Exhibit 4.1
Modified as of October 12, 2000
AMENDED AND RESTATED
STOCKHOLDERS RIGHTS AGREEMENT
amended and restated as of October 12, 2000
between
PEAPOD, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
A DIVISION OF EQUISERVE
as Rights Agent
TABLE OF CONTENTS
Page
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Section 1. Certain Definitions.................................................................. 3
Section 2. Appointment of Rights Agent.......................................................... 8
Section 3. Issuance of Rights Certificates...................................................... 8
Section 4. Form of Rights Certificates.......................................................... 10
Section 5. Countersignature and Registration.................................................... 11
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates............................. 11
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights........................ 12
Section 8. Cancellation and Destruction of Rights Certificates.................................. 14
Section 9. Reservation and Availability of Preferred Shares..................................... 14
Section 10. Record Date of Preferred Share Ownership............................................. 16
Section 11. Adjustment of Exercise Price, Number and Kind of Shares and Number of
Rights............................................................................... 16
Section 12. Certificate of Adjusted Exercise Price or Number of Shares........................... 22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................. 22
Section 14. Fractional Rights and Fractional Shares.............................................. 25
Section 15. Rights of Action..................................................................... 26
Section 16. Agreements of Holders of Rights...................................................... 26
Section 17. Rights Certificate Holder Not Deemed a Stockholder................................... 27
Section 18. Concerning the Rights Agent.......................................................... 27
Section 19. Merger or Consolidation of the Rights Agent.......................................... 28
Section 20. Duties of the Rights Agent........................................................... 28
Section 21. Resignation or Removal of the Rights Agent........................................... 30
Section 22. Issuance of New Rights Certificates.................................................. 31
Section 23. Redemption........................................................................... 31
Section 24. Exchange............................................................................. 33
Section 25. Notice to Holders of Rights Certificates of Certain Events........................... 34
Section 26. Other Notices........................................................................ 35
Section 27. Supplements and Amendments........................................................... 35
Section 28. Successors........................................................................... 36
Section 29. Certain Determinations and Actions by the Board...................................... 36
Section 30. Benefits of this Agreement........................................................... 36
Section 31. Severability......................................................................... 37
Section 32. Governing Law........................................................................ 37
Section 33. Counterparts......................................................................... 37
Section 34. Descriptive Headings................................................................. 37
Exhibit A - Form of Certificate of Designations of Series A Junior Participating
Preferred Stock.................................................................... A-1
Exhibit B - Form of Rights Certificate........................................................... B-1
Exhibit C - Summary of Rights to Purchase Shares of Series A Junior Participating
Preferred Stock.................................................................... C-1
i
STOCKHOLDERS RIGHTS AGREEMENT
Amended and Restated Stockholders Rights Agreement dated as of June 9,
1997 and amended and restated as of April 13, 2000 and October 12, 2000 (this
"Agreement") between Peapod, Inc., a Delaware corporation (the "Company"), and
First Chicago Trust Company of New York, a division of Equiserve (the "Rights
Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Rights Agent entered into a Stockholders
Rights Agreement, dated as of June 9, 1997, which, among other things, governs
the terms and conditions under which the Rights are exercisable by the holders
of Common Stock of the Company;
WHEREAS, on May 29, 1997, the Board of Directors of the Company
authorized and declared a dividend of one preferred stock purchase right
(individually a "Right" and collectively the "Rights") for each share of Common
Stock (as hereinafter defined) of the Company outstanding at the Close of
Business on the effective date of the Company's initial public offering
registration statement, file no. 333-24341 (the "Record Date"), each Right
representing the right to purchase one one-hundredth of a Preferred Share (as
hereinafter defined) upon the terms and subject to the conditions herein after
set forth, and contemplates that one Right will be issued with respect to each
share of Common Stock which shall become outstanding after the Record Date and
prior to the earlier of the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined), including any shares of Common Stock issued
by reason of the exercise of any option, warrant, right (other than the Rights)
or conversion or exchange privilege contained in any option, warrant, right
(other than the Rights) or convertible or exchangeable security issued by the
Company prior to the Distribution Date, unless the Board (as hereinafter
defined) shall expressly provide to the contrary at the time of issuance of any
such option, warrant, right or convertible or exchangeable security;
WHEREAS, the Company entered into a Purchase Agreement (the "Purchase
Agreement") with Koninklijke Ahold N.V. (the "Investor") pursuant to which,
among other things, the Investor purchased shares of Series B Convertible
Preferred Stock, $.01 par value, of the Company ("Series B Preferred Stock") and
warrants to purchase Common Stock (as hereinafter defined) of the Company;
WHEREAS, the Board of Directors of the Company authorized and declared
a dividend on April 13, 2000 of Rights with respect to the Series B Preferred
Stock, such that a number of Rights equal to the number of shares of Common
Stock that such Series B Preferred Stock are convertible into in accordance with
the Certificate of Designation for the Series B Preferred Stock (the "Series B
Certificate of Designations") were issued with respect to each share of Series B
Preferred Stock outstanding on the Final Closing Date (as defined in the
Purchase Agreement) and will be issued with respect to each share of Series B
Preferred Stock issued at any time thereafter and prior to the earlier of the
Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined), including any shares of Series B Preferred Stock issued by reason of
the exercise of any option, warrant, right (other than the
Rights) or conversion or exchange privilege contained in any option, warrant,
right (other than the Rights) or convertible or exchangeable security issued by
the Company prior to the Distribution Date, unless the Board (as hereinafter
defined) shall expressly provide to the contrary at the time of issuance of any
such option, warrant, right or convertible or exchangeable security.
WHEREAS, the Company proposes to enter into an Exchange Agreement and
First Amendment to Purchase Agreement dated April 14, 20000 (the "Exchange
Agreement") with the Investor, pursuant to which the Series B Preferred Stock
held by the Investor will be exchanged for shares of Series C Convertible
Preferred Stock, $.01 par value, of the Company ("Series C Preferred Stock"),
after which the Series B Preferred Stock will no longer be outstanding;
WHEREAS, on October 11, 2000, the Board of Directors authorized and
declared a dividend of Rights with respect to the Series C Preferred Stock, and
contemplates the issuance of a number of Rights equal to the number of shares of
Common Stock that such Series C Preferred Stock are convertible into in
accordance with the Certificate of Designations for the Series C Preferred Stock
(the "Series C Certificate of Designations") will be issued with respect to each
share of Series C Preferred Stock which shall become outstanding on the Exchange
Closing Date (as defined in the Exchange Agreement) and at any time thereafter
and prior to the earlier of the Redemption Date and the Final Expiration Date
(as such terms are hereinafter defined), including any shares of Series C
Preferred Stock issued by reason of the exercise of any option, warrant, right
(other than the Rights) or conversion or exchange privilege contained in any
option, warrant, right (other than the Rights) or convertible or exchangeable
security issued by the Company prior to the Distribution Date, unless the Board
shall expressly provide to the contrary at the time of issuance of any such
option, warrant, right or convertible or exchangeable security;
WHEREAS, the Company and the Rights Agent desire to amend and restate
the Agreement (i) to provide for the issuance of Rights with respect to the
Series C Preferred Stock and (ii) to make certain other administrative changes.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Certain Definitions. For all purposes of this Agreement,
-------------------
unless the context otherwise requires, the following terms shall have the
respective meanings set forth below:
(a) "Acquiring Person" shall mean any Person who or which,
----------------
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock of the Company
then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan or other compensation program or
arrangement of the Company or of any such Subsidiary, (iv) any Person holding
such shares of Common Stock for or pursuant to the terms of any such plan,
program or arrangement and each Affiliate and Associate thereof, and (v) ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, and each Affiliate and Associate thereof
(the Persons specified in clauses (i) through (v) being hereinafter collectively
called "Exempt Persons"). Notwithstanding
3
the preceding sentence, no Person shall become an "Acquiring Person" as the
result of an acquisition by the Company of shares of its Common Stock which, by
reason of reducing the number of its then outstanding shares of Common Stock,
increases the percentage of its then outstanding shares of Common Stock
Beneficially Owned by such Person to 15% or more; provided, however, that if
such Person shall, after such purchase by the Company, become the Beneficial
Owner of any additional shares of Common Stock of the Company, then such Person
shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, none of the Investor, any of its
Affiliates or Associates or any Permitted Transferee (as defined in the Purchase
Agreement) shall be deemed an Acquiring Person.
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of 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
to be an "Acquiring Person" for any purpose of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
--------- ---------
ascribed to such terms in Rule 12b-2, as in effect on the date of this
Agreement, under the Exchange Act; provided, however, that no director or
officer of the Company shall be deemed an Affiliate or Associate of any other
director or officer of the Company solely as a result of his or her being a
director or officer of the Company.
(c) "Beneficial Owner" (including the terms "Beneficially Own" and
---------------- ----------------
"Beneficial Ownership"), when used with respect to any Person, shall be deemed
---------------------
to include any securities which:
(i) such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly (determined as provided in Rule
13d-3, as in effect on the date of this Agreement, under the Exchange Act);
(ii) such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has:
(A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction
of any conditions, or both) pursuant to any written or oral agreement,
arrangement or understanding (other than customary agreements with and
among underwriters and selling group members with respect to a bona
fide public offering of securities), upon the exercise of any options,
warrants, rights (other than the Rights) or conversion or exchange
privileges or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own: (I) securities
tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until
such tendered securities are
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accepted for purchase or exchange or (II) securities issuable upon
exercise of the Rights at any time prior to the Distribution Date; or
(B) the right to vote pursuant to any written or oral
agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to Beneficially
Own, any security otherwise subject to this item (B) if such
agreement, arrangement or understanding to vote (I) arises solely from
a revocable proxy or consent given to such Person or any of such
Person's Affiliates or Associates in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (II) is
not also then reportable by such Person on Schedule 13D (or any
comparable or successor report then in effect) under the Exchange Act;
or
(C) the right to dispose of pursuant to any written or oral
agreement, arrangement or understanding (other than customary
agreements with and among underwriters and selling group members with
respect to a bona fide public offering of securities); or
(iii) 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 written or oral agreement,arrangement or
understanding (other than customary agreements with and among
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose ofacquiring, holding,
voting (except to the extent contemplated by the provisoto item (B) of
subparagraph (ii) of the first paragraph of this definition) or
disposing of any securities of the Company.
Notwithstanding the first paragraph of this definition, no director or
officer of the Company shall be deemed to be the "Beneficial Owner" of, or to
"Beneficially Own," shares of Common Stock or other securities of the Company
beneficially owned by any other director or officer of the Company solely as a
result of his or her being a director or officer of the Company.
