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AMENDED AND RESTATED RIGHTS AGREEMENT
by and between
BIG ENTERTAINMENT, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
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Dated as of
August 23, 1996
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26141.0006
AMENDED AND RESTATED RIGHTS AGREEMENT
Agreement, dated as of August 23, 1996, by and between Big
Entertainment, Inc., a Florida corporation (the "Company"), and American Stock
Transfer & Trust Company, a corporation organized under the laws of the State of
New York (the "Rights Agent").
W I T N E S S E T H :
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WHEREAS, on August 23, 1996, the Company entered into a Rights
Agreement with the Rights Agent (the "Original Rights Agreement"); and
WHEREAS, pursuant to the Original Rights Agreement, the Board of
Directors of the Company authorized the issuance of, and declared a dividend
payable in, one right (a "Right") for each share of Common Stock, $0.01 par
value per share, of the Company outstanding as of the close of business on
September 4, 1996 (the "Record Date"), each such Right representing the right to
purchase one share of Common Stock upon the terms and subject to the conditions
set forth in the Original Rights Agreement; and
WHEREAS, pursuant to Section 26 of the Original Rights Agreement, the
Company wishes to make certain amendments to the Original Rights Agreement and
the Rights as hereinafter set forth in this Amended and Restated Rights
Agreement, which upon its execution will amend and supplement the Original
Rights Agreement in its entirety.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates
(as such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, shall be the Beneficial Owner
(as such term is hereinafter defined) of 15% or more of the Voting
Stock (as such term is hereinafter defined) of the Company then
outstanding; provided, that, an Acquiring Person shall not include
(i) an Exempt Person (as such term is hereinafter defined) or (ii)
any Person who or which, together with all Affiliates and Associates
of such Person, would be an Acquiring Person solely by reason of (A)
being the Beneficial Owner of shares of Voting Stock of the Company,
the Beneficial Ownership of which was acquired by such Person
(together with all Affiliates and Associates of such Person) pursuant
to any action or transaction or series of related actions or
transactions approved by the Board of Directors before such Person
(together with all Affiliates and Associates of such Person)
otherwise became an Acquiring Person or (B) a reduction in the number
of issued and outstanding shares of Voting Stock of the Company
pursuant to a transaction or a series of related transactions
approved by the Board of Directors of the Company; provided, further,
that in the event such Person
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described in this clause (ii) does not become an Acquiring Person by
reason of subclause (A) or (B) of this clause (ii), such Person
nonetheless shall become an Acquiring Person in the event such Person
(together with all Affiliates and Associates of such Person)
thereafter acquires Beneficial Ownership of an additional 1% of the
Voting Stock of the Company, unless the acquisition of such
additional Voting Stock would not result in such Person becoming an
Acquiring Person by reason of subclause (A) or (B) of this clause
(ii). Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be
an "Acquiring Person" as defined pursuant to the foregoing provisions
of this paragraph (a) has become such inadvertently, and such Person
divests as promptly as practicable (as determined in good faith by
the Board of Directors) a sufficient number of shares of Common Stock
so that such Person would no longer be an "Acquiring Person" as
defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed an "Acquiring Person" for any
purposes of this Agreement.
(b) "Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), as in
effect on the date of this Agreement.
(c) "Associate" of a Person shall mean (i) with respect to
a corporation, any officer or director thereof or of any Subsidiary
(as such
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term is hereinafter defined) thereof, or any Beneficial Owner of 10%
or more of any class of equity security thereof, (ii) with respect to
an association, any officer or director thereof or of a Subsidiary
thereof, (iii) with respect to a partnership, any general partner
thereof or any limited partner thereof who is, directly or
indirectly, the Beneficial Owner of a 10% ownership interest therein,
(iv) with respect to a business trust, any officer or trustee thereof
or of any Subsidiary thereof, (v) with respect to any other trust or
an estate, any trustee, executor or similar fiduciary or any Person
who has a 15% or greater interest as a beneficiary in the income from
or principal of such trust or estate, (vi) with respect to a natural
person, any relative or spouse of such person, or any relative of
such spouse, who has the same home as such person, and (vii) any
Affiliate of such Person.
(d) A person shall be deemed the "Beneficial Owner" of, or
to "Beneficially Own," any securities (and correlative terms shall
have correlative meanings):
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, for purposes of Section 13(d) of the Exchange
Act and Regulations 13D and 13G thereunder (or any
comparable or successor law or regulation), in each case
as in effect on the date hereof; or
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is
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exercisable immediately or only after the passage of time
or the fulfillment of a condition or both) pursuant to any
agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, other
rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "Beneficially
Own," securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities
are accepted for purchase or exchange or (B) the right to
vote, alone or in concert with others, pursuant to any
agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "Beneficially
Own," any securities if the agreement, arrangement or
understanding to vote such security (1) arises solely from
a revocable proxy or consent given in response to a proxy
or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations
under the Exchange Act and (2) is not at the time
reportable by such Person on a Schedule 13D or Schedule
13G report under the Exchange Act (or any comparable or
successor report), other than by reference to a proxy or
consent solicitation being conducted by such Person; or
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(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting
(except as described in clause (B) of subparagraph (ii) of
this paragraph (d)) or disposing of any securities of the
Company; provided, however, that for purposes of
determining Beneficial Ownership of securities under this
Agreement, officers and directors of the Company solely by
reason of their status as such shall not constitute a
group (notwithstanding that they may be Associates of one
another or may be deemed to constitute a group for
purposes of Section 13(d) the Exchange Act) and shall not
be deemed to own shares owned by another officer or
director of the Company.
Notwithstanding anything in this paragraph (d) to the
contrary, a Person engaged in the business of underwriting securities
shall not be deemed the "Beneficial Owner" of, or to "Beneficially
Own," any securities acquired or otherwise beneficially owned in good
faith in a firm commitment underwriting until the expiration of forty
(40) days after the date of the sale of securities to the public
pursuant to such firm commitment underwriting.
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(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State
of Florida or New York are authorized or obligated by law or
executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York
City time, on the next succeeding Business Day.
(g) "Common Stock" when used with reference to the Company
shall collectively mean the Common Stock, $0.01 par value, of the
Company. "Common Stock" when used with reference to any Person other
than the Company which shall be organized in corporate form shall
mean the capital stock or other equity security with the greatest per
share voting power of such Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be
organized in corporate form shall mean units of beneficial interest
which shall represent the right to participate in profits, losses,
deductions and credits of such Person and which shall be entitled to
exercise the greatest voting power per unit of such Person.
(h) "Distribution Date" shall have the meaning set forth
in Section 3(b) hereof.
(i) "Exchange Act" shall have the meaning set forth in
Section 1(b) hereof.
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(j) "Exchange Consideration" shall have the meaning set
forth in Section 27 hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company or (iii) any employee benefit plan or
employee stock plan of the Company or any Subsidiary of the Company,
or any trust or other entity organized, appointed, established or
holding Voting Stock for or pursuant to the terms of any such plan or
(iv) any Person who, as of May 16, 1996, together with all Affiliates
and Associates of such Person, was the Beneficial Owner of 15% or
more of the Voting Stock of the Company outstanding as of such date;
provided, however, that any Person described in this clause (iv)
shall no longer be an exempt person and shall become an Acquiring
Person if such Person, together with all Affiliates and Associates of
such Person, from May 16, 1996 acquires Beneficial Ownership of an
additional 5% or more of the Voting Stock, unless such acquisition of
an additional 5% or more of the Voting Stock was pursuant to (x) any
action or transaction or series of related actions or transactions
approved by the Board of Directors before such acquisition or (y) a
reduction in the number of issued and outstanding shares of Voting
Stock of the Company pursuant to a transaction or a series of related
transactions approved by the Board of Directors of the Company;
provided, further, however, that in the event such Person described
in this clause (iv) does not become an Acquiring Person by reason of
clause (x) or (y), such Person nonetheless shall become an Acquiring
Person in the event such
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Person thereafter acquires Beneficial Ownership of an additional 1%
of the Voting Stock of the Company, unless the acquisition of such
additional Voting Stock would not result in such Person becoming an
Acquiring Person by reason of such clause (x) or (y).
