RIGHTS AGREEMENT Dated as of January 18, 2011 between WHITE MOUNTAIN TITANIUM CORPORATION and INTERWEST TRANSFER COMPANY, INC.
Dated
as of January 18, 2011
between
WHITE
MOUNTAIN TITANIUM CORPORATION
and
INTERWEST
TRANSFER COMPANY, INC.
TABLE
OF CONTENTS
|
Section
1.
|
Certain
Definitions.
|
1
|
|
Section
2.
|
Appointment
of Rights Agent.
|
6
|
|
Section
3.
|
Issue
of Rights Certificates.
|
6
|
|
Section
4.
|
Form
of Rights Certificates.
|
7
|
|
Section
5.
|
Countersignature
and Registration.
|
8
|
|
Section
6.
|
Transfer,
Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.
|
9
|
|
Section
7.
|
Exercise
of Rights; Purchase Price; Expiration Date of Rights.
|
10
|
|
Section
8.
|
Cancellation
of Rights Certificates.
|
11
|
|
Section
9.
|
Reservation
and Availability of Capital Stock; Registration of
Securities.
|
12
|
|
Section
10.
|
Preferred
Stock Record Date.
|
13
|
|
Section
11.
|
Adjustment
of Purchase Price, Number and Kind of Shares or Number of
Rights.
|
14
|
|
Section
12.
|
Certificate
of Adjusted Purchase 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.
|
26
|
|
Section
15.
|
Rights
of Action.
|
27
|
|
Section
16.
|
Agreement
of Rights Holders.
|
27
|
|
Section
17.
|
Rights
Certificate Holder Not Deemed a Stockholder.
|
28
|
|
Section
18.
|
Duties
of Rights Agent.
|
28
|
|
Section
19.
|
Compensation
and Indemnification of the Rights Agent.
|
31
|
|
Section
20.
|
Merger
or Consolidation or Change of Name of Rights Agent.
|
31
|
|
Section
21.
|
Change
of Rights Agent.
|
32
|
|
Section
22.
|
Issuance
of New Rights Certificates.
|
33
|
|
Section
23.
|
Redemption
and Review.
|
33
|
|
Section
24.
|
Exchange.
|
34
|
|
Section
25.
|
Notice
of Certain Events.
|
36
|
|
Section
26.
|
Notices.
|
36
|
|
Section
27.
|
Supplements
and Amendments.
|
37
|
|
Section
28.
|
Successors.
|
37
|
ii
|
Section
29.
|
Determinations
and Actions by the Board, Etc.
|
38
|
|
Section
30.
|
Benefits
of this Agreement.
|
38
|
|
Section
31.
|
Severability.
|
38
|
|
Section
32.
|
Governing
Law.
|
39
|
|
Section
33.
|
Counterparts.
|
39
|
|
Section
34.
|
Descriptive
Headings.
|
39
|
iii
THIS
RIGHTS AGREEMENT, dated as of January 18, 2011 (the “Agreement”), is by and between
White Mountain Titanium Corporation, a Nevada corporation (the “Company”), and Interwest
Transfer Company, Inc., a Utah corporation (the “Rights Agent”).
WHEREAS,
on December 29, 2010, the Board of Directors of the Company determined it
desirable and in the best interests of the Company and its stockholders for the
Company to implement a rights plan by executing this Agreement;
WHEREAS,
effective January 18, 2011 (the “Rights Dividend Declaration
Date”), the Board of Directors of the Company authorized and declared a
dividend of one preferred share purchase right (a “Right”) for each share of
Common Stock (as hereinafter defined) of the Company outstanding at the Close of
Business (as defined herein) on the Record Date (as defined herein), and has
authorized the issuance of one Right with respect to each share of Common Stock
of the Company issued (whether originally issued or delivered from the Company’s
treasury) between the Record Date and the earliest of the Distribution Date, the
Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined); provided, however that Rights may be issued with respect to shares of
Common Stock that become outstanding after the Distribution Date and prior to
the Expiration Date (as defined herein) in accordance with Section 22;
and
WHEREAS,
each Right shall initially represent the right to purchase one one-thousandth of
one share of Series B Junior Participating Preferred Stock of the Company having
the rights, powers and preferences set forth in the form of Certificate of
Designation, Preferences and Rights attached hereto as EXHIBIT A, upon
the terms and subject to the conditions hereinafter set forth.