(d) "Board" shall mean the Board of Directors of the Company.
-----
(e) "Business Day" shall mean any day other than a Saturday, a
------------
Sunday or a day on which banking institutions in the State of Illinois are
authorized or obligated by law or executive order to close.
(f) "Certificate of Designations" shall mean the Certificate of
---------------------------
Designations for the Preferred Shares previously filed with the Secretary of
State of the State of Delaware on June 4, 1997, in substantially the form
attached hereto as Exhibit A.
---------
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
-----------------
Chicago time, on such date or, if such date is not a Business Day, then 5:00
P.M., Chicago time, on the next succeeding Business Day.
5
(h) "Common Stock," when used with reference to the Company, shall
------------
mean the Common Stock, $.01 par value, of the Company. "Common Stock," when
used with reference to any Person other than the Company, shall mean the capital
stock with the greatest voting power (or the other equity securities or equity
interests having the power to control or direct management) of such Person or,
if such Person is a Subsidiary of another Person, of the Person which ultimately
controls such first-mentioned Person and which has issued and outstanding such
capital stock, equity securities or equity interests.
(i) "Designated Preferred Stock" shall mean the Series B Preferred
--------------------------
Stock and the Series C Preferred Stock.
(j) "Distribution Date" shall have the meaning set forth in
-----------------
Section 3(a).
(k) "Equivalent Preferred Shares" shall have the meaning set forth
---------------------------
in Section 11(b).
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934,
------------
as in effect on the date of this Agreement.
(m) "Exchange Rate" shall have the meaning set forth in Section
-------------
24(a).
(n) "Exempt Persons" shall have the meaning set forth in the
--------------
definition of "Acquiring Person."
(o) "Exercise Price" shall have the meaning set forth in Section
--------------
7(b).
(p) "Fair Market Value" shall have the meaning and be determined
-----------------
as set forth in Section 11(d).
(q) "Final Expiration Date" shall have the meaning set forth in
---------------------
Section 7(a).
(r) "Interested Stockholder" shall mean any Restricted Person or
----------------------
any Affiliate or Associate of any other Person in which such Restricted Person
has an interest, or any Person acting, directly or indirectly, on behalf of or
in concert with any such Restricted Person.
(s) "Person" shall mean any individual, firm, corporation,
------
partnership or other entity, and shall include any successor (by merger or
otherwise) of any of the foregoing.
(t) "Preferred Shares" shall mean the Series A Junior
----------------
Participating Preferred Stock of the Preferred Stock, which series shall have
the powers, preferences and other rights set forth in the Certificate of
Designations.
(u) "Preferred Stock," when used with reference to the Company,
---------------
shall mean the Preferred Stock, $.01 par value, of the Company.
(v) "Principal Party" shall have the meaning set forth in Section
---------------
13(e).
(w) "Record Date" shall have the meaning set forth in the second
-----------
recital clause of this Agreement.
6
(x) "Redemption Date" shall have the meaning set forth in Section
---------------
7(a).
(y) "Redemption Price" shall have the meaning set forth in Section
----------------
23(a).
(z) "Restricted Person" shall mean an Acquiring Person or any
-----------------
Affiliate or Associate of an Acquiring Person.
(aa) "Rights" shall have the meaning set forth in the second
------
recital clause of this Agreement.
(bb) "Rights Certificates" shall mean the certificates evidencing
-------------------
the Rights after the Distribution Date.
(cc) "Section 11(a)(ii) Event" shall mean any event described in
-----------------------
Section 11(a)(ii).
(dd) "Section 13 Event" shall mean any transaction described in
----------------
Section 13(a).
(ee) "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended from time to time.
(ff) "Security" shall have the meaning set forth in Section 11(d).
--------
(gg) "Series B Certificate of Designations" shall have the meaning
------------------------------------
set forth in the fourth recital of this Agreement.
(hh) "Series B Preferred Stock" shall have the meaning set forth in
------------------------
the second recital of this Agreement.
(ii) "Series C Certificate of Designations" shall have the meaning
------------------------------------
set forth in the sixth recital of this Agreement.
(jj) "Series C Preferred Stock" shall have the meaning set forth in
------------------------
the fifth recital of this Agreement.
(kk) "Share Acquisition Date" shall mean the first date on which
----------------------
there shall be a public announcement (which shall include, without limitation,
any press release or publicly available filing with the Securities and Exchange
Commission or any other federal or state governmental authority or agency) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(ll) "Stock" shall have the meaning set forth in Section 11(d).
-----
(mm) "Subsidiary" of any Person shall mean any corporation or other
----------
entity of which a majority of the voting power or the other equity securities or
equity interests having the power to control or direct management) is owned,
directly or indirectly, by such Person.
7
(nn) "Summary of Rights" shall mean the Summary of Rights to
-----------------
Purchase shares of Series A Junior Participating Preferred Stock in
substantially the form attached hereto as Exhibit C.
---------
(oo) "Trading Day" shall have the meaning set forth in Section
-----------
11(d)(i).
(pp) "Triggering Event" shall mean any Section 11(a)(ii) Event or
----------------
any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
---------------------------
the Rights Agent to act as agent for the Company and the holders of the Rights
(which holders, as provided in Section 3, shall, prior to the Distribution Date,
also be the holders of the Common Stock of the Company) in accordance with the
terms and conditions of this Agreement. 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. In the event the Company appoints one or
more Co-Rights Agents, the respective obligations and duties of the Rights Agent
and of any Co-Rights Agent shall be as the Company shall specify in writing. The
Rights Agent shall have no duty to supervise, and shall not be liable for the
acts or omissions of, any Co-Rights Agent.
Section 3. Issuance of Rights Certificates.
-------------------------------
(a) Until the earliest of (i) the Close of Business on the 10th
Business Day after the Share Acquisition Date or (ii) the Close of Business on
the 10th Business Day (or, anything in Section 27 to the contrary
notwithstanding, such other Business Day as may be determined by action of the
Board prior to the occurrence of any Section 11(a)(ii) Event) after the date of
the commencement by any Person (other than an Exempt Person) of, or the first
public announcement of the intention of any Person (other than an Exempt Person)
to commence, a tender or exchange offer if, upon the consummation thereof, such
Person would be the Beneficial Owner of 15% or more of the shares of Common
Stock of the Company then outstanding (the earliest of the dates specified
clauses (i) and (ii) being hereinafter called the "Distribution Date"), the
Rights shall be evidenced and be transferable only as provided in Section 3(b).
As soon as practicable after the Distribution Date or, in the case of any shares
of Common Stock of the Company which are issued or otherwise become outstanding
after the Distribution Date and prior to the earlier of the Redemption Date and
the Final Expiration Date, including any shares of Common Stock issued by reason
of the exercise of any option, warrant, right (other than the Rights) or
conversion or exchange privilege contained in any option, warrant, right (other
than the Rights) or convertible or exchangeable security issued by the Company
prior to the Distribution Date, unless the Board shall have expressly provided
to the contrary at the time of issuance of any such option, warrant, right or
convertible or exchangeable security, simultaneously with the issuance of stock
certificates for such shares of Common Stock, the Company shall prepare and
execute, the Rights Agent shall countersign and the Company shall deliver or
cause to be delivered (or the Rights Agent shall, if requested, deliver), by
first-class mail, postage prepaid, to each record holder of shares of Common
Stock or Designated Preferred Stock of the Company as of the Close of Business
on the Distribution Date or, in the case of shares of Common Stock or Designated
Preferred Stock issued or otherwise becoming outstanding after the Distribution
Date (unless otherwise provided with respect thereto as aforesaid), to each
record holder of the shares of Common Stock or Designated
8
Preferred Stock so being issued or becoming outstanding at the time of such
occurrence, at its last address shown on the registry books of the transfer
agent for the Common Stock and the Designated Preferred Stock (if any) of the
Company, one or more Rights Certificates evidencing (i) one Right for each share
of Common Stock of the Company so held, issued or becoming outstanding and (ii)
the number of Rights equal to the number of shares of Common Stock that each
share of Designated Preferred Stock so held, issued or becoming outstanding is
convertible into in accordance with the Designated Certificate of Designations.
As of and after the Distribution Date, the Rights shall be evidenced solely by
the Rights Certificates.
(b) Until the Distribution Date: no Rights Certificates shall be
issued; each stock certificate for shares of Common Stock or Designated
Preferred Stock of the Company outstanding as of the Record Date, until the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date, shall be deemed also to constitute a certificate for the Rights associated
with the shares represented thereby, together with a copy of the Summary of
Rights attached thereto; and the registered holder of such shares shall also be
the registered holder of the associated Rights. Until the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date, the
surrender for transfer of any such stock certificate, with or without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with the shares of Common Stock or Designated Preferred
Stock represented thereby.
(c) Any stock certificate for shares of Common Stock or Designated
Preferred Stock of the Company which shall be delivered by or on behalf of the
Company (including, without limitation, stock certificates for shares of Common
Stock or Designated Preferred Stock which are reacquired by the Company and then
transferred) after the Record Date and prior to the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date shall have impressed,
printed or written thereon, or otherwise affixed thereto, the following legend:
"This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Amended and Restated
Stockholders Rights Agreement dated as of October 12, 2000, as it may
be amended from time to time (the "Rights Agreement") between Peapod,
Inc. (the "Company") and First Chicago Trust Company of New York, a
division of Equiserve, as Rights Agent, the terms, provisions and
conditions of which are incorporated herein by reference and made a
part hereof. The Rights Agreement is on file at the principal office
of the Company and the principal office of such Rights Agent, and the
Company will mail to the holder of this certificate a copy without
charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Rights (i) may be redeemed at a redemption
price (subject to adjustment) of $.01 per Right or (ii) under certain
circumstances, may be exchanged, in whole or in part, for shares of
Common Stock of the Company at an exchange rate (subject to
adjustment) of one share of Common Stock per Right, all as set forth
in the Rights Agreement. Under certain circumstances, as set forth in
the Rights Agreement, Rights Beneficially Owned by a Restricted Person
(as such terms are defined in the Rights Agreement), or by specified
transferees from a Restricted Person, shall be or become void."
9
Each stock certificate containing the foregoing legend, until the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date, shall be deemed also to constitute a certificate for the Rights associated
with the shares represented thereby, and the registered holder of such shares
shall also be the registered holder of the associated Rights. Until the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date, the surrender for transfer of any such stock certificate shall also
constitute the transfer of the Rights associated with the shares of Common Stock
or Designated Preferred Stock represented thereby. The omission of the
foregoing legend shall not in any manner whatsoever affect the application or
interpretation of Section 7(d).