(l) "Exercise Price" shall have the meaning set forth in
Section 4 hereof.
(m) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(n) "Fair Market Value" of any property shall mean the
fair market value of such property as determined in accordance with
Section 11(b) hereof.
(o) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(p) "Person" shall mean any individual, firm, corporation
or other entity.
(q) "Preferred Stock" shall mean the Series E Junior
Preferred Stock of the Company authorized by the Board of Directors
on October 1, 1999.
(r) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(s) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
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(t) "Right Certificate" shall have the meaning set forth
in Section 3(d) hereof.
(u) "Spread" shall mean the excess of (1) the value of the
shares of Preferred Stock issuable upon the exercise of a Right in
accordance with Section 11(a)(ii) over (2) the Exercise Price in
effect at the time of determination of the Spread.
(v) "Stock Acquisition Date" shall mean the first date on
which there shall be a public announcement by the Company or an
Acquiring Person that an Acquiring Person has become such (which, for
purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) or such
earlier date as a majority of the Board of Directors of the Company
shall become aware of the existence of an Acquiring Person.
(w) "Subsidiary" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having
voting power sufficient to elect a majority of the board of directors
or other persons performing similar functions are beneficially owned,
directly or indirectly, by such Person or by any corporation or other
entity that is otherwise controlled by such Person.
(x) "Summary of Rights" shall have the meaning set forth
in Section 3(a) hereof.
(y) "Trading Day" shall have the meaning set forth in
Section 11(b) hereof.
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(z) "Transfer Tax" shall mean any tax or charge, including
any documentary stamp tax, imposed or collected by any governmental
or regulatory authority in respect of any transfer of any security,
instrument or right, including the Rights, shares of the Common Stock
and shares of the Preferred Stock.
(aa) "Voting Stock" shall mean (i) the Common Stock of the
Company and (ii) any other shares of capital stock of the Company
entitled to vote generally in the election of directors or entitled
to vote together with the Common Stock in respect of any merger,
consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up. For purposes of this
Agreement, a stated percentage of the Voting Stock shall mean a
number of shares of the Voting Stock as shall equal in voting power
that stated percentage of the total voting power of the then
outstanding shares of Voting Stock in the election of a majority of
the Board of Directors of the Company or in respect of any merger,
consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of Directors of the Company
for purposes of applying the definitions contained in this Section 1 shall be
made by a majority of the full Board of Directors in its good faith judgment,
which determination shall be binding on the Rights Agent and the holders of the
Rights.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
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(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
be the holders of Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the
Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached as Exhibit A to the Original Rights Agreement
(the "Summary of Rights"), by first class mail, postage prepaid, to each record
holder of the Common Stock as of the close of business on the Record Date, at
the address of such holder shown on the records of the Company.
(b) Until the close of business on the day which is the earlier of
(i) the tenth day after the Stock Acquisition Date or (ii) the tenth Business
Day (or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person would be the Beneficial Owner of 30% or more of the then outstanding
shares of Voting Stock of the Company (irrespective of whether any shares are
actually purchased pursuant to any such offer) (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights shall be evidenced by the certificates for Common Stock registered in
the
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name of the holders of Common Stock (together with, in the case of certificates
for Common Stock outstanding as of the Record Date, the Summary of Rights) and
not by separate Right certificates and the record holders of such certificates
for Common Stock shall be the record holders of the Rights represented thereby
and (y) each Right shall be transferable only simultaneously and together with
the transfer of a share of Common Stock (subject to adjustment as hereinafter
provided). Until the Distribution Date (or, if earlier, the Expiration Date or
Final Expiration Date), the surrender for transfer of any certificate for Common
Stock shall constitute the surrender for transfer of the Right or Rights
associated with the Common Stock evidenced thereby, whether or not accompanied
by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earlier of the
Distribution Date, the Expiration Date or the Final Expiration Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Company's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earliest of the Distribution Date, the Expiration Date, or the Final Expiration
Date shall have impressed, printed, written or stamped thereon or otherwise
affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof to the
same number of Rights (subject to adjustment) as the number of shares of
Common Stock represented by this certificate, such Rights being on the
terms provided under the Rights Agreement between Big Entertainment, Inc.
and American Stock Transfer & Trust Company (the "Rights Agent"), dated as
of August 23, 1996 (as it may be amended from time to time the "Rights
Agreement"), the terms of which are incorporated herein by reference and a
copy of which is on file at the principal executive offices of Big
Entertainment, Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights shall be
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evidenced by separate certificates and shall no longer be evidenced by this
certificate. Big Entertainment, Inc. shall mail to the registered holder of
this certificate a copy of the Rights Agreement without charge within five
days after receipt of a written request therefor. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN SECTION 7(e) OF THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE
EXERCISED BY OR TRANSFERRED TO ANY PERSON.
With respect to such certificates containing the foregoing legend,
until the Distribution Date the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate, except as otherwise
provided herein, shall also constitute the transfer of the Rights associated
with the Common Stock represented thereby. In the event that the Company
purchases or otherwise acquires any Common Stock after the Record Date but prior
to the Distribution Date, any Rights associated with such Common Stock shall be
deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Stock which are no longer
outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall
not affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
(d) As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Distribution Date, as shown by the records of
the Company, at the address of such
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holder shown on such records, a certificate in the form provided by Section 4
hereof (a "Right Certificate"), evidencing one Right (subject to adjustment as
provided herein) for each share of Common Stock so held. As of and after the
Distribution Date, the Rights shall be evidenced solely by Right Certificates
and may be transferred by the transfer of the Right Certificate as permitted
hereby, separately and apart from any transfer of one or more shares of Common
Stock.
Section 4. Form of Right Certificates. The Right Certificates (and
the forms of election to purchase shares, certificate and assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially
in the form set forth in Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Stock or the Rights may from time to time be listed
or as the Company may deem appropriate to conform to usage or otherwise and as
are not inconsistent with the provisions of this Agreement. Subject to the
provisions of Section 22 hereof, Right Certificates evidencing Rights whenever
issued, (i) shall be dated as of the date of issuance of the Rights they
represent and (ii) subject to adjustment from time to time as provided herein,
on their face shall entitle the holders thereof to purchase such number of one
one-thousandths of a share (including fractional shares which are integral
multiples of one-thousandth of a share) of Preferred Stock as shall be set forth
thereon at the price per one one-thousandth of a share of Preferred Stock
payable upon exercise of a Right provided by Section 7(b) hereof, as the same
may from time to time be adjusted as provided herein (the "Exercise Price").
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Section 5. Countersignature and Registration.
(a) Each Right Certificate shall be executed on behalf of the Company
by its Chairman of the Board, Chief Executive Officer, President or any Vice
President, either manually or by facsimile signature, and have affixed thereto
the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. Each Right Certificate shall be countersigned by the Rights
Agent either manually or by facsimile signature and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any Right Certificate shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Right Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed on
behalf of the Company by any person who, on the date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the
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respective holders of the Right Certificates, the number of Rights evidenced on
its face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Expiration Date or the
Final Expiration Date, any Right Certificate, may be (i) transferred or (ii)
split up, combined or exchanged for one or more other Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths
of a share of Preferred Stock as the Right Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
surrender the Right Certificate at the office of the Rights Agent designated for
the surrender of Right Certificates with the form of certificate and assignment
on the reverse side thereof duly endorsed (or enclose with such Right
Certificate a written instrument of transfer in form satisfactory to the Company
and the Rights Agent), duly executed by the registered holder thereof or his
attorney duly authorized in writing, and with such signature duly guaranteed.
Any registered holder desiring to split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate to be split up, combined or exchanged
at the office of the Rights Agent designated therefor. Thereupon, the Rights
Agent shall countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover
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any Transfer Tax that may be imposed in connection with any transfer, split up,
combination or exchange of any Right Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof,
at any time after the Distribution Date and prior to the Expiration Date, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them and, if requested by the Company, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, or
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company shall cause a new Right Certificate of like tenor to be
issued and delivered to the registered owner in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e), 23(a) and 27(b) hereof). Except as otherwise provided herein, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in New York, New York, together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the Close of Business on the earlier of (i) September 4, 2006
(the "Final
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Expiration Date") or (ii) the date on which the Rights are redeemed as provided
in Section 23 hereof or the date on which the Rights are exchanged as provided
in Section 27 hereof (such earlier date being herein referred to as the
"Expiration Date").