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:
For
purposes of this Agreement, the following terms have the meanings
indicated:
(a) “Acquiring
Person” shall mean any Person that, 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, or (iii) any employee benefit plan
of the Company or any Subsidiary of the Company, or any Person holding shares of
Common Stock for or pursuant to the terms of any such employee benefit plan to
the extent, and only to the extent, of such shares of Common Stock so
held. Notwithstanding the foregoing, ▇▇▇ ▇▇▇▇ together with his
Affiliates and Associates (a “Qualified Exempt Person”), who
as of January 18, 2011, was the Beneficial Owner of in excess of 15% of the
Company’s outstanding Common Stock shall not be deemed an Acquiring Person;
provided however, that if after the date hereof, any Qualified Exempt Person
shall become at any time the Beneficial Owner of an additional 2% of the
shares of Common Stock of the Company then outstanding in excess of the amount
such Qualified Exempt Person beneficially owned as of the date hereof, then such
Qualified Exempt Person shall be deemed an Acquiring Person hereunder as to all
of their Common Stock beneficially owned. Notwithstanding anything in
this definition of Acquiring Person to the contrary:
(i) no
Person shall become an Acquiring Person as the result of an acquisition of
shares of Common Stock by the Company which, by reducing the number of shares of
Common Stock outstanding, increases the proportionate number of shares of Common
Stock beneficially owned by such Person to 15% or more of the shares of Common
Stock of the Company then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 15% or more of the shares of Common Stock of the
Company then outstanding by reason of share acquisitions by the Company and
shall, after such share acquisitions by the Company, become the Beneficial Owner
of any additional shares of Common Stock of the Company (other than pursuant to
a dividend or distribution paid or made by the Company on the outstanding Common
Stock or pursuant to a split or subdivision of the outstanding Common Stock),
then such Person shall be deemed to be an Acquiring Person if such Person is
then the Beneficial Owner of 15% or more of the Common Stock then outstanding;
and
(ii) if
the Board 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 (including, without limitation,
because (A) such Person was unaware that it beneficially owned a percentage of
Common Stock that would otherwise cause such Person to be an Acquiring Person,
or (B) such Person was aware of the extent of its Beneficial Ownership of Common
Stock but had no actual knowledge of the consequences of such Beneficial
Ownership under this Agreement), and such Person divests as promptly as
practicable (as determined in good faith by the Board) a sufficient number of
shares of Common Stock so that such Person would no longer be an Acquiring
Person, as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed an Acquiring Person for any purposes of
this Agreement unless and until such Person shall again become an Acquiring
Person.
(b) “Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement.
(c) A
Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own,” any securities:
(i) which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the exercise
of conversion rights, exchange rights, other rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to “beneficially own,” (A) 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 accepted for purchase or exchange, (B) securities issuable
upon exercise of Rights at any time prior to the occurrence of a Triggering
Event, or (C) securities issuable upon exercise of Rights from and after
the occurrence of a Triggering Event which Rights were acquired by such Person
or any of such Person’s Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 hereof (the “Original Rights”) or pursuant
to Section 11(a)(i) hereof in connection with an adjustment made with
respect to any Original Rights;
2
(ii) which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of
(as determined pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any security
under this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding to vote such security (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which
are beneficially owned, directly or indirectly, by any other Person or any of
such Person’s Affiliates or Associates with which such Person or any of such
Person’s Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (c)) or disposing of any
securities of the Company; provided, however, that nothing in this
paragraph (c) shall cause a Person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to beneficially own, any securities
acquired through such Person’s participation in good faith in a firm commitment
underwriting until the expiration of forty (40) days after the date of such
acquisition; provided further, however, that no Person who is an officer,
director or employee of the Company or any Subsidiary of the Company shall be
deemed, solely by reason of such Person’s status or authority as such, to be the
Beneficial Owner of, or to beneficially own, any securities that are
beneficially owned (as defined in this paragraph (c)), including, without
limitation, in a fiduciary capacity, by the Company or any Subsidiary of the
Company, or by any other such officer, director or employee of the Company or
any Subsidiary 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 or trust institutions in the State of Utah are authorized or obligated
by law or executive order to close.
(f) “Close
of Business” on any given date shall mean 5:00 P.M., mountain time, on such
date; provided, however, that if such date is not a Business Day it shall mean
5:00 P.M., pacific time, on the next succeeding Business Day.
3
(g) “Committee”
shall have the meaning set forth in Section 23(c).
(h) “Common
Stock” when used with reference to the Company shall mean the shares of the
common stock, par value $0.001 per share, of the Company. Common
Stock when used with reference to any Person other than the Company shall mean
the class of capital stock with the greatest aggregate voting power, or the
class of equity securities or other equity interests having power to control or
direct the management of such Person.
(i) “Company”
shall mean White Mountain Titanium Corporation, a Nevada
corporation.