(d) In the event that the Company shall reacquire any shares of
its Common Stock or Designated Preferred Stock after the Record Date and prior
to the Distribution Date, the Rights associated with such shares shall be deemed
cancelled and retired, the Company not being entitled to exercise any Rights
associated with shares of its Common Stock or Designated Preferred Stock which
are no longer outstanding.
Section 4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (including the Form of Election to
Purchase and Certification of Status and the Form of Assignment and
Certification of Status to be set forth on the reverse side thereof) shall be in
substantially the form attached hereto as Exhibit B and may have such marks of
identification or designation and such legends, summaries or endorsements set
forth thereon as the Company may deem appropriate and are not inconsistent with
the provisions of this Agreement, or as may be required to conform to customary
practice or to comply with any applicable law or any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed. Subject to Sections 11 and 22, the
Rights Certificates, whenever distributed, shall be dated as of the Record Date
(or, in the case of Rights with respect to shares of Common Stock or Designated
Preferred Stock issued or becoming outstanding after the Record Date, the same
date as the stock certificate evidencing such shares), shall (if the Company
shall so require) indicate the date of countersignature by the Rights Agent and
shall entitle the holders thereof to purchase such number of one one-hundredths
of a Preferred Share at the Exercise Price as shall be set forth therein, but
the number of such one one-hundredths of a Preferred Share and the Exercise
Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 that represents Rights Beneficially Owned by: (i) a Restricted
Person, (ii) a transferee from a Restricted Person who becomes a transferee
after the Acquiring Person becomes such or (iii) a transferee from a Restricted
Person who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from such Acquiring Person (or any Affiliate
or Associate thereof) to holders of equity interests in such Acquiring Person
(or any such Affiliate or Associate) or to any Person with whom such Acquiring
Person (or any such Affiliate or Associate) has any continuing written or oral
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of Section
7(d), and any Rights Certificate issued pursuant to Section 6, 11 or 22 upon the
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence,
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shall have deleted therefrom the second sentence of the legend on the Form of
Rights Certificate attached hereto as Exhibit B and, in lieu thereof, shall
contain the following two sentences:
"The Rights represented by this Rights Certificate are or were
Beneficially Owned by a Restricted Person (as such term is defined in such
Agreement). This Rights Certificate and the Rights represented hereby
shall be or become void under the circumstances specified in Section 7(d)
of such Agreement."
The Company shall give prompt written notice to the Rights Agent after
becoming aware of the existence and identity of any Restricted Person. The
failure to insert the foregoing sentences on any such Rights Certificate or any
defect therein shall not in any manner whatsoever affect the application or
interpretation of Section 7(d). The Company shall specify to the Rights Agent
in writing which Rights Certificates are to be so legended.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President, any of its Vice Presidents or its
Treasurer, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof attested by its Secretary or
any of its Assistant Secretaries, either manually or by facsimile signature.
The Rights Certificates shall be manually countersigned by an authorized
signatory of the Rights Agent and shall not be valid or obligatory for any
purpose unless so countersigned. In case any officer of the Company who shall
have executed any Rights Certificate or who shall have attested the Company's
seal thereon shall cease to be such officer of the Company before such Rights
Certificate shall have been countersigned by an authorized signatory of the
Rights Agent and issued and delivered by or on behalf of the Company, such
Rights Certificate, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by or on behalf of the Company with the same force and
effect as though the individual who executed such Rights Certificate or who
attested the Company's seal thereon had not ceased to be such officer; and any
Rights Certificate may be executed on behalf of the Company and the Company's
seal may be attested by any individual who, at the actual date of such execution
or attestation, shall be a proper officer of the Company, although at the date
of execution of this Rights Agreement such person was not such an officer.
(b) After the Distribution Date, the Rights Agent shall keep or cause
to be kept, at its principal office, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each Rights Certificate, the date of each Rights
Certificate and (if required by the Company) the date of countersignature by the
Rights Agent.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
----------------------------------------------------------------------
(a) Subject to Sections 4(b), 7(d) and 14, at any time after the Close
of Business on the Distribution Date and prior to the Close of Business on the
earlier of the Redemption Date and the Final Expiration Date, any Rights
Certificate (other than any Rights Certificate which shall have been exchanged
pursuant to Section 24) may be transferred, split up,
11
combined or exchanged for one or more other Rights Certificates, entitling the
registered holder to purchase the same number of one one-hundredths of a
Preferred Share (or after a Triggering Event, the securities, cash and other
property purchasable in lieu thereof) as the Rights Certificate or Rights
Certificates surrendered entitled such registered holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange one or
more Rights Certificates shall make such request in a writing delivered to the
Rights Agent, and shall surrender the Rights Certificates to be transferred,
split up, combined or exchanged, with the Form of Assignment and Certification
of Status on the reverse side thereof duly executed, together with such
signature guarantees and other documentation as the Rights Agent may reasonably
request, at the principal office of the Rights Agent. Thereupon the Company
shall prepare and execute, the Rights Agent shall countersign and the Company
shall deliver or cause to be delivered (or the Rights Agent shall, if requested,
deliver) to the person entitled thereto one or more Rights Certificates as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in the case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them or, in the case of
mutilation, upon surrender to the Rights Agent of the mutilated Rights
Certificate, and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, the Company shall
prepare and execute, the Rights Agent shall countersign and the Company shall
deliver or cause to be delivered (or the Rights Agent shall, if requested,
deliver) to the registered holder thereof a new Rights Certificate of like tenor
in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
------------------------------------------------------
Rights.
------
(a) Subject to Section 7(d), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein), in whole or in part, at any time after the Distribution Date
and prior to the earliest of (i) the Close of Business on the tenth anniversary
of the Record Date (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 (the "Redemption Date") and (iii)
the time at which such Rights are exchanged as provided in Section 24, upon
surrender of such Rights Certificate, with the Form of Election to Purchase and
Certification of Status on the reverse side thereof duly executed, together with
such signature guarantees and other documentation as the Rights Agent may
reasonably request, to the Rights Agent at its principal office, accompanied by
payment (as provided in subsection (c) of this Section 7) of the Exercise Price
for each one one-hundredth of a Preferred Share (or after a Triggering Event,
the securities, cash and other property purchasable in lieu thereof) as to which
the surrendered Rights are then being exercised.
(b) The price (the "Exercise Price") for each one one-hundredth of a
Preferred Share purchased upon exercise of the Rights shall initially be $98.00
shall be subject to adjustment from time to time as provided in Sections 11 and
13 and shall be payable in lawful money of the United States of America in
accordance with subsection (c) of this Section 7.
12
(c) Upon receipt of a Rights Certificate representing then exercisable
Rights, with the Form of Election to Purchase and Certification of Status on the
reverse side thereof duly executed, together with such signature guarantees and
other documentation as the Rights Agent may reasonably request, accompanied by
payment of the Exercise Price for the number of one one-hundredths of a
Preferred Share (or after a Triggering Event, the securities, cash and other
property purchasable in lieu thereof) being purchased, plus the amount of any
applicable transfer tax (as determined by the Rights Agent) required to be paid
by the holder of such Rights Certificate in accordance with Section 9, by
certified or cashier's check or money order payable to the order of the Company,
the Rights Agent shall, subject to the terms and conditions of this Agreement,
thereupon promptly (i) requisition from any transfer agent for the Preferred
Shares (or, if the Rights Agent is such a transfer agent, make available) stock
certificates for the number of one one-hundredths of a Preferred Share being
purchased, the Company hereby irrevocably authorizing any such transfer agent to
comply with all such requests, (ii) if the Company shall have elected to deposit
the Preferred Shares issuable upon exercise of the Rights with a depository
agent, requisition from the depository agent depository receipts for the number
of one one-hundredths of a Preferred Share being purchased (in which case stock
certificates for the Preferred Shares represented by such depository receipts
shall be deposited by the transfer agent for the Preferred Shares with the
depository agent), the Company hereby irrevocably authorizing any such
depository agent to comply with all such requests, (iii) after a Triggering
Event, requisition or obtain from the appropriate Person or Persons such
securities, cash and other property as may then be purchasable in lieu of
Preferred Shares, the Company hereby irrevocably authorizing all such requests,
(iv) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of the issuance of any fractional share in accordance with Section
14 and (v) promptly after receipt of such stock certificates, depository
receipts, securities, cash and/or other property, cause the same to be delivered
to or upon the order of the registered holder of such Rights Certificate,
registered (when appropriate) in such name or names as may be designated by such
registered holder.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any Section 11(a)(ii) Event, any Rights
Beneficially Owned by: (i) a Restricted Person, (ii) a transferee from a
Restricted Person who becomes a transferee after the Acquiring Person becomes
such or (iii) a transferee from a Restricted Person who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration)
from such Acquiring Person (or any Affiliate or Associate thereof) to holders of
equity interests in such Acquiring Person (or any such Associate or Affiliate)
or to any Person with whom such Acquiring Person (or any such Associate or
Affiliate) has any continuing written or oral agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
has determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(d) shall be or become
void without any further action; and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise, from and after such first occurrence. The Company
shall use all reasonable efforts to ensure that the provisions of this Section
7(d) and Section 4(b) are complied with, but shall have no liability to any
holder of the Rights Certificates or to any other Person as a result of the
Company's failure to make any applicable finding or determination with respect
to any Restricted Person, or any transferee therefrom.
13
(e) Notwithstanding subsection (a) of this Section 7, a Right may be
exercised by the holder thereof on or after the Distribution Date and prior to
the receipt of the associated Rights Certificate by notifying the Rights Agent
in writing and furnishing to the Rights Agent such information and evidence as
to such election as the Rights Agent may reasonably request; provided, however,
that the Rights Agent shall not be required to take any of the actions specified
in subsection (c) of this Section 7 until such holder shall have fully satisfied
the applicable requirements specified therein.
(f) Neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to any Rights or Rights Certificate upon the
purported exercise or transfer thereof unless the registered holder thereof
shall have (i) completed and signed the Certification of Status following the
Form of Election to Purchase or the Form of Assignment, as the case may be, set
forth on the reverse side of the Rights Certificate surrendered for such
exercise or transfer and (ii) provided such additional evidence as to the
identity of the Beneficial Owner (or former Beneficial Owner) thereof or the
Affiliates or Associates thereof as the Company shall reasonably request.