(b) The Exercise Price shall be $100.00 for each one one-thousandth
(1/1,000) of a share of Preferred Stock issued pursuant to the exercise of a
Right. The Exercise Price and the number of one one-thousandths of a share of
Preferred Stock or other securities or property to be acquired upon exercise of
a Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof. The Exercise Price shall be payable in lawful money of the
United States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase and certificate duly executed, accompanied by payment by certified
check, cashier's check, bank draft or money order payable to the Company or the
Rights Agent of the Exercise Price for the shares of Preferred Stock to be
purchased and an amount equal to any applicable Transfer Tax required to be paid
by the holder of the Right Certificate in accordance with Section 9(e) hereof,
the Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Preferred Stock of the Company one or more certificates
representing the number of shares of Preferred Stock to be so purchased, and the
Company hereby authorizes and directs such transfer agent to comply with all
such requests, (ii) as provided in Section 14(b), at the election of the
Company, cause depositary receipts to be issued in lieu of fractional shares of
Preferred Stock, (iii) if the election provided for in the immediately preceding
clause (ii) has not been made,
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requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares (other than fractions that are integral multiples
of one one-thousandth of a share) in accordance with Section 14(b) hereof, (iv)
after receipt of such Preferred Stock certificates and, if applicable,
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate; provided, however, that in the case of a purchase of
securities, other than Preferred Stock, pursuant to Section 13 hereof, the
Rights Agent shall promptly take the appropriate actions corresponding in such
case to that referred to in the foregoing clauses (i) through (v) of this
Section 7(c). Notwithstanding the foregoing provisions of this Section 7(c), the
Company may suspend the issuance of shares of Preferred Stock and other
securities upon exercise of a Right for a reasonable period, not in excess of
ninety (90) days, during which the Company seeks to register under the
Securities Act of 1933, as amended (the "Act"), and any applicable securities
law of any other jurisdiction, the shares of Preferred Stock or other securities
to be issued pursuant to the Rights; provided, however, that nothing contained
in this Section 7(c) shall relieve the Company of its obligations under Section
9(d) hereof. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights
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equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or his assign, subject
to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Agreement to the contrary,
from and after the time (the "invalidation time") when any Person first becomes
an Acquiring Person, any Rights that are Beneficially Owned by (x) such
Acquiring Person (or any Associate or Affiliate of such Acquiring Person), (y) a
transferee of such Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after the invalidation time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the invalidation time pursuant to either (I) a
transfer from the Acquiring Person (or any such Associate or Affiliate) to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (II) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding which has the purpose or effect of avoiding
the provisions of this Section 7(e), and subsequent transferees of such Persons
referred to in clause (y) and (z) above, shall be null and void without any
further action and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of this Agreement.
The Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) are complied with, but shall have no liability to any holder
of Right Certificates or any other Person as a result of its failure to make any
determination with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. No Right Certificate shall be issued pursuant to
Section 3 hereof
21
that represents Rights beneficially owned by an Acquiring Person or any
Affiliate or Associate thereof whose Rights would be null and void pursuant to
the provisions of this Section 7(e); no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person (or an Affiliate or
Associate of such Acquiring Person) whose Rights would be null and void pursuant
to the provisions of this Section 7(e) or any Associate or Affiliate thereof or
to any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
(or an Associate or Affiliate of such Acquiring Person) whose Rights would be
void pursuant to the provisions of this Section 7(e) shall be cancelled.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate following the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall
22
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall cancel and retire, any Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of authorized and issued shares of Preferred Stock held
in its treasury, such number of shares of Preferred Stock as will from time to
time be sufficient to permit the exercise in full of all outstanding Rights.
(b) The Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares of Preferred Stock issued
or reserved for issuance in accordance with this Agreement to be listed, upon
official notice of issuance, upon the principal national securities exchange, if
any, upon which the Common Stock is listed or, if the principal market for the
Common Stock is not on any national securities exchange, to be eligible for
quotation in the National Association of Securities Dealers' Automated Quotation
System or any successor thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to
23
payment of the Exercise Price in respect thereof), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (a) the date as of which the
Rights are no longer exercisable for Preferred Stock, and (b) the earlier of the
Expiration Date and the Final Expiration Date. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days, the issuance of
shares of Preferred Stock upon exercise of a Right in order to prepare and file
a registration statement under the Act and permit it to become effective. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement under the Act (if required)
shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due and
payable any and all federal and state Transfer Taxes which may be payable in
respect of
24
the issuance or delivery of the Right Certificates or of any shares of Preferred
Stock issued or delivered upon the exercise of Rights. The Company shall not,
however, be required to pay any Transfer Tax which may be payable in respect of
any transfer or delivery of a Right Certificate to a Person other than, or the
issuance or delivery of certificates for Preferred Stock upon exercise of Rights
in a name other than that of, the registered holder of the Right Certificate,
and the Company shall not be required to issue or deliver a Right Certificate or
certificate for Preferred Stock to a Person other than such registered holder
until any such Transfer Tax shall have been paid (any such Transfer Tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such
Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name
any certificate for shares of Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Stock represented thereby on, and such certificate shall be dated
as of, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated as of, the next succeeding
Business Day on which the Preferred Stock transfer books of the Company are
open.
Section 11. Adjustment of Exercise Price or Number of Shares. The
Exercise Price and the number of shares of Preferred Stock which may be
purchased
25
upon exercise of a Right are subject to adjustment from time to time as provided
in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare or pay any dividend on Common Stock
payable in shares of Common Stock, (B) subdivide or split the
outstanding shares of Common Stock into a greater number of shares or
(C) combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, then and in each such event the
number of one one-thousandth of a share of Preferred Stock issuable
upon the Exercise of a Right after the record date for such event (if
one shall have been established or, if not, after the date of such
event) shall be the number of one one-thousandth of a share of
Preferred Stock issuable immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately prior to such event and the
denominator of which is the number of shares of Common Stock
outstanding immediately after such event and the Exercise Price to be
in effect after the record date for such event (if one shall have
been established or, if not, after the date of such event) shall be
determined by multiplying the Exercise Price in effect immediately
prior to such event by such fraction. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment
26
provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 27 of this Agreement, in the event
that any Person shall become an Acquiring Person, then, except as
otherwise provided in this Section 11, each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have the right
to receive upon exercise of such Right in accordance with the terms
of this Agreement and payment of the Exercise Price, such number of
one one-thousandth of a share of Preferred Stock as shall equal the
result obtained by (1) multiplying the then current Exercise Price by
the number of one one-thousandth of a share of Preferred Stock for
which a Right is then exercisable and dividing the product by (2) 50%
of the per share Fair Market Value of one one-thousandth of a share
of Preferred Stock (determined pursuant to Section 11(b) hereof) on
the date of such occurrence.
(iii) In the event that the Company does not have available
sufficient authorized but unissued Preferred Stock to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be
necessary to authorize and reserve for issuance such number of
additional shares of Preferred Stock as may from time to time be
required to be issued upon the exercise in full of all Rights from
time to time outstanding and, if necessary, shall use its best
efforts to obtain stockholder approval thereof. In lieu of issuing
shares of Preferred Stock in accordance with the foregoing
subparagraph (ii),
27
the Company may, if the Board of Directors determines that such
action is necessary or appropriate and not contrary to the interests
of holders of Rights, elect to issue or pay, upon the exercise of the
Rights, cash, property, shares of Preferred or Common Stock, or any
combination thereof, having an aggregate Fair Market Value equal to
the Fair Market Value of the shares of Preferred Stock which
otherwise would have been issuable pursuant to Section 11(a)(ii),
which Fair Market Value shall be determined by an investment banking
firm selected by the Board of Directors. For purposes of the
preceding sentence, the Fair Market Value of the Preferred Stock
shall be as determined pursuant to Section 11(b). Subject to Section
23 hereof, any such election by the Board of Directors of the Company
must be made and publicly announced within thirty (30) days after the
date on which the event described in Section 11(a)(ii) occurs.
