------
[Authorized Officer]
Attest:
--------------------------------
[Authorized Officer]
B-5