(g) In case the registered holder of any Rights Certificate shall
exercise less than all of the Rights evidenced thereby, then, subject to the
provisions of Section 14, a new Rights Certificate evidencing the Rights
remaining unexercised shall be prepared and executed by the Company and
countersigned and delivered by the Rights Agent to the registered holder of such
surrendered Rights Certificate or to such registered holder's duly authorized
assigns.
Section 8. Cancellation and Destruction of Rights Certificates. All
---------------------------------------------------
Rights 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 Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation,
and the Rights Agent shall cancel, any other Rights Certificate purchased or
reacquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates and deliver a certificate of the destruction thereof to the
Company.
Section 9. Reservation and Availability of Preferred Shares.
------------------------------------------------
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares, or any
authorized and issued Preferred Shares held in its treasury, the number of
Preferred Shares required to permit the exercise in full of all outstanding
Rights.
(b) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares delivered upon exercise
of the Rights shall, at the time of delivery of the stock certificates therefor
in accordance with Section 7(c) (including the receipt of payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable.
14
(c) The Company covenants and agrees that it will use its best efforts
to cause, from and after such time as the Rights shall become exercisable, all
Preferred Shares issued or reserved for issuance to be listed, upon official
notice of issuance, on the principal national securities exchange, if any, on
which its Common Stock is listed or, if the principal market for Common Stock is
not on any national securities exchange, to be eligible for quotation on The
NASDAQ National Market or any successor thereto or other comparable quotation
system.
(d) The Company covenants and agrees that it will use its best efforts
to (i) file, as soon as practicable after the occurrence of any Section
11(a)(ii) Event for which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iv),
or as soon as required by law after the Distribution Date, as the case may be, a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (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 which at all times meets the requirements of the Securities
Act) until the earliest of (A) the date as of which the Rights are no longer
exercisable for such securities, (B) the Redemption Date and (C) the Final
Expiration Date. The Company further covenants and agrees that it will take
such action as may be appropriate under, and which will ensure compliance with,
the securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate in connection with the exercisability of the Rights. The Company
may temporarily suspend, for not more than 90 days after the applicable date
specified in the first sentence of this subsection (d), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective and to complete such securities or "blue sky" law action.
Upon such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, and the Company
shall also issue a public announcement at such time as the suspension shall no
longer be in effect. Failure of the Company to notify the Rights Agent of any
such suspension shall not affect the effectiveness thereof. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification or exemption in such
jurisdiction shall have been effected. Until otherwise notified in writing by
the Company, the Rights Agent may assume that each purported exercise of the
Rights is permitted by this Agreement and by applicable law, and the Rights
Agent shall not be liable for acting in reliance upon such assumption.
(e) The Company covenants and agrees that, subject to Section 6, it
will pay when due and payable any and all federal and state original issue or
transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Rights or the Rights Certificates or of any stock certificate
for Preferred Shares issued upon exercise of the 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 any Rights Certificate to a Person other than, or
the issuance of any stock certificate for Preferred Shares upon exercise of any
of the Rights represented by such Rights Certificate in a name other than, the
registered holder of such Rights Certificate or to issue or deliver any Rights
Certificate or stock certificate for Preferred Shares upon such transfer or
exercise until any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender thereof) or until
it has been established to the Company's reasonable satisfaction that no such
tax is due.
15
(f) After a Triggering Event, the provisions of this Section 9 shall
apply, to the extent applicable and appropriate, to all shares of capital stock
and other securities then purchasable upon exercise of the Rights.
Section 10. Record Date of Preferred Share Ownership. The Person in
----------------------------------------
whose name any stock certificate for Preferred Shares is issued upon exercise of
any of the Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Shares represented thereby on, and such stock
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered to the Rights Agent with proper
payment of the Exercise Price (and all applicable transfer taxes, if any);
provided, however, that if the date of such surrender and payment shall be a
date upon which the registry books of the transfer agent for the Preferred
Shares are closed, such Person shall be deemed to have become the record holder
of such Preferred Shares on, and such stock certificate shall be dated, the next
succeeding Business Day on which such registry books are open.
Section 11. Adjustment of Exercise Price, Number and Kind of Shares
-------------------------------------------------------
and Number of Rights. The Exercise Price, the number and kind of shares of
--------------------
capital stock for which each Right is exercisable and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event that the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares into a greater
number of Preferred Shares, (C) combine or consolidate the outstanding Preferred
Shares into a smaller number of Preferred Shares or (D) issue any shares of
capital stock of any class in a reclassification of the Preferred Shares
(including any such reclassification in connection with a combination or merger
in which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and in Section 7(d), the Exercise Price
in effect at the Close of Business on the record date for such dividend or at
the effective time of such subdivision, combination, consolidation or
reclassification, and the number and kind of shares of capital stock issuable
upon exercise of the Rights at such date or time, shall be proportionately
adjusted so that the registered holder of each Right exercised after such date
or time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date or time and at a time when the registry books of the transfer agent for the
Preferred Shares were open, such registered holder would have been entitled to
receive by reason of such dividend, subdivision, combination, consolidation or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon the exercise thereof.
If an event shall occur which would require an adjustment under both this
paragraph (i) and paragraph (ii) of this subsection (a), the adjustment provided
for in this paragraph (i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to such paragraph (ii).
(ii) Subject to Section 24, in the event that any Person, either
alone or together with its Affiliates and Associates, shall become an
Acquiring Person, then, in such case and promptly following such
occurrence, proper provision shall be made so that the registered holder of
each Right, except as otherwise provided in Section 7(d), shall thereafter
have the right to receive, upon exercise thereof and payment of an amount
16
equal to the product determined by multiplying the then current Exercise
Price by the number of one one-hundredths of a Preferred Share for which
such Right was exercisable immediately prior to such occurrence, in
accordance with this Agreement, in lieu of Preferred Shares, the number of
shares of Common Stock determined by dividing such product by 50% of the
Fair Market Value (determined as provided in subsection (d) of this Section
11) of one share of Common Stock on the date of such occurrence.
(iii) In the event that there shall not be sufficient authorized and
unissued or treasury shares of Common Stock to permit the exercise in full
of the Rights in accordance with paragraph (ii) of this subsection (a), the
Company shall take all necessary action to authorize and reserve for
issuance such number of additional shares of Common Stock as may from time
to time be required to be issued upon the exercise in full of all
outstanding Rights and, if necessary, shall use its best efforts to obtain
stockholder approval thereof. Notwithstanding the preceding sentence, if
the Board shall determine that such action is necessary or appropriate and
is not contrary to the best interests of the holders of the Rights, the
Board may cause the Company, in lieu of issuing shares of Common Stock in
accordance with such paragraph (ii), to distribute, or if a sufficient
number of shares of Common Stock cannot be issued for such purpose in
accordance with the provisions hereof, the Company shall distribute, upon
the exercise of each Right, cash, debt securities, Preferred Shares, other
shares of Preferred Stock, other property or any combination thereof having
an aggregate Fair Market Value (determined as provided in subsection (d) of
this Section 11) equal to the Fair Market Value (as so determined) of the
number of shares of Common Stock which otherwise would have been issuable
pursuant to such paragraph (ii). Any such decision by the Board must be
made and publicly announced within 30 days after the occurrence of any
Section 11(a)(ii) Event.
(b) In the event that the Company shall fix a record date for the
making of any distribution to all registered holders of Preferred Shares of
options, warrants or rights entitling them (for a period expiring not later than
45 calendar days after such record date) to subscribe for or purchase Preferred
Shares (or shares of capital stock of any class of the Company having the same
(or more favorable) powers, preferences and rights as the Preferred Shares
("Equivalent Preferred Shares"), or securities convertible into or exchangeable
for Preferred Shares or Equivalent Preferred Shares, at a price per Preferred
Share or per Equivalent Preferred Share (or having a conversion or exchange
price per share, in the case of securities convertible into or exchangeable for
Preferred Shares or Equivalent Preferred Shares) less than the Fair Market Value
(determined as provided in subsection (d) of this Section 11) of one Preferred
Share 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 Preferred Shares outstanding on such record date, plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or Equivalent Preferred Shares so to be offered (and/or the
aggregate initial conversion or exchange price, in the case of convertible or
exchangeable securities so to be offered) would purchase at such Fair Market
Value, and the denominator of which shall be the number of Preferred Shares
outstanding on such record date, plus the total number of Preferred Shares
and/or Equivalent Preferred Shares so to be offered (and/or into or for which
the convertible or exchangeable securities so to be offered are initially
convertible or exchangeable);
17
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon the exercise thereof. In case all or
part of such subscription price may be paid in a form other than cash, the value
of such non-cash consideration shall be its Fair Market Value (determined as
provided in such subsection (d)). Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
computation provided for in this subsection (b). The adjustment required by this
subsection (b) 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
be adjusted to the Exercise Price which would have been in effect if such record
date had not been fixed.
(c) In the event that the Company shall fix a record date for the
making of any distribution to all registered holders of Preferred Shares
(including any such distribution made in connection with a combination or merger
in which the Company is the continuing or surviving corporation) of cash (other
than a regular quarterly cash dividend), options, warrants, rights (other than
those referred to in subsection (b) of this Section 11), securities, evidences
of indebtedness or other property (excluding any dividend payable in Preferred
Shares, but including any dividend payable in other shares of capital stock),
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 (determined
as provided in subsection (d) of this Section 11) of one one-hundredth of a
Preferred Share on such record date, less the Fair Market Value (as so
determined) of the cash, options, warrants, rights, securities, evidences of
indebtedness or other property so to be distributed and properly attributable to
one one-hundredth of a Preferred Share, and the denominator of which shall be
such Fair Market Value of one one-hundredth of a Preferred Share; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon the exercise thereof. The adjustment required by
this subsection (c) 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 be adjusted to the Exercise Price which would have been in effect if
such record date had not been fixed.