(b) For the purpose of this Agreement, the "Fair Market Value" of any
share of Preferred Stock, Common Stock or any other stock or any Right or other
security or any other property on any date shall be determined as provided in
this Section 11(b). In the case of a publicly-traded stock or other security,
the Fair Market Value on any date shall be deemed to be the average of the daily
closing prices per share of such stock or per unit of such other security for
the thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
Fair Market Value per share of any share of Common Stock is determined during a
period which includes any date that is within thirty (30) Trading Days after
28
(i) the ex-dividend date for a dividend or distribution on such stock payable in
shares of Common Stock or securities convertible into shares of Common Stock, or
(ii) the effective date of any subdivision, split, combination, consolidation,
reverse stock split or reclassification of such stock, then, and in each such
case, the Fair Market Value shall be appropriately adjusted by the Board of
Directors of the Company to take into account ex-dividend or post-effective date
trading. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way (in either case, as reported in the
applicable transaction reporting system with respect to securities listed or
admitted to trading on the Nasdaq National Market), or, if the securities are
not listed or admitted to trading on the Nasdaq National Market, as reported in
the applicable transaction reporting system with respect to securities listed on
the principal national securities exchange or Nasdaq market on which such
security is listed or admitted to trading; or, if not listed or admitted to
trading on any national securities exchange or Nasdaq market, the last quoted
price (or, if not so quoted, the average of the high bid and low asked prices)
in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use; or, if no bids for such security are quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such security selected by the Board
of Directors of the Company. The term "Trading Day" shall mean a day on which
the principal national securities exchange or Nasdaq market on which such
security is listed or admitted to trading is open for the transaction of
business or, if such security is not listed or admitted to trading on any
national securities exchange or
29
Nasdaq market, a Business Day. If a security is not publicly held or not so
listed or traded, "Fair Market Value" shall mean the fair value per share of
stock or per other unit of such other security, as determined by an independent
investment banking firm experienced in the valuation of securities selected in
good faith by the Board of Directors of the Company, or, if no such investment
banking firm is, in the good faith judgment of the Board of Directors, available
to make such determination, in good faith by the Board of Directors of the
Company; provided, however, that for purposes of making the adjustment provided
for by Section 11(a)(ii) hereof, the Fair Market Value of a share of Preferred
Stock shall not be less than 100% of the product of the Fair Market Value of a
share of Common Stock multiplied by the higher of the then Dividend Multiple or
Vote Multiple applicable to the Preferred Stock (as defined in the Certificate
of Designations relating to the Preferred Stock) and shall not exceed 105% of
the product of the then Fair Market Value of a share of Common Stock multiplied
by the higher of the then Dividend Multiple or Vote Multiple applicable to the
Preferred Stock. In the case of property other than securities, the "Fair Market
Value" thereof shall be determined in good faith by the Board of Directors of
the Company based upon such appraisals or valuation reports of such independent
experts as the Board of Directors of the Company shall in good faith determine
to be appropriate in accordance with good business practices and the interests
of the holders of Rights. Any such determination of Fair Market Value shall be
described in a statement filed with the Rights Agent and shall be binding upon
the Rights Agent.
(c) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them (for a
period expiring within forty-five (45) calendar days after such record date) to
subscribe for or purchase
30
Common Stock or securities convertible into Common Stock at a price per share
(or having a conversion price per share, if a security convertible into Common
Stock) less than the then current per share Fair Market Value of the Common
Stock on such record date, the Exercise Price to be in effect after such record
date shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current Fair Market Value and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent. Shares of Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed
and in the event that such rights, options or warrants are not so issued, the
Exercise Price shall be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
31
(d) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend not in excess of 150% of the previous
regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Common Stock) or
subscription rights or warrants (excluding those referred to in Section 11(c)
hereof), the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Fair Market Value
of the shares of Common Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one share of Common Stock
and the denominator of which shall be such current Fair Market Value of the
shares of Common Stock. Such adjustment shall be made successively whenever such
a record date is fixed and in the event that such distribution is not so made,
the Exercise Price shall again be adjusted to be the Exercise Price which would
then be in effect if such record date had not been fixed.
(e) Unless the Company shall have exercised its election as provided
in Section 11(f), upon each adjustment of the Exercise Price as a result of the
calculations made in Section (c) and (d), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise
32
Price, that number of one one-thousandths of a share of Preferred Stock obtained
by (i) multiplying (x) the number of one one-thousandths of a share of Preferred
Stock covered by a Right immediately prior to the adjustment pursuant to this
Section 11(e) by (y) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(f) The Company may elect on or after the date of any adjustment of
the Exercise Price pursuant to Sections 11(c) and 11(d) to adjust the number of
Rights in substitution for any adjustment pursuant to Section 11(e) in the
number of one one-thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-thousandths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights obtained by dividing the
Exercise Price in effect immediately prior to adjustment of the Exercise Price
by the Exercise Price in effect immediately after adjustment of the Exercise
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Exercise Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If the Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(e), the Company shall, as promptly as
33
practicable, cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates evidencing, subject to Section 14 hereof,
the additional Rights, if any, to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(g) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-thousandth of a share, as the case may
be.
(h) Irrespective of any adjustment or change in the Exercise Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price and the number of shares to be issued upon exercise
of the Rights as in the initial Right Certificates issued hereunder but,
nevertheless, shall represent the Rights as so adjusted.
(i) Before taking any action that would cause an adjustment reducing
the purchase price per whole share of Preferred Stock upon exercise of the
Rights below the then par value, if any, of the shares of Preferred Stock, the
Company shall use its best efforts to take any corporate action which may, in
the opinion of its counsel, be necessary
34
in order that the Company may validly and legally issue fully paid and
non-assessable shares of such Preferred Stock at such adjusted purchase price
per share.
(j) Anything in this Section 11 to the contrary notwithstanding, in
the event of any reclassification of stock of the Company or any
recapitalization, reorganization or partial liquidation of the Company or
similar transaction, the Company shall be entitled to make such further
adjustments in the number of shares of Preferred Stock which may be acquired
upon exercise of the Rights, and such adjustments in the Exercise Price
therefor, in addition to those adjustments expressly required by the other
paragraphs of this Section 11, as the Board of Directors of the Company shall
determine to be necessary or appropriate in order for the holders of the Rights
in such event to be treated equitably and in accordance with the purpose and
intent of this Agreement or in order that any such event shall not, but for such
adjustment, in the opinion of counsel to the Company, result in the stockholders
of the Company being subject to any United States federal income tax liability
by reason thereof.
(k) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than the Preferred
Stock, thereafter the Exercise Price and the number of such other shares so
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
11(c), 11(e), 11(f) and 11(j) hereof, as applicable, and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
35
Section 12. Certification of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11, 13, 23 or 27,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force
or effect of the requirement for such adjustment. Any adjustment to be made
pursuant to Section 11, 13 or 23(c) of this Agreement shall be effective as of
the date of the event giving rise to such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any adjustment unless and
until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, at any time after the time that any Person
becomes an Acquiring Person, (x) the Company shall, directly or indirectly,
consolidate with, or merge with and into, any other Person or Persons (other
than an Exempt Person) and the Company shall not be the surviving or continuing
corporation of such consolidation or merger, or (y) any Person or Persons (other
than an Exempt Person) shall, directly or indirectly, consolidate with, or merge
with and into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in
36
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (other than an Exempt Person) or of the Company
or cash or any other property, or (z) the Company or one or more of its
Subsidiaries shall, directly or indirectly, sell or otherwise transfer to any
other Person, in one or more transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole), then, on the first occurrence of any such event, proper
provision shall be made so that (i) each holder of record of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at a price equal to the then current Exercise Price
multiplied by the number of one one-thousandths of a share of Preferred Stock
for which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of shares of Preferred Stock, such number of shares of
validly issued, fully paid, non-assessable and freely tradeable Common Stock of
the Principal Party (as defined herein), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall equal the result
obtained by (1) multiplying the then current Exercise Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (2) 50% of the then per share Fair
Market Value of the Common Stock of the Principal Party on the date of the
consummation, merger, sale or transfer; provided, however, that the Exercise
Price (as adjusted) and the number of shares of Common Stock of such Principal
Party so receivable upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 11 hereof to reflect any
events occurring in respect of the Common Stock of such Principal Party after
37
the occurrence of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" for all
purposes of this Agreement shall thereafter be deemed to refer to such Principal
Party; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with the provisions of Section 9 hereof applicable to the
reservation of Preferred Stock) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; provided, however, that,
upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).
38
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y)
of the first sentence of Section 13(a) hereof: (A) the Person that is the issuer
of the securities into which shares of Common Stock of the Company are changed
or otherwise exchanged or converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer of the Common Stock of which has
the greatest market value or (B) if no securities are so issued, (x) the Person
that is the other party to the merger or consolidation and that survives such
merger or consolidation, or, if there is more than one such Person, the Person
the Common Stock of which has the greatest market value or (y) if the Person
that is the other party to the merger or consolidation does not survive the
merger or consolidation, the Person that does survive the merger or
consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest market value of shares
outstanding; provided, however, that in any such case, if the Common Stock of
such Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, then (i) if
such Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered,
39
the term "Principal Party" shall refer to such other Person, or (2) if such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest market value of shares outstanding, or (3) if
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in clauses (1) and (2) above shall apply to each of the
owners having an interest in the venture as if the Person owned by the joint
venture was a Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations set forth in this
Section 13 in the same ratio as its interest in such Person bears to the total
of such interests.
(c) The Company shall not consummate any consolidation, merger or
sale or transfer of assets or earning power referred to in Section 13(a) unless
the Principal Party shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Agreement in accordance with
Section 13(a) hereof and that all rights of first refusal or preemptive rights
in respect of the issuance of shares of Common Stock of the Principal Party upon
exercise of outstanding Rights have been waived and that such transaction shall
not result in a default by the Principal Party under this Agreement, and further
40
providing that, as soon as practicable after the date of any consolidation,
merger or sale or transfer of assets or earning power referred to in Section
13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the date of
expiration of the Rights, and similarly comply with applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on NASDAQ;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act. In the event that any of the transactions
described in Section 13(a) hereof shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof,
the Rights which have not theretofore been exercised shall, subject
to the provisions of Section 7(e)
41
hereof, thereafter be exercisable in the manner described in Section
13(a); and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal
Party subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share (determined pursuant to Section 11(b) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then Fair Market Value (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special tax or similar
payment in connection with the issuance to any holder of a Right of Common Stock
of such Principal Party pursuant to the provisions of this Section 13, then, in
such event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
42
(e) The Company covenants and agrees that it shall not, at any time
after any Person becomes an Acquiring Person, enter into any transaction of the
type described in clauses (x) through (z) of Section 13(a) hereof if (i) at the
time of or immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (ii)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (iii) the form or nature
of organization of the Principal Party would preclude or limit the
exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights (i.e., Rights
to acquire less than one one-thousandth of a share of Preferred Stock), unless
such fractional Rights result from a transaction referred to in Section 11(a)(i)
hereof. If the Company shall determine not to issue such fractional Rights,
then, in lieu of such fractional Rights, there shall be paid to the holders of
record of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-thousandth of
43
a share) upon exercise of the Rights or to distribute certificates which
evidence fractional shares (other than fractions that are integral multiples of
one one-thousandth of a share). In lieu of issuing fractions of shares of
Preferred Stock, the Company may, at its election, issue depositary receipts
evidencing fractions of shares pursuant to an appropriate agreement between the
Company and a depositary selected by it, provided, that such agreement shall
provide that the holders of such depositary receipts shall have all of the
rights, privileges and preferences to which they would be entitled as owners of
the Preferred Stock. With respect to fractional shares that are not integral
multiples of one one-thousandth of a share, if the Company does not issue such
fractional shares or depositary receipts in lieu thereof, there shall be paid to
the holders of record of Right Certificates at the time such Right Certificates
are exercised as herein provided an amount in cash equal to the same fraction of
the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent in Section 18
hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate
44
(or, prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
evidenced by the certificates for Common Stock registered in the name
of the holders of Common Stock (together, as applicable, with the
Summary of Rights), which certificates for Common Stock shall also
constitute certificates for Rights, and not by separate Right
Certificates, and each Right shall be transferable only
simultaneously and together with the transfer of shares of Common
Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered
45
at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof (except as provided in Section 7(f) hereof), or to give or
withhold consent to any corporate action (except as provided in Section 7(f)
hereof), or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until
46
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the cost and expenses of defending
against any claim of liability relating to the Rights or this Agreement.
(b) The Rights Agent shall be protected against, and shall incur no
liability for or in respect of, any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Preferred Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons.
47
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; in case at that time any
of the Right
48
Certificates shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed name; in all
such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates by
their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President or any
Vice President and by the Treasurer or the Secretary or an Assistant
Secretary of the Company and delivered to the Rights Agent. Any such
certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good
49
faith by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct. Anything to the
contrary notwithstanding, in no event shall the Rights Agent be
liable for special, 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.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements
and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent)
or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be
responsible for any adjustment required under the provisions of
Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except
50
with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any shares of Preferred Stock to be issued pursuant to this Agreement
or any Right Certificate or as to whether any shares of Preferred
Stock will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent
of the provisions of the Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President or any Vice
President or the Treasurer or the Secretary of the Company, and to
apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent
for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or
omitted by
51
the Rights Agent under this Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective.
The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included
in any such application on or after the date specified in such
application (which date shall not be less than five Business Days
after the date any officer of the Company actually receives such
application unless any such officer shall have consented in writing
to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall
have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not the Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of
52
any such attorneys or agents or for any loss to the Company resulting
from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued
employment thereof.
(j) If, with respect to any Rights 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 to certify the holder is not an Acquiring Person
(or an Affiliate or Associate thereof), the Rights Agent shall not
take any further action with respect to such requested exercise or
transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon thirty (30) days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. Notwithstanding the foregoing provisions of this Section 21,
in no event shall the resignation or removal of a Rights Agent be effective
until a successor Rights Agent shall have been appointed and have accepted such
appointment. If the Company shall fail to make such appointment within a period
of
53
thirty (30) days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the incumbent Rights
Agent or the holder of record of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of any state thereof, in good standing, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination in the conduct of its corporate trust or stock
transfer business by federal or state authorities and which has at the time of
its appointment as Rights Agent a combined capital and surplus of at least
$5,000,000 or (b) an Affiliate controlled by a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed, but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the
54
Rights Agent or the appointment of the successor Rights Agent, as the case may
be. Notwithstanding the foregoing provisions, in the event of resignation,
removal or incapacity of the Rights Agent, the Company shall have the authority
to act as the Rights Agent until a successor Rights Agent shall have assumed the
duties of the Rights Agent hereunder.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Exercise Price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Voting Stock following the
Distribution Date and prior to the Expiration Date, the Company may with respect
to shares of Voting Stock so issued or sold pursuant to (i) the exercise of
stock options, (ii) under any employee plan or arrangement, (iii) upon the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company or (iv) a contractual obligation of the Company, in each case
existing prior to the Distribution Date, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale.
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of
a majority of the Board of Directors, redeem all but not less than
all of the then outstanding Rights, at any time prior to the Close of
Business on the
55
earlier of (i) the tenth day following the Stock Acquisition Date
(subject to extension by the Company as provided in Section 26
hereof) or (ii) the Final Expiration Date, at a redemption price of
$.01 per Right, subject to appropriate adjustment to reflect any
stock split, combination or reclassification involving the Common
Stock or any stock dividend on the Common Stock occurring after the
date hereof (the "Redemption Price"). Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be
exercisable pursuant to Section 11(a)(ii) prior to the expiration of
the Company's right of redemption hereunder.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the time so designated by action
of the Board of Directors ordering the redemption of the Rights and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within ten (10) days after the effective time of the action of the Board
of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each notice of redemption will state the
method by which the payment of the Redemption Price will be made. At the option
of the Board of Directors, the Redemption Price may be paid in cash to each
Rights holder or by the issuance of shares (and, at the Company's election
pursuant to Section 14(b) hereof, cash or
56
depositary receipts in lieu of fractions of shares other than fractions which
are integral multiples of one one-thousandth of a share) of Preferred Stock or
Common Stock having a Fair Market Value equal to such cash payment.