(d) For the purpose of any computation required under this Agreement,
"Fair Market Value," when used with respect to Preferred Shares or shares of
Common Stock or other capital stock of any class (collectively, a "Stock"), with
respect to any option, warrant, right or other security or evidence of
indebtedness (collectively, a "Security") or with respect to any other property,
shall be determined as provided in this subsection (d):
(i) In the case of any Stock or Security which is publicly traded, 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 Security
for the 30 consecutive Trading Days immediately prior to such date;
provided, however, that in the event that the Fair Market Value per share
of any Stock is determined during a period commencing after the public
announcement by its issuer of (A) a dividend or distribution on such Stock
payable in shares of such Stock or securities convertible into or
exchangeable for shares of such Stock or (B) a subdivision, combination,
consolidation or reclassification of such Stock, and ending prior to the
expiration of the 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination,
18
consolidation or reclassification, then, in each such case, the Fair Market
Value of such Stock shall be properly adjusted to take into account "ex-
dividend" trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale shall take place on such day,
the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if such Stock or Security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the principal national securities exchange on
which such Stock or Security is listed or admitted to trading; or if such
Stock or Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the last quoted high bid and low asked prices in the over-the-
counter market, as reported by the NASDAQ National Market or any other
similar system then in use; or if on any such day no bid for such Stock or
Security is 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 Stock or Security selected by the Board. If during any
relevant period no market maker is making a market in such Stock or
Security, its Fair Market Value on a specified date shall be determined
reasonably and with utmost good faith to the holders of the Rights by the
Board; provided, however, that if at the time of such determination there
shall be an Acquiring Person, the Fair Market Value of such Stock or
Security on such date shall be determined by a nationally recognized
investment banking firm selected by the Board, which determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Company, the Rights Agent and the holders of the Rights. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which such Stock or Security is listed or admitted to trading
is open for the transaction of business or, if such Stock or Security is
not listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) In the case of any Stock or Security which is not publicly traded,
the Fair Market Value on any date shall be the fair value per share of such
Stock or per unit of such Security as determined reasonably and with utmost
good faith to the holders of the Rights by the Board; provided, however,
that if at the time of such determination there shall be an Acquiring
Person, the Fair Market Value of such Stock or Security on such date shall
be determined by a nationally recognized investment banking firm selected
by the Board, which determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Company, the Rights Agent
and the holders of the Rights.
(iii) In the case of any property which is not a Stock or a Security,
the Fair Market Value on any date shall be determined reasonably and with
utmost good faith to the holders of Rights by the Board; provided, however,
that if at the time of such determination there shall be an Acquiring
Person, the Fair Market Value of such property on such date shall be
determined by a nationally recognized investment banking firm selected by
the Board, which determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Company, the Rights Agent and
the holders of the Rights.
19
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Exercise
Price then in effect; provided, however, that any adjustments which by reason of
this subsection (e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest whole cent, to the nearest one ten-
thousandth of a share of Common Stock or other capital stock of any class (other
than Preferred Shares) or to the nearest one one-millionth of a Preferred Share,
as the case may be. Notwithstanding the first sentence of this subsection (e),
any adjustment required by this Section 11 shall be made no later than the
earliest of (i) three years after the date of the occurrence requiring such
adjustment, (ii) the Redemption Date and (iii) the Final Expiration Date.
(f) If as a result of an adjustment required by any Triggering Event
the holder of any Rights thereafter exercised shall become entitled to receive
any shares of capital stock of any class of the Company (other than Preferred
Shares), the number of such other shares so receivable upon exercise of any
Rights shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as reasonably possible to the provisions with respect to
the Preferred Shares contained in this Section 11, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised the option provided in
subsection (i) of this Section 11, upon each adjustment of the Exercise Price as
a result of the calculations required by subsection (b) or (c) of this Section
11, each Right outstanding immediately prior to the making of such Exercise
Price adjustment shall thereafter evidence the right to purchase, at the
adjusted Exercise Price, the number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth) determined by (i) multiplying the
number of one one-hundredths of a Preferred Share purchasable upon exercise of
such Right immediately prior to such adjustment by the Exercise Price in effect
immediately prior to such adjustment and (ii) dividing the product so obtained
by the Exercise Price in effect immediately after such adjustment.
(i) The Company may elect, on or after the date on which any
adjustment of the Exercise Price is required to be made hereunder, to adjust the
number of Rights outstanding in substitution for making an adjustment in the
number of one one-hundredths of a Preferred Share purchasable upon exercise of
each Right. Each Right outstanding after such an adjustment in the number of
Rights shall be exercisable for the same number of one one-hundredths of a
Preferred Share as such Right was exercisable for immediately prior to such
adjustment; but each Right held of record prior to such adjustment shall become
the number of Rights (calculated to the nearest one ten-thousandth) determined
by dividing the Exercise Price in effect immediately prior to the occurrence
requiring the adjustment of the Exercise Price by the Exercise Price in effect
immediately after such adjustment of the Exercise Price. The Company shall make
a prompt public announcement of its election to adjust the number of Rights
outstanding, indicating the record date for the adjustment and, if known at the
time of such announcement, the
20
amount of the adjustment to be made. Such record date may be the date on which
the Exercise Price is required to be adjusted or any day thereafter, unless the
Rights Certificates shall have been issued, in which case such record date shall
be at least 10 days after the date of such public announcement. If the Rights
Certificates shall have been issued, upon each adjustment of the number of
Rights outstanding pursuant to this subsection (i), the Company shall, as
promptly as practicable, cause to be distributed to each registered holder of
the Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14, the additional Rights to which such registered holder
shall be entitled as a result of such adjustment; or, at its option, the Company
shall cause to be distributed to each such registered holder, in substitution
and replacement for the Rights Certificates held by such registered holder prior
to the date of such adjustment, but only upon surrender thereof (if so required
by the Company), new Rights Certificates evidencing all the Rights to which such
registered holder shall be entitled after such adjustment. Rights Certificates
so distributed shall be executed and countersigned in the manner provided in
Section 5 (and may designate, at the option of the Company, the adjusted
Exercise Price) and shall be registered in the names of the registered holders
of the Rights Certificates on the record date specified in the aforesaid public
announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or
the number of one one-hundredths of a Preferred Share issuable upon exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to designate the Exercise Price and the number of one one-hundredths of
a Preferred Share which were designated in the Rights Certificates originally
issued hereunder.
(k) Before taking any action which would cause an adjustment reducing
the Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require an adjustment
of the Exercise Price effective as of the record date for a particular event,
the Company may elect to defer until the occurrence of such event the issuing to
the holder of any Rights exercised after such record date of the Preferred
Shares (and/or the other shares of capital stock, securities or other property
of the Company, if any) issuable upon such exercise in excess of the Preferred
Shares (and/or the other shares of capital stock, securities or other property
of the Company, if any) issuable upon such exercise on the basis of the Exercise
Price in effect immediately prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due ▇▇▇▇ or other appropriate
instrument evidencing such holder's right to receive such excess upon the
occurrence of such event.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Board shall be entitled to make reductions in the Exercise Price, in addition to
the adjustments expressly required by this Section 11, as and to the extent that
the Board, in its sole discretion, shall determine to be advisable in order that
any dividend on the Preferred Shares payable in Preferred Shares, any
subdivision, combination or consolidation of the Preferred Shares (by
reclassification or otherwise than by payment of dividends in Preferred Shares)
into a greater or lesser number of Preferred Shares, any issuance of Preferred
Shares solely for cash at less than the Fair Market Value thereof, any issuance
solely for cash of Preferred Shares or securities
21
which by their terms are convertible into or exchangeable for Preferred Shares
or any issuance of options, warrants, rights, securities, evidences of
indebtedness or other property subject to subsection (b) or (c) of this Section
11, hereafter made by the Company to the holders of the Preferred Shares, shall
not be taxable to such holders.
(n) In the event that the Company shall at any time after the date of
this Agreement and prior to the Distribution Date (i) declare a dividend on its
outstanding shares of Common Stock payable in shares of Common Stock or (ii)
effect a subdivision, combination or consolidation of its outstanding shares of
Common Stock (by reclassification or otherwise than by payment of dividends in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in each such case: (i) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event; and (ii)
each share of Common Stock and Designated Preferred Stock outstanding
immediately after such event shall have issued with respect to it the same
number of Rights which each share of Common Stock and Designated Preferred Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustment required by this subsection (n) shall be made successively whenever
such a dividend is declared or such a subdivision, combination or consolidation
is effected.
(o) Except as permitted by Sections 23 and 27, the Company covenants
and agrees that, after the Distribution Date, it will not take, or permit any of
its Subsidiaries to take, any action if at the time such action would be taken
it is reasonably foreseeable that such action would eliminate or substantially
diminish the benefits intended to be afforded by the Rights.
SECTION 12. Certificate of Adjusted Exercise Price or Number of Shares.
----------------------------------------------------------
Whenever any adjustment shall be required by Section 11, 13 or 23(g), the
Company shall promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts requiring such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Preferred Shares, the Common
Stock and the Designated Preferred Stock (if any) of the Company a copy of such
certificate and (c) mail a brief summary thereof to each registered holder of
the Rights in accordance with Section 26. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment described
therein and shall not be deemed to have knowledge of any such 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, on or after the occurrence of any Section 11(a)
(ii) Event, directly or indirectly: (i) the Company shall consolidate with, or
merge with and into, any Interested Stockholder or, if in such consolidation or
merger all holders of the Common Stock of the Company are not treated the same,
any other Person (other than a wholly-owned Subsidiary of the Company in a
transaction not prohibited by Section 11(o)), so that the Company shall not be
the continuing or surviving corporation, (ii) any Interested Stockholder or, if
in such merger all holders of the Common Stock of the Company are not treated
the same, any other Person
22
(other than a wholly-owned Subsidiary of the Company in a transaction not
prohibited by Section 11(o)) shall merge with and into the Company, so that the
Company shall be the continuing or surviving corporation, and in connection with
such merger either (A) all or part of the outstanding shares of Common Stock of
the Company shall be converted or changed into or exchanged for capital stock or
other securities of any other Person (or the Company), cash and/or other
property or (B) such shares of Common Stock shall remain outstanding,
unconverted and unchanged, or (iii) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer), in one or
a series of related transactions, assets or earning power aggregating 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any Interested Stockholder or, if in such transaction or
transactions the holders of the Common Stock of the Company are not treated the
same, any other Person or Persons (other than the Company or one or more of its
wholly-owned Subsidiaries in one or more transactions, each of which is not
prohibited by Section 11(o)), then, in each such case, proper provision shall be
made so that (w) the registered holder of each Right, except as otherwise
provided in Section 7(d), shall thereafter have the right to receive, upon
exercise thereof and payment of an amount equal to the product determined by
multiplying the then current Exercise Price by the number of one one-hundredths
of a Preferred Share for which such Right is then exercisable, in accordance
with this Agreement, in lieu of Preferred Shares, the number of freely tradable
shares (which shall be duly authorized, validly issued, fully paid and non-
assessable) of Common Stock of the Principal Party or, in the case of a merger
described in clause (ii) of this sentence in which the Common Stock of the
Company shall remain outstanding, unconverted and unchanged, of the Company,
free and clear of all rights of call or first refusal, liens, encumbrances or
other adverse claims, determined by dividing such product by 50% of the Fair
Market Value (determined as provided in Section 11(d)) of the shares of Common
Stock of such Principal Party (or, if appropriate, the Company) on the date of
consummation of such Section 13 Event; (x) such Principal Party shall thereafter
be liable for, and shall assume, by reason of the consummation of such Section
13 Event, all the obligations and duties of the Company under this Agreement;
(y) the term "Company" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 shall
apply to such Principal Party; and (z) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its shares of Common Stock to permit exercise of all outstanding Rights in
accordance with this subsection (a) and the distribution of cash, debt
securities, shares and other property in accordance with Section 11(a)(iv))in
connection with the consummation of such Section 13 Event as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably possible, in relation to the shares of Common Stock thereafter
deliverable upon exercise of the Rights.