Section 24. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall propose
(i) to effect any of the transactions referred to in Section 11(a)(i) or to pay
any dividend to the holders of record of its shares of Common Stock payable in
shares of capital stock of any class or to make any other distribution to the
holders of record of its Common Stock (other than a regular periodic cash
dividend at a rate not in excess of 150% of the rate of the last cash dividend
theretofore paid), or (ii) to offer to the holders of record of its Common Stock
options, warrants, or other rights to subscribe for or to purchase shares of
Common Stock (including any security convertible into or exchangeable for Common
Stock) or shares of stock of any class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, or (iii) to
effect any reclassification of its Preferred Stock or Common Stock or any
recapitalization or reorganization of the Company, or (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Right Certificate, in accordance with Section 25,
notice of such proposed action, which shall specify the record date for the
purposes of such transaction referred to in Section 11(a)(i) or such
57
dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution, or winding up is to take place and the record
date for determining participation therein by the holders of record of Common
Stock or Preferred Stock, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least ten (10) days prior to the record date for determining holders of record
of the Preferred Stock for purposes of such action, and in the case of any such
other action, at least ten (10) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record of
Common Stock or Preferred Stock, whichever shall be the earlier. The failure to
give notice required by this Section 24 or any defect therein shall not affect
the legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case the event referred to in Section 11(a)(ii) shall occur,
then the Company shall as soon as practicable thereafter, in accordance with
Section 25 hereof, give to each holder of a Right notice of the occurrence of
such event, which notice shall describe the event and the consequences of the
event to holders of Rights under Section 11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
58
Big Entertainment, Inc.
ββββ ββββββ ββββ
βββββ ββββ
ββββ βββββ, βββββββ βββββ
Attn: Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of record of any
Right Certificate or Right to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
ββ ββββ ββββββ, ββββ βββββ
βββ ββββ, ββ βββββ
Attn: βββββββ βββββ or βββββββ ββββββ
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Right Certificate or
Right shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 26. Supplements and Amendments. For as long as the Rights are
then redeemable and except as provided in the last sentence of this Section 26,
the Company may in its sole and absolute discretion, and the Rights Agent shall
if the Company so directs, supplement or amend any provision of this Agreement
without the approval of any holders of the Rights. At any time when the Rights
are not then redeemable and except as provided in the last sentence of this
Section 26, the Company may, and the Rights Agent shall if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Right Certificates (i) to cure any
59
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein or (iii) to
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable, provided, that no such supplement or amendment
pursuant to this clause (iii) shall materially adversely affect the interest of
the holders of Right Certificates. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price.
Section 27. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become null and void pursuant to the provisions of Section 7(e) hereof) by
exchanging for each such Right a number of shares of Common Stock having an
aggregate Fair Market Value on the date such Person becomes an Acquiring Person
equal to the Spread, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date such Person becomes an
Acquiring Person (such amount per Right being hereinafter referred to as the
"Exchange Consideration"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than an Exempt Person), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Voting Stock
then outstanding.
60
From and after the occurrence of an event specified in Section 13(a) hereof, any
Rights that theretofore have not been exchanged pursuant to this Section 27(a)
shall thereafter be exercisable only in accordance with Section 13 and may not
be exchanged pursuant to this Section 27(a).
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 27 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive the Exchange Consideration. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become null and void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 27, the
Company shall substitute
61
to the extent of such insufficiency, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of shares of Preferred
Stock or fractions thereof having an aggregate Fair Market Value equal to the
Fair Market Value of one share of Common Stock as of the date any Person becomes
an Acquiring Person.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares. In
lieu of such fractional shares, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional shares of Common
Stock would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole share of Common Stock. For the purposes
of this paragraph (d), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock for the Trading Day
immediately prior to the date of exchange pursuant to this Section 27.
Section 28. Successors. All of the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the holders of Common Stock in their capacity as
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
62
record of the Right Certificates (and, prior to the Distribution Date, the
holders of Common Stock in their capacity as holders of the Rights).
Section 30. Florida Contract. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Florida and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 31. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section 33. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 34. Determinations and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or
63
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including for
purposes of clause (y) below, all omissions with respect to the foregoing) that
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, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights.
64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
BIG ENTERTAINMENT, INC.
By: /s/ W. ββββββ βββββββ
-----------------------------------------
W. ββββββ βββββββ
Senior Vice President and General Counsel
AMERICAN STOCK TRANSFER & TRUST COMPANY
By /s/ βββββββ β. ββββββ
-----------------------------------------
βββββββ β. ββββββ
Vice President
65
TABLE OF CONTENTS
-----------------
Section Page
------- ----
1. Certain Definitions...............................................................2
2. Appointment of Rights Agent......................................................11
3. Issuance of Right Certificates...................................................12
4. Form of Right Certificates.......................................................15
5. Countersignature and Registration................................................16
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates..........................17
7. Exercise of Rights; Exercise Price; Expiration Date of Rights....................18
8. Cancellation and Destruction of Right Certificates...............................22
9. Reservation and Availability of Shares of Preferred Stock........................23
10. Preferred Stock Record Date......................................................25
11. Adjustment of Exercise Price or Number of Shares.................................26
12. Certification of Adjusted Exercise Price or Number of Shares.....................36
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.............36
14. Fractional Rights and Fractional Shares..........................................43
15. Rights of Action.................................................................44
16. Agreement of Right Holders.......................................................45
17. Right Certificate Holder Not Deemed a Stockholder................................46
18. Concerning the Rights Agent......................................................47
19. Merger or Consolidation of, or Change in Name of, the Rights Agent...............48
20. Duties of Rights Agent...........................................................49
21. Change of Rights Agent...........................................................53
22. Issuance of New Right Certificates...............................................55
i
23. Redemption.......................................................................55
24. Notice of Proposed Actions.......................................................57
25. Notices..........................................................................58
26. Supplements and Amendments.......................................................59
27. Exchange.........................................................................60
28. Successors.......................................................................62
29. Benefits of this Agreement.......................................................62
30. FloridaContract..................................................................63
31. Counterparts.....................................................................63
32. Descriptive Headings.............................................................63
33. Severability.....................................................................63
34. Determinations and Actions by the Board of Directors.............................63
Exhibit A -- Form of Right Certificate
Exhibit B -- Form of Designations of Preferences, Rights
and Limitations of Series E Junior Preferred Stock
ii
EXHIBIT A
[Form of Right Certificate]
Certificate No. W- ______ Rights
NOT EXERCISABLE AFTER SEPTEMBER 4, 2006 OR EARLIER IF EXCHANGED OR
REDEEMED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY AND UNDER CERTAIN OTHER CIRCUMSTANCES, AT $.01 PER RIGHT
(SUBJECT TO ADJUSTMENT), ON THE TERMS SET FORTH OR REFERRED TO IN THE
RIGHTS AGREEMENT. AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO
BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS
OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE
NULL AND VOID AND MAY NOT BE EXERCISED OR TRANSFERRED TO ANY PERSON.
Right Certificate
This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Amended and Restated Rights Agreement dated as of August 23, 1996 (the "Rights
Agreement") between Big Entertainment, Inc., a Florida corporation (the
"Company"), and American Stock Transfer & Trust Company, a banking corporation
organized under the laws of the State of New York (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (New York time) on
September 4, 2006 at the office of the Rights Agent designated in the Rights
Agreement for such purpose, or its successor as Rights Agent, in New York, New
York, one one-thousandth (1/1,000) of a fully paid nonassessable share of Series
E Junior Preferred Stock (the "Preferred Stock") of the Company at a purchase
price of
$100.00, as the same may from time to time be adjusted in accordance with the
Rights Agreement (the "Exercise Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase attached hereto duly
executed.
As provided in the Rights Agreement, the Exercise Price and the
number of shares of Preferred Stock which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office of the Rights Agent designated in the Rights
Agreement for such purpose, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
of record to purchase a like aggregate number of shares of Preferred Stock as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive
2
upon surrender hereof, another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option or
under certain other circumstances at a redemption price of $.01 per Right.
No fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-thousandth (1/1,000) of a share) are required
to be issued upon the exercise of any Right or Rights evidenced hereby, and in
lieu thereof the Company may cause depositary receipts to be issued and/or a
cash payment may be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at meeting
thereof, or to give or withhold consent to any corporate action or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
3
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________, 199_.
ATTEST:
By
-------------------------------- --------------------------------
Secretary Title:
Countersigned:
[Rights Agent]
By
--------------------------------
Authorized Signature
4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and
transfers unto
----------------------------------------------------------------
(Please print name and address of transferee)
-------------------------------------------------------------------------------
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
__________________ Attorney to transfer the within Right Certificate on the
books of the within-named Company, with full power of substitution.
Dated: ________________, 199__
----------------------------------
Signature
Signature Guaranteed:
5
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement). Dated: ____________, 199__
----------------------------------
Signature
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
6
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO _____________________:
The undersigned hereby irrevocably elects to exercise
---------------
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of such Rights and requests that certificates
for such share(s) be issued in the following name:
Please insert social security
or other identifying number:
---------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
---------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
Dated: _____________, 199__
-----------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this Right
Certificate)
Signature Guaranteed:
EXHIBIT B
FORM OF DESIGNATION
OF
PREFERENCES, RIGHTS AND LIMITATIONS
OF
SERIES E JUNIOR PREFERRED STOCK
OF
BIG ENTERTAINMENT, INC.
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series E Junior Preferred Stock" (the "Series E Preferred Stock")
and the number of shares constituting such series shall be 240,000.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set forth,
and subject to the rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the Series E Preferred Stock with
respect to dividends, the holders of shares of Series E Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, (i) cash dividends in an amount per
share (rounded to the nearest cent) equal to 1,000 times the aggregate per share
amount of all cash dividends declared or paid on the Common Stock, $0.01 par
value per share, of the Company (the "Common Stock") and (ii) a preferential
cash dividend (the "Preferential Dividends"), if any, in preference to the
holders of Common Stock, on the first day of each fiscal quarter of the Company
of each year (each a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series E Preferred Stock, payable in an amount (except in the case of the first
Quarterly Dividend Payment if the date of the first issuance of Series E
Preferred Stock is a date other than a Quarterly Dividend Payment date, in which
case such payment shall be a prorated amount of such amount) equal to $0.001 per
share of Series E Preferred Stock less the per share amount of all cash
dividends declared on the Series E Preferred Stock pursuant to clause (i) of
this sentence since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series E Preferred Stock. In the
event the Company shall, at any time after the issuance of any share or fraction
of a share of Series E Preferred Stock, make any distribution on the shares of
Common Stock of the Company, whether by way of a dividend or a reclassification
of stock, a recapitalization, reorganization or partial liquidation of the
Company or otherwise, which is payable in cash or any debt security, debt
instrument, real or personal property or any other property (other than cash
dividends subject to the immediately preceding sentence, a distribution of
shares of Common Stock or other capital stock of the Company or a distribution
of rights or warrants to acquire any such share, including any debt security
convertible into or exchangeable for any such share, at a price less than the
Fair Market Value (as hereinafter defined) of such share), then, and in each
such event, the Company shall simultaneously pay on each then outstanding share
of Series E Preferred Stock of the Company a distribution, in like kind, of
1,000 times such distribution paid on a share of Common Stock (subject to the
provisions for adjustment hereinafter set forth). The dividends and
distributions on the Series E Preferred Stock to which holders thereof are
2
entitled pursuant to clause (i) of the first sentence of this paragraph and
pursuant to the second sentence of this paragraph are hereinafter referred to as
"Dividends" and the multiple of such cash and non-cash dividends on the Common
Stock applicable to the determination of the Dividends, which shall be 1,000
initially but shall be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Dividend Multiple". In the event the Company
shall at any time after October 19, 1999 declare or pay any dividend or make any
distribution on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, then in each such case the Dividend Multiple thereafter applicable
to the determination of the amount of Dividends which holders of shares of
Series E Preferred Stock shall be entitled to receive shall be the Dividend
Multiple applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash dividend
or distribution on the Common Stock in respect of which a Dividend is required
to be paid shall be paid or set aside for payment on the Common Stock unless a
Dividend in respect of such dividend or distribution on the Common Stock shall
be simultaneously paid, or set aside for payment, on the Series E Preferred
Stock.
3
(C) Preferential Dividends shall begin to accrue on outstanding
shares of Series E Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series E Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series E Preferred Stock
in an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of Series E Preferred
Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series E Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the holders of the Common Stock. The
number of votes which a holder of Series E Preferred Stock is entitled to cast,
as the same may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Vote Multiple". In the event the Company shall
at any time after October 19, 1999 declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Vote Multiple thereafter applicable to the determination of the
number of votes per share to which holders of shares of Series E Preferred Stock
shall be entitled after such event shall be the Vote Multiple immediately prior
to such event multiplied by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the
4
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in the Amended and Restated
Articles of Incorporation or by law, the holders of shares of Series E Preferred
Stock and the holders of shares of Common Stock shall vote together as one class
on all matters submitted to a vote of stockholders of the Company.
(C) Except as otherwise required by the Amended and Restated Articles
of Incorporation or by law or set forth herein, holders of Series E Preferred
Stock shall have no other special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for the taking of any corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in arrears or
the Company shall be in default of payment thereof, thereafter and until all
accrued and unpaid Preferential Dividends and Dividends, whether or not
declared, on shares of Series E Preferred Stock outstanding shall have been paid
or set irrevocably aside for payment in full, and in addition to any and all
other rights which any holder of shares of Series E Preferred Stock may have in
such circumstances, the Company shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series E Preferred Stock;
5
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity as to dividends with the Series E
Preferred Stock, unless dividends are paid ratably on the Series E
Preferred Stock and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the holders of all
such shares are then entitled if the full dividends accrued thereon were to
be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
4(A), redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series E Preferred Stock, provided that
the Company may at any time redeem, purchase or otherwise acquire shares of
any such parity stock in exchange for shares of any stock of the Company
ranking junior (both as to dividends and upon liquidation, dissolution or
winding up) to the Series E Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series E Preferred Stock, or any shares of stock ranking on a parity with
the Series E Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except in accordance with a purchase offer made
to all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series end classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
6
(B) The Company shall not permit any Subsidiary (as hereinafter
defined) of the Company to purchase or otherwise acquire for consideration any
shares of stock of the Company unless the Company could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner. A "Subsidiary" of the Company shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors of such
corporation or other entity or other persons performing similar functions are
beneficially owned, directly or indirectly, by the Company or by any corporation
or other entity that is otherwise controlled by the Company.
(C) The Company shall not issue any shares of Series E Preferred
Stock except upon exercise of Rights issued pursuant to that certain Amended and
Restated Rights Agreement dated as of August 23, 1996 between the Company and
American Stock Transfer & Trust Company, as Rights Agent, as it may be amended
from time to time, a copy of which is on file with the Secretary of the Company
at its principal executive office and shall be made available to stockholders of
record without charge upon written request therefor addressed to said Secretary.