(b) After the Distribution Date, the Company shall not consolidate or
merge with any other Person (other than a wholly-owned Subsidiary of the Company
in a transaction not prohibited by Section 11(o)), or sell or otherwise transfer
(or permit one or more of its Subsidiaries to sell or otherwise transfer), in
one or a series of related transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company or one
or more of its wholly-owned Subsidiaries in one or more transactions, each of
which is not prohibited by Section 11(o)), if (i) at the time of or immediately
after the consummation of such transaction there are any options, warrants,
rights, conversion or exchange privileges or securities outstanding or any
written or oral agreements, arrangements or understandings
23
(including provisions contained in the Company's Certificate of Incorporation or
By-laws) in effect which, as a result of the consummation of such transaction,
would eliminate or substantially diminish the benefits intended to be afforded
by the Rights, or (ii) prior to, at the time of or immediately after the
consummation of such transaction the stockholders of the Person who constitutes,
or would constitute, the Principal Party for the purpose of subsection (a) of
this Section 13 shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates.
(c) The Company shall not consummate any Section 13 Event unless prior
thereto (i) the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section 13
and (ii) the Company, the Principal Party and each other Person who may become
the Principal Party as a result of the consummation of such Section 13 Event
shall have executed and delivered to the Rights Agent a supplemental agreement
providing (x) for the implementation of all the terms and conditions set forth
in this Section 13 and (y) that, as soon as practicable after the date of such
Section 13 Event, the Principal Party, at its own expense, shall:
(A) prepare and file a registration statement on an appropriate
form under the Securities Act with respect to the Rights and the
securities purchasable upon exercise thereof, and use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing and to remain effective (with a
prospectus which at all times meets the requirements of the Securities
Act) until the earliest of the date as of which the Rights are no
longer exercisable for such securities, the Redemption Date and the
Final Expiration Date;
(B) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise thereof under the securities
or "blue sky" laws of such jurisdictions as may be necessary or
appropriate in connection with the exercisability of the Rights;
(C) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise thereof on a
national securities exchange or to meet the eligibility requirements
for quotation on The NASDAQ National Market; and
(D) deliver to the registered holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates complying in all material respects with the requirements
for registration of securities on Form 10 under the Exchange Act.
(d) "Principal Party" shall mean: in the case of any transaction
described in clause (i) or (ii) of subsection (a) of this Section 13, the Person
which is the issuer of the securities into which shares of Common Stock of the
Company are being converted or changed in such transaction or, if there shall be
more than one such issuer, the issuer having shares of Common Stock with the
greatest aggregate market value; or if no securities are being issued in such
transaction for shares of Common Stock of the Company, the Person which is the
other party to such transaction or, if there shall be more than one such Person,
the Person having
24
shares of Common Stock with the greatest aggregate market value; and in the case
of any transaction described in clause (iii) of such subsection (a), the Person
which is the party receiving the greatest portion of the assets or earning power
sold or otherwise transferred pursuant to such transaction or transactions;
provided, however, that in any such case (i) if the shares of Common Stock of
such Person shall not at the time of the consummation of such transaction have
been continuously registered under Section 12 of the Exchange Act during the
immediately preceding 12-month period, and such Person shall be a direct or
indirect Subsidiary or Affiliate of another Person the shares of Common Stock of
which shall have been so registered, "Principal Party" shall mean such other
Person; and (ii) if such Person shall be a direct or indirect Subsidiary or
Affiliate of more than one other Person, the shares of Common Stock of two or
more of which shall have been so registered, "Principal Party" shall mean
whichever of such other Persons shall have Common Stock with the greatest
aggregate market value; and (iii) if such Person shall be owned, directly or
indirectly, by a joint venture formed by two or more Persons which are not
owned, directly or indirectly, by the same Person, the rules set forth in
clauses (i) and (ii) of this proviso shall apply to each chain of ownership of
any joint venturer as though such joint venture were a "Subsidiary" of all of
such joint venturers, and the Principal Party in each such chain shall bear the
obligations and duties set forth in this Section 13 in the same proportion as
their direct or indirect ownership interest in such Person bears to the total of
such ownership interests.
(e) If, in the case of any transaction described in clause (iii) of
subsection (a) of this Section 13, the Person or Persons to whom assets or
earning power are sold or otherwise transferred are individuals, then, in lieu
of any other payment or distribution required by this Section 13, and the
Company shall require as a condition to such transaction that, such Person or
Persons shall pay to each holder of a Rights Certificate, upon its surrender to
the Rights Agent and in exchange therefor (without requiring any payment by such
holder), cash in the amount determined by multiplying the then current Exercise
Price by the number of one one-hundredths of a Preferred Share for which a Right
is then exercisable.
(f) In no event shall the Rights Agent have any obligations or duties
in respect of any Section 13 Event, except as expressly set forth in this
Agreement. The Rights Agent may rely, and shall be fully protected in relying
upon, a certificate of the Company stating that the provisions of this Section
13 have been fulfilled. The prior written consent of the Rights Agent shall be
required in connection with any supplemental agreement which alters or impairs
the rights, obligations, duties or immunities of the Rights Agent hereunder.
(g) The provisions of this Section 13 shall similarly apply to
successive consolidations, mergers, sales or other transfers. In the event that
any Section 13 Event shall occur at any time after the occurrence of any Section
11(a)(ii) Event, the Rights which have not been theretofore exercised shall
thereafter be exercisable in the manner described in this Section 13.
SECTION 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights. If the Company
shall determine not to issued fractional Rights, the Company shall pay, in lieu
of issuing fractional Rights, to the registered holders of the Rights with
respect to which fractional Rights would otherwise be
25
issuable an amount in cash equal to the same fraction of the Fair Market Value
(determined as provided in Section 11(d) for the Trading Day immediately prior
to the date on which such fractional Rights would otherwise have been issued) of
one Right.
(b) The Company shall not be required to issue fractional Preferred
Shares (other than fractions which are multiples of one one-hundredth of a
Preferred Share) upon exercise of the Rights or to distribute stock certificates
which evidence fractional Preferred Shares (other than fractions which are
multiples of one one-hundredth of a Preferred Share). If the Company shall
determine not to issue fractional Preferred Shares that are not multiples of one
one-hundredth of a Preferred Share, the Company shall pay to the registered
holders of the Rights Certificates at the time Rights represented thereby are
exercised, in lieu of such fractional Preferred Shares, an amount in cash equal
to the same fraction of the Fair Market Value (determined as provided in Section
11(d) for the Trading Day immediately prior to the date of such exercise) of one
one-hundredth of a Preferred Share.
(c) Each holder of a Right, by accepting the same, expressly waives
such holder's right to receive or exercise any fractional Right or to receive
any fractional Preferred Share upon the exercise of such Right (except as
provided in this Section 14).
SECTION 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, other than rights of action which the Rights Agent may have under
Sections 18 and 20, are vested in the registered holders of the Rights
Certificates (or, prior to the Distribution Date, the registered holders of the
Common Stock and the Designated Preferred Stock of the Company); and the
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of any stock certificate for shares of such Common Stock and Designated
Preferred Stock), without the consent of the Rights Agent or of the holder of
any other Rights Certificate (or, prior to the Distribution Date, of any other
stock certificate for shares of Common Stock or Designated Preferred Stock),
may, on such registered holder's own behalf and for such registered holder's own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such registered
holder's right to exercise the Rights evidenced by such Rights Certificate (or,
prior to the Distribution Date, such stock certificate) in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the
generality of the foregoing or any remedies available to the holders of the
Rights, it is specifically acknowledged that the registered holders of the
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 and duties
under, and injunctive relief against any actual or threatened violations of the
obligations and duties of any Person subject to, this Agreement.
SECTION 16. Agreements of Holders of Rights. 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 transferable
only simultaneously and together with the transfer of shares of Common Stock or
Designated Preferred Stock of the Company;
(b) after the Distribution Date, the Rights Certificates shall be
transferable on the registry books of the Rights Agent only if surrendered at
the principal office of the Rights
26
Agent, with the Form of Assignment and Certification of Status on the reverse
side thereof duly executed, together with such signature guarantees and other
documentation as the Rights Agent may reasonably request;
(c) subject to Sections 6 and 7(d), the Company and the Rights Agent
may deem and treat the Person in whose name any Rights Certificate (or, prior to
the Distribution Date, any stock certificate for Common Stock or Designated
Preferred Stock of the Company) is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
other writing on such Rights Certificate or 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; and
(d) neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or to any other Person because of its inability to
perform any of its obligations or duties under this Agreement by reason of any
applicable law, any preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission or any rule, regulation or
executive order promulgated or enacted by any such governmental authority
prohibiting or otherwise restraining performance of any such obligation or duty;
provided, however, that the Company shall use its best efforts to have any such
injunction, order, decree or ruling lifted or otherwise overturned as soon as
reasonably possible.
SECTION 17. Rights Certificate Holder Not Deemed a Stockholder. No
--------------------------------------------------
holder, as such, of any Rights Certificate shall be entitled to vote, to receive
dividends or other distributions on or to exercise any preemptive rights with
respect to, or shall be deemed for any other purpose to be the holder of, the
Preferred Shares or other shares of capital stock of any class of the Company
which may at the time be issuable upon exercise of the Rights represented
thereby; nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights 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 other matter submitted to stockholders at any
meeting thereof, to give or withhold consent to any corporate action, to receive
notice of meetings or other actions affecting stockholders (except as provided
in Section 25) or to receive dividends, subscription rights or other
distributions, until the Rights represented by such Rights Certificate shall
have been exercised, in whole or in part, in accordance with the provisions
hereof.
SECTION 18. Concerning the Rights Agent.