Notwithstanding the foregoing sentence, nothing contained in the provisions
hereof shall prohibit or restrict the Company from issuing for any purpose any
series of Preferred Stock with rights and privileges similar to, different from,
or greater than, those of the Series E Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series E Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
upon their
7
retirement and cancellation shall become authorized but unissued shares of
Preferred Stock, without designation as to series, and such shares may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary
or involuntary liquidation, dissolution or winding up of the Company, no
distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series E Preferred Stock unless the holders of shares of Series E Preferred
Stock shall have received for each share of Series E Preferred Stock, subject to
adjustment as hereinafter provided, (A) $1,000.00 plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment or, (B) if greater than the amount specified in
clause (i)(A) of this sentence, an amount equal to 1,000 times the aggregate
amount to be distributed per share to holders of Common Stock, as the same may
be adjusted as hereinafter provided and (ii) to the holders of stock ranking on
a parity upon liquidation, dissolution or winding up with the Series E Preferred
Stock, unless simultaneously therewith distributions are made ratably on the
Series E Preferred Stock and all other shares of such parity stock in proportion
to the total amounts to which the holders of shares of Series E Preferred Stock
are entitled under clause (i)(A) of this sentence and to which the holders of
such parity shares are entitled, in each case upon such liquidation, dissolution
or winding up. The amount to which holders of Series E Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the Company pursuant to
clause (i)(B) of the foregoing sentence is hereinafter referred to as the
"Participating
8
Liquidation Amount" and the multiple of the amount to be distributed to holders
of shares of Common Stock upon the liquidation, dissolution or winding up of the
Company applicable pursuant to said clause to the determination of the
Participating Liquidation Amount, as said multiple may be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the "Liquidation
Multiple". In the event the Company shall at any time after October 19, 1999
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or split or a combination, consolidation or reverse
split of the outstanding shares of Common Stock into a greater or lesser number
of shares of Common Stock, then, in each such case, the Liquidation Multiple
thereafter applicable to the determination of the Participating Liquidation
Amount to which holders of Series E Preferred Stock shall be entitled after such
event shall be the Liquidation Multiple applicable immediately prior to such
event multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock of the
Company receive after October 19, 1999 in respect of their shares of Common
Stock any share of capital stock of the Company (other than any share of Common
Stock of the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise (a "Transaction"),
then, and in each such event, the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series E Preferred Stock shall be adjusted so that after such
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event the holders of Series E Preferred Stock shall be entitled, in respect of
each share of Series E Preferred Stock held, in addition to such rights in
respect thereof to which such holder was entitled immediately prior to such
adjustment, to (i) such additional dividends as equal the Dividend Multiple in
effect immediately prior to such Transaction multiplied by the additional
dividends which the holder of a share of Common Stock shall be entitled to
receive by virtue of the receipt in the Transaction of such capital stock, (ii)
such additional voting rights as equal the Vote Multiple in effect immediately
prior to such Transaction multiplied by the additional voting rights which the
holder of a share of Common Stock shall be entitled to receive by virtue of the
receipt in the Transaction of such capital stock and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Company as
equal the Liquidation Multiple in effect immediately prior to such Transaction
multiplied by the additional amount which the holder of a share of Common Stock
shall be entitled to receive upon liquidation, dissolution or winding up of the
Company by virtue of the receipt in the Transaction of such capital stock, as
the case may be, all as provided by the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after October 19, 1999 in respect of their shares of Common
Stock any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the Fair
Market Value of a share of Common Stock on the date of issuance of such right or
warrant, then and in each such event the dividend rights, voting rights and
rights upon the liquidation, dissolution or winding up of the Company of the
shares of Series E Preferred Stock shall each be adjusted so that after
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such event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple
shall each be the product of the Dividend Multiple, the Vote Multiple and the
Liquidation Multiple, as the case may be, in effect immediately prior to such
event multiplied by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of shares
of Common Stock which could be purchased, at the Fair Market Value of the Common
Stock at the time of such issuance, by the maximum aggregate consideration
payable upon exercise in full of all such rights or warrants.
(C) In the event that holders of shares of Common Stock of the
Company receive after October 19, 1999 in respect of their shares of Common
Stock any right or warrant to purchase capital stock of the Company (other than
shares of Common Stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock of
the Company (other than Common Stock), at a purchase price per share less than
the Fair Market Value of such shares of capital stock on the date of issuance of
such right or warrant, then and in each such event the dividend rights, voting
rights and rights upon liquidation, dissolution or winding up of the Company of
the shares of Series E Preferred Stock shall each be adjusted so that after such
event each holder of a share of Series E Preferred Stock shall be entitled, in
respect of each share of Series E Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior to
such event, to receive
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(i) such additional dividends as equal the Dividend Multiple in effect
immediately prior to such event multiplied, first, by the additional dividends
to which the holder of a share of Common Stock shall be entitled upon exercise
of such right or warrant by virtue of the capital stock which could be acquired
upon such exercise and multiplied again by the Discount Fraction (as hereinafter
defined) and (ii) such additional voting rights as equal the Vote Multiple in
effect immediately prior to such event multiplied, first, by the additional
voting rights to which the holder of a share of Common Stock shall be entitled
upon exercise of such right or warrant by virtue of the capital stock which
could be acquired upon such exercise and multiplied again by the Discount
Fraction and (iii) such additional distributions upon liquidation, dissolution
or winding up of the Company as equal the Liquidation Multiple in effect
immediately prior to such event multiplied, first, by the additional amount
which the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company upon exercise of such
right or warrant by virtue of the capital stock which could be acquired upon
such exercise and multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction the numerator of
which shall be the difference between the Fair Market Value of a share of the
capital stock subject to a right or warrant distributed to holders of shares of
Common Stock of the Company as contemplated by this paragraph immediately after
the distribution thereof and the purchase price per share for such share of
capital stock pursuant to such right or warrant and the denominator of which
shall be the Fair Market Value of a share of such capital stock immediately
after the distribution of such right or warrant.
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(D) For purposes of this Certificate of Designations, the "Fair
Market Value" of a share of capital stock of the Company (including a share of
Common Stock) on any date shall be deemed to be the average of the daily closing
price per share thereof over the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that, in
the event that such Fair Market Value of any such share of capital stock is
determined during a period which includes any date that is within 30 Trading
Days after (i) the ex-dividend date for a dividend or distribution on stock
payable in shares of such stock or securities convertible into shares of such
stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case, no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange), or, if
the shares are not listed or admitted to trading on the New York Stock Exchange,
as reported in the applicable transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares are listed or admitted to trading or, if the shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or if on any such date
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the shares are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the shares selected by the Board of Directors of the Company. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the shares are listed or admitted to trading is open for the
transaction of business or, if the shares are not listed or admitted to trading
on any national securities exchange, on which the New York Stock Exchange or
such other national securities exchange as may be selected by the Board of
Directors of the Company is open. If the shares are not publicly held or not so
listed or traded on any day within the period of 30 Trading Days applicable to
the determination of Fair Market Value thereof as aforesaid, "Fair Market Value"
shall mean the fair market value thereof per share as determined in good faith
by the Board of Directors of the Company. In either case referred to in the
foregoing sentence, the determination of Fair Market Value shall be described in
a statement filed with the Secretary of the Company.
Section 8. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series E Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
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Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series E Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event requiring
such adjustments occurs.
(B) The Company shall give prompt written notice to each holder of a
share of Series E Preferred Stock of the effect of any adjustment to the voting
rights, dividend rights or rights upon liquidation, dissolution or winding up of
the Company of such shares required by the provisions hereof. Notwithstanding
the foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment.
Section 10. No Redemption. The shares of Series E Preferred Stock
shall not be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may acquire
shares of Series E Preferred Stock in any other manner permitted by law, the
provisions hereof and the Amended and Restated Articles of Incorporation of the
Company.
Section 11. Ranking. Unless otherwise provided in the Amended and
Restated Articles of Incorporation of the Company or a Certificate of
Designations relating to a subsequent series of preferred stock of the Company,
the Series E Preferred Stock shall rank junior to all other series of the
Company's preferred stock as to the payment of dividends and the distribution of
assets on liquidation, dissolution or winding up and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the Amended and
Restated Articles of Incorporation of the Company shall not be amended in any
manner
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which would adversely affect the rights, privileges or powers of the Series E
Preferred Stock without, in addition to any other vote of stockholders required
by law, the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series E Preferred Stock, voting together as a single
class.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate
of Designations and do affirm the foregoing as true under the penalties of
perjury this 19th day of October, 1999.
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W. ββββββ βββββββ
Senior Vice President
ATTEST:
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ββββββ β. βββββββ
Corporate Secretary
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