---------------------------
(a) The Company covenants and agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time on the written request of the Rights Agent, to reimburse it for all
reasonable expenses and counsel fees incurred in connection with the acceptance
and administration of this Agreement and the performance of its obligations and
duties hereunder. The Company also covenants and agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability or expense,
incurred without gross negligence, bad faith or willful misconduct on its part,
for any action taken, suffered or omitted by it in connection with the
acceptance and administration of this Agreement and the performance of its
obligations and duties hereunder, including the costs and expenses of defending
against any claim of liability arising therefrom, directly or indirectly.
27
(b) The Rights Agent shall be protected 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 Rights
Certificate, stock certificate for Preferred Shares, Common Stock or other
shares of capital stock of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be executed and, where necessary, verified or acknowledged by the proper
Person or Persons.
SECTION 19. Merger or Consolidation 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 stockholder services or corporate trust 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 successor Rights Agent under Section 21. In case at
the time any successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates countersigned by its predecessor Rights
Agent shall not have been delivered, such successor Rights Agent may adopt the
countersignature of its predecessor Rights Agent and deliver the Rights
Certificates so countersigned; or in case at such time any of the Rights
Certificates shall not have been countersigned, such successor Rights Agent may
countersign such Rights Certificates either in the name of its predecessor
Rights Agent or in the name of such successor Rights Agent; and in all such
cases, such Rights Certificates shall have the full force and effect provided
therein 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 Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver the Rights Certificates so countersigned; or in case at
such time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases, such Rights Certificates shall
have the full force and effect provided therein and in this Agreement.
SECTION 20. Duties of the Rights Agent. The Rights Agent undertakes
--------------------------
the obligations and duties imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of the Rights
Certificates (or, prior to the Distribution Date, the stock certificates for
Common Stock and Designated Preferred Stock of the Company), by accepting the
same, shall be bound, and no implied obligations or duties shall be read into
this Agreement against the Rights Agent:
(a) the Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the written opinion of such legal counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken, suffered or omitted by it in good faith and in accordance with
such opinion;
28
(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, suffering or omitting 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 executed by any one of the Chairman of the Board,
the President, any Vice President, the Treasurer or the Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full and
complete authorization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith in reliance upon such
certificate;
(c) the Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct;
(d) the Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereon) 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 responsible for the validity of this
Agreement or the execution and delivery hereof (except for its due execution
hereof) or for the validity or execution of any Rights Certificate (except for
its countersignature thereon); nor shall the Rights Agent be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall the Rights Agent be responsible for any
change in the exercisability of the Rights (including Rights becoming void
pursuant to Section 7(d)), for any adjustment or change (or for the manner or
method of determining same) in the terms of the Rights (including any adjustment
or change in the Exercise Price or in the number or kind of shares, securities
or other property issuable upon the exercise thereof) required by Section 11,
13, 23 or 24 or for ascertaining the existence of facts which would require any
such change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice, in the manner provided in
Section 12, that such change or adjustment is required); nor shall the Rights
Agent by any act hereunder be deemed to have made any representation or warranty
as to the authorization or reservation of any Preferred Shares or shares of
Common Stock to be issued pursuant to this Agreement or any Rights Certificate
or as to whether any Preferred Shares or shares of Common Stock will, when
issued, be validly authorized and issued and 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 acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement;
(g) the Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its obligations and duties
hereunder from any one of the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its obligations and
duties; and the Rights Agent shall not be liable for any action taken, suffered
or omitted by it in good faith and in accordance with the written instructions
of any such officer or for any delay in acting while waiting for such
instructions;
29
(h) the Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in the Rights or in any other
securities of the Company (including the Preferred Shares and its Common Stock)
or become pecuniarily interested in any transaction in which the Company (or any
of its Subsidiaries) may be interested, or contract with or lend money to the
Company (or any of its Subsidiaries), and may otherwise act as fully and freely
as though it were not the Rights Agent under this Agreement; and nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Company, any of its Subsidiaries or any other entity;
(i) the Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any of its obligations or duties hereunder
either directly or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorney or agent or for any loss to the Company
resulting from any such act, default, neglect or misconduct, provided the Rights
Agent exercised reasonable care in the selection and continued employment of
such attorney or agent;
(j) if, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the Form of Certification of Status
attached to the Form of Election to Purchase or the Form of Assignment, as the
case may be, has either not been completed or indicates an affirmative response
to Question 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to the requested exercise or transfer without first
consulting with the Company; and
(k) no provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its obligations or duties or in the exercise of its rights
or powers hereunder if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured.
SECTION 21. Resignation or Removal of the Rights Agent. The Rights
------------------------------------------
Agent or any successor Rights Agent may resign and be discharged from its
obligations and duties under this Agreement upon 30 days' prior notice to the
Company and to each transfer agent for the Preferred Shares, the Common Stock
and the Designated Preferred Stock (if any) of the Company, sent by registered
or certified mail, postage prepaid, and to each registered holder of the Rights
Certificates, sent by first-class mail, postage prepaid. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' prior notice to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent for the Preferred Shares, the Common Stock and the Designated Preferred
Stock (if any) of the Company, sent by registered or certified mail, postage
prepaid, and to each registered holder of the Rights Certificates, sent by
first-class mail, postage prepaid. If the Rights Agent or any successor Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor Rights Agent. If the Company shall fail to
make such appointment within 30 days after giving notice of such removal or
after receiving notice of such resignation or incapacity, either from the
resigning or incapacitated Rights Agent or from the registered holder of any
Rights Certificate (who shall, with such notice, submit its Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or the
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a successor Rights Agent. Any successor
Rights Agent, whether appointed by
30
the Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States of America, the State of Delaware,
the State of New York or the State of Illinois (or of any other state so long as
such corporation is authorized to do business as a banking institution in the
State of Delaware, the State of New York or the State of Illinois), be in good
standing under the laws of the jurisdiction of its incorporation, have an office
in the State of Delaware, the State of New York or the State of Illinois, be
authorized under such laws to exercise corporate trust or stock transfer powers,
be subject to supervision or examination by federal or state authority and have
at the time of its appointment as Rights Agent a combined capital and surplus of
at least $50,000,000 or (b) an affiliate of a corporation described in clause
(a) of this sentence. After its appointment, the successor Rights Agent shall be
vested with the same rights, powers, obligations, duties and immunities 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 for
the Preferred Shares, the Common Stock and Designated Preferred Stock (if any)
of the Company, and mail notice thereof to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or any successor Rights Agent or the
appointment of any successor thereto.
SECTION 22. Issuance of New Rights Certificates. Notwithstanding any
-----------------------------------
provision of this Agreement or of the Rights Certificates to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing the Rights
in such form as may be approved by the Board to reflect any adjustment or change
in the Exercise Price or in the number or kind of shares, securities or other
property issuable upon exercise of the Rights in accordance with the provisions
of this Agreement; provided, however, that (a) no such Rights Certificates shall
be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance could create a significant risk of material adverse tax
consequences to the Company or to the Persons to whom such Rights Certificates
would be issued and (b) no such Rights Certificates shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
SECTION 23. Redemption.
----------
(a) The Board may, at its option, at any time prior to the earliest of
(i) the Close of Business on the 10th Business Day after the Share Acquisition
Date, (ii) the occurrence of any Section 13 Event and (iii) the Final Expiration
Date, redeem all, but not less than all, of the then outstanding Rights at a
redemption price of $.01 per Right, adjusted as provided in subsection (g) of
this Section 23 (such redemption price being hereinafter called the "Redemption
Price").
(b) In addition to the right of redemption reserved in the first
sentence of subsection (a) of this Section 23, the Board may redeem all, but not
less than all, of the then outstanding Rights at the Redemption Price after the
Share Acquisition Date, but prior to the occurrence of any Section 13 Event, if
either (i) the Person who is an Acquiring Person shall have transferred or
otherwise disposed of (either alone or together with its Affiliates and
31
Associates) such number of shares of Common Stock of the Company, in one or a
series of related transactions not directly or indirectly involving the Company
or any of its Subsidiaries or any Section 13 Event shall have occurred, as
shall result in such Person thereafter being a Beneficial Owner of less than 10%
of the then outstanding shares of Common Stock of the Company, and after such
transfer or other disposition there is no other Acquiring Person, or (ii) any
Section 13 Event shall have occurred which does not involve an Interested
Stockholder and in which all holders of the Common Stock of the Company are
treated the same.
(c) Notwithstanding any other provision of this Agreement, the Rights
shall not be exercisable after the first occurrence of any Section 11(a)(ii)
Event until such time as the Company's right of redemption under this Section 23
shall have expired.
(d) In considering whether to redeem the Rights, the Board may
consider the best long-term and short-term interests of the Company and its
stockholders, including, without limitation, the effects of the redemption of
the Rights upon employees, creditors, suppliers and customers of the Company or
of its Subsidiaries and upon the communities in which offices or other
establishments of the Company and such Subsidiaries are located and all other
pertinent factors. The redemption of the Rights by the Board may be made
effective at such time, on such basis and with such conditions as the Board, in
its sole discretion, may establish.
(e) Immediately after action by the Board directing the redemption of
the Rights pursuant to subsection (a) or (b) of this Section 23, and without any
further action and without any notice, the right to exercise the Rights shall
terminate, and thereafter each registered holder of the Rights shall only be
entitled to receive the Redemption Price therefor. The Company shall give prompt
written notice to the Rights Agent and prompt public notice to the holders of
the Rights of any such redemption; provided, however, that the failure to give,
or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after action by the Board directing the redemption
of the Rights, the Company shall mail (or cause the Rights Agent to mail) a
notice of redemption to each registered holder of the then outstanding Rights,
at its last address appearing on 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 and the Designated Preferred Stock (if any) of the Company.
Any notice which is mailed in the manner provided in this subsection (e) shall
be deemed given, whether or not received by the registered holder to whom sent.
Each notice of redemption shall state the method by which payment of the
Redemption Price is to be made. Neither the Company nor any of its Affiliates
or Associates may at any time redeem, acquire or purchase for value any Rights
other than in the manner set forth in this Section 23 and Section 24 or in
connection with any purchase of outstanding shares of its Common Stock and
Designated Preferred Stock prior to the Distribution Date.
(f) The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on its Fair Market Value (determined as provided
in Section 11(d)) as of the date of redemption) or any other form of
consideration deemed appropriate by the Board.
(g) In the event that the Company shall at any time after the date of
this Agreement (i) declare a dividend on its outstanding shares of Common Stock
payable in shares of Common Stock or (ii) effect a subdivision, combination or
consolidation of its outstanding shares of Common Stock (by reclassification or
otherwise than by payment of dividends in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then, in
32
each such case, the Redemption Price after such event shall equal the Redemption
Price 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 prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event; provided,
however, that such adjustment shall be made only if the amount of the Redemption
Price would be reduced or increased by at least $.001 per Right.
SECTION 24. Exchange.
--------
(a) The Board may, at its option, at any time on or after the
occurrence of any Section 11(a)(ii) Event, exchange all or any part of the then
outstanding and exercisable Rights (which shall not include any Rights which
have become void pursuant to Section 7(d)) for shares of Common Stock of the
Company at an exchange rate of one share of Common Stock per Right,
appropriately adjusted to reflect any event specified in clauses (A) through
(D), inclusive, of the first sentence of Section 11(a)(i) or in Section 11(n)
occurring after the date hereof (such exchange rate being hereinafter called the
"Exchange Rate"); provided, however, that the Board shall not be authorized to
effect such an exchange at any time after any Person (other than an Exempt
Person), together with the Affiliates and Associates of such Person, shall have
become the Beneficial Owner of 50% or more of the then outstanding shares of
Common Stock of the Company.
(b) Immediately after action by the Board directing the exchange of
any Rights pursuant to subsection (a) of this Section 24, and without any
further action and without any notice, the right to exercise such Rights shall
terminate, and thereafter each registered holder of such Rights shall only be
entitled to receive the number of shares of Common Stock of the Company which
shall equal the number of such Rights held by such registered holder multiplied
by the Exchange Rate then in effect. The Company shall give prompt written
notice to the Rights Agent and prompt public notice to the holders of the Rights
of any such exchange; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such exchange. Within 10
days after action by the Board directing the exchange of any Rights, the Company
shall mail (or cause the Rights Agent to mail) a notice of exchange to each
registered holder of such Rights, at its last address appearing on 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 and the Designated Preferred
Stock (if any) of the Company. Any notice which is mailed in the manner
provided in this subsection (b) shall be deemed given, whether or not received
by the registered holder to whom sent. Each notice of exchange shall state the
method by which the exchange of 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 among the
registered holders of the Rights based upon the number of Rights held (excluding
Rights which shall have become void pursuant to Section 7(d)); and, in such
case, a new Rights Certificate evidencing the Rights not being exchanged shall
be prepared and executed by the Company and countersigned and delivered by the
Rights Agent to the registered holder of such Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or Equivalent Preferred Shares) for
shares of Common Stock in effecting an exchange for Rights, at the initial rate
of one one-hundredth of a Preferred Share (or Equivalent Preferred Share) for
each share of Common Stock, appropriately adjusted to reflect
33
any adjustments in the voting rights of the Preferred Shares pursuant to the
Certificate of Designations attached hereto as Exhibit A, so that the fractional
Preferred Share delivered in lieu of each share of Common Stock shall have the
same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient authorized and
unissued or treasury shares of Common Stock or Preferred Shares (or Equivalent
Preferred Shares) to permit the exchange of Rights directed by the Board, the
Company shall take all necessary action to authorize and reserve for issuance
such number of additional shares of Common Stock or Preferred Shares (or
Equivalent Preferred Shares) as may be required for issuance upon such exchange
and, if necessary, shall use its best efforts to obtain stockholder approval
thereof.
(e) The Company shall not be required to issue fractional shares of
Common Stock in exchange for Rights or to distribute stock certificates which
evidence fractional shares of Common Stock. If the Company shall determine not
to issue fractional shares of Common Stock, the Company shall pay to the
registered holders of the Rights with respect to which such fractional shares
would otherwise be issuable an amount in cash equal to the same fraction of the
Fair Market Value (determined as provided in Section 11(d) for the Trading Day
immediately prior to the date of such exchange) of one share of Common Stock.
SECTION 25. Notice to Holders of Rights Certificates of Certain
---------------------------------------------------
Events.
------
(a) In the event that at any time after the Distribution Date, the
Company shall propose: (i) to pay any dividend payable in shares of capital
stock of any class of the Company to the holders of Preferred Shares or to make
any other cash distribution to the holders of Preferred Shares (other than a
regular quarterly cash dividend); (ii) to effect any reclassification of the
Preferred Shares (other than a reclassification involving only the subdivision
of the outstanding Preferred Shares); (iii) to make any distribution to the
holders of Preferred Shares described in subsection (b) or (c) of Section 11;
(iv) to effect any Section 13 Event; (v) to pay any dividend on its shares of
Common Stock payable in shares of Common Stock or to effect a subdivision,
combination or consolidation of its outstanding shares of Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock); or (vi) to effect the liquidation, dissolution or winding up of the
Company; then, in each such case, the Company shall give to the Rights Agent and
each registered holder of the Rights, in the manner provided in Section 26,
written notice of such proposed action, which shall specify the record date for
such stock dividend or distribution or the date on which such reclassification,
Section 13 Event, liquidation, dissolution or winding up is expected to occur
(and the date for participation therein by the holders of the Common Stock
and/or Preferred Shares if any such date is to be fixed). Such notice shall be
given, in the case of any action described in clause (i) or (iii) of the
preceding sentence, at least 10 days prior to the record date and, in the case
of any other such action, at least 20 days prior to the date of taking of such
proposed action or the date for participation therein by the holders of
Preferred Shares, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, the Company
shall, as soon as practicable thereafter, give to the Rights Agent and each
registered holder of the Rights, in the manner provided in Section 26, written
notice of the occurrence thereof, which notice shall describe such occurrence
and its consequences in reasonable detail.
34
SECTION 26. Other Notices. Except as otherwise provided herein,
-------------
notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the registered holder of any Rights, Rights Certificate or
stock certificate for shares of Common Stock or Designated Preferred Stock of
the Company to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address shall be
filed in writing with the Rights Agent) as follows:
Peapod, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Except as otherwise provided herein, notices or demands authorized by
this Agreement to be given or made by the Company or by the registered holder of
any Rights, Rights Certificate or stock certificate for shares of Common Stock
or Designated Preferred Stock of the Company to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address shall be filed in writing with the Company) as
follows:
First Chicago Trust Company of New York, a division of Equiserve
Suite 4660
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Tenders & Exchange Administration
Except as otherwise provided herein, notices or demands authorized by
this Agreement to be given or made by the Company or the Rights Agent to the
registered holder of any Rights, Rights Certificate or stock certificate for
shares of Common Stock or Designated Preferred Stock of the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at its last address appearing on 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 and the Designated Preferred Stock (if
any)of the Company.
SECTION 27. Supplements and Amendments. Prior to the Distribution
--------------------------
Date, but subject to the last sentence of this Section 27, the Company and the
Rights Agent, if so directed in writing by the Company, shall supplement or
amend any term, provision or condition of this Agreement, without the approval
of the registered holders of the stock certificates representing the Common
Stock, the Designated Preferred Stock and the Rights. From and after the
Distribution Date, but subject to the last sentence of this Section 27, the
Company and the Rights Agent, if so directed in writing by the Company, shall
supplement or amend this Agreement, without the approval of the registered
holders of the Rights (however represented), in order: (a) to cure any
ambiguity, (b) to correct or supplement any term, provision or condition of this
Agreement which may be defective or inconsistent with any other term, provision
or condition hereof, (c) to shorten or lengthen any time period specified herein
or (d) to change or supplement one or more of the terms, provisions or
conditions hereof in any manner which the Company may deem necessary or
desirable and which shall not adversely affect, as determined by the Board, the
interests of the holders (other than any Restricted Person or the transferees
therefrom specified in Section 7(d) of the Rights (however represented);
provided, however, that
35
this Agreement may not be supplemented or amended pursuant to clause (c) of this
sentence (i) to lengthen any time period (except as permitted by Section
3(a)(ii)) unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders (other than any
Restricted Person or the transferees therefrom specified in Section 7(d)) of the
Rights or (ii) to lengthen any time period relating to when the Rights may be
redeemed if at such time the Rights are not then redeemable. Upon the delivery
of a certificate from an appropriate officer of the Company stating that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment; provided,
however, that the Rights Agent shall not be required to execute any supplement
or amendment which affects any of the Rights Agent's rights, powers,
obligations, duties or immunities under this Agreement without its consent. On
and after the Distribution Date, no supplement or amendment shall be made which
changes the Exercise Price, the number of one one-hundredths of a Preferred
Share for which a Right is exercisable, the Redemption Price or the Final
Expiration Date. Prior to the Distribution Date, the interests of the holders
of the Rights shall be deemed coincident with the interests of the holders of
the Common Stock and the Designated Preferred Stock of the Company.
SECTION 28. Successors. All of the terms, provisions and conditions
----------
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.
SECTION 29. Certain Determinations and Actions by the Board. For all
-----------------------------------------------
purposes purpose of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including the determination of
the percentage of such outstanding shares of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-
3(d)(1)(i), as in effect on the date hereof, under the Exchange Act. The Board
shall have the exclusive power and authority to interpret this Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to make all
determinations deemed necessary or advisable for such administration, including,
without limitation, a determination to redeem or not to redeem the Rights, to
exchange or not to exchange the Rights or to supplement or amend this Agreement.
All such calculations, determinations, interpretations and exercises (including,
for purposes of clause (b) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith shall (a) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights and all
other Persons and (b) not subject any director to any liability to the holders
of the Rights or to any other Person.
SECTION 30. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the stock certificates for the
Common Stock and the Designated Preferred Stock of the Company) 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
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the stock certificates for the Common Stock and
the Designated Preferred Stock of the Company).
36
SECTION 31. Severability. If any term, provision or condition of
------------
this Agreement shall be held by a court of competent jurisdiction or other
lawful authority to be invalid, void or unenforceable, the remaining terms,
provisions, and conditions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that if any such term, provision or condition is held by such court or
authority to be invalid, void or unenforceable and the Board shall determine in
good faith that severing the same from this Agreement would adversely affect the
purposes or effect of this Agreement, the right of redemption set forth in
Section 23 shall be reinstated and shall not expire until the Close of Business
on the 10th day following the date of such determination by the Board.
SECTION 32. Governing Law. This Agreement and each Rights Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts made and to be
performed entirely within such State.
SECTION 33. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall for all purposes be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
SECTION 34. 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.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PEAPOD, INC.
By: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Title: President & Chief Executive Officer
Attest:
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
FIRST CHICAGO TRUST COMPANY
OF NEW YORK, A DIVISION OF EQUISERVE
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
Attest:
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Manager, Client Support
38