(j) “Current
Value” shall have the meaning set forth in Section 11(a)(iii)
hereof.
(k) “Distribution
Date” shall mean the earlier of (i) the Close of Business on the tenth Business
Day after the Stock Acquisition Date (or, if the tenth Business Day after the
Stock Acquisition Date occurs before the Record Date, the Close of Business on
the Record Date), or (ii) the Close of Business on the tenth Business Day (or,
if such tenth Business Day occurs before the Record Date, the Close of Business
on the Record Date), or such specified or unspecified later date on or after the
Record Date as may be determined by action of the Board prior to such time as
any Person becomes an Acquiring Person, after the date of the commencement by
any Person (other than the Company, any Subsidiary of the Company or any
employee benefit plan of the Company or of any Subsidiary of the Company or any
Person holding shares of Common Stock for or pursuant to the terms of any such
employee benefit plan) of, or of the first public announcement of the intention
of any Person (other than any of the Persons referred to in the preceding
parenthetical) to commence, a tender or exchange offer the consummation of which
would result in such Person becoming the beneficial owner of 15% or more of the
outstanding shares of Common Stock.
(l) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, as in effect on
the date of this Agreement or as thereafter amended.
(m) “Exchange
Date” shall have the meaning set forth in Section 7(a) hereof.
(n) “Expiration
Date” shall have the meaning set forth in Section 7(a) hereof.
(o) “Final
Expiration Date” shall have the meaning set forth in Section 7(a)
hereof.
(p) “Person”
shall mean any individual, firm, corporation, partnership or other entity, and
shall include any successor (by merger or otherwise) of such
entity.
(q) “Preferred
Stock” shall mean shares of Series B Junior Participating Preferred Stock, par
value $0.001 per share, of the Company.
(r) “Principal
Party” shall have the meaning set forth in Section 13(b)
hereof.
4
(s) “Purchase
Price” shall have the meaning set forth in Section 4(a) and Section 11(a)(ii)
hereof.
(t) “Record
Date” shall mean the Close of Business on January 28, 2011.
(u) “Redemption
Date” shall have the meaning set forth in Section 7(a) hereof.
(v) “Redemption
Period” shall have the meaning set forth in Section 23(a) hereof.
(w) “Right”
shall have the meaning set forth in the recitals hereof.
(x) “Rights
Agent” shall mean Interwest Transfer Company, Inc., a Utah
corporation.
(y) “Rights
Certificate” shall have the meaning set forth in Section 3(d)
hereof.
(z) “Rights
Dividend Declaration Date” shall have the meaning set forth in the recitals
hereof.
(aa) “Section 11(a)(ii)
Event” shall mean any event described in Section 11(a)(ii)
hereof.
(bb) “Section 11(a)(ii)
Trigger Date” shall have the meaning set forth in Section 11(a)(iii)
hereof.
(cc) “Section 13
Event” shall mean any event described in clause (x), (y) or (z) of
Section 13(a) hereof.
(dd) “Securities
Act” shall mean the Securities Act of 1933, as amended, as in effect on the date
of this Agreement or as thereafter amended.
(ee) “Spread”
shall have the meaning set forth in Section 11(a)(iii) hereof.
(ff) “Stock
Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such, or such earlier date
as a majority of the Board shall become aware of the existence of such an
Acquiring Person.
(gg) “Subsidiary”
of any Person shall mean any corporation or other entity of which a majority of
the voting power of the voting equity securities or equity interests is owned,
directly or indirectly, by such Person, or is otherwise controlled by such
Person.
(hh) “Substitution
Period” shall have the meaning set forth in Section 11(a)(iii).
(ii) “Trading
Day” shall have the meaning set forth in Section 11(d)(i).
5
(jj) “Triggering
Event” shall mean any Section 11(a)(ii) Event or any Section 13
Event.
The
Company hereby appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with Section 3 hereof, shall,
prior to the Distribution Date, also be the holders of Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.
(a) As
promptly as practicable following the Record Date, the Company shall make
available a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as EXHIBIT B (the
“Summary of Rights”), to
each record holder of Common Stock who may so request from time to time prior to
the Expiration Date. With respect to certificates for shares of Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights shall
be evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier
Expiration Date or Final Expiration Date), the transfer of any certificate
representing shares of Common Stock in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with the shares of
Common Stock represented thereby.
(b) Rights
shall be issued in respect of all shares of Common Stock issued (whether
originally issued or from the Company’s treasury) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date; provided, however, Rights shall also be issued to the
extent provided in Section 22 hereof in respect of all shares of Common
Stock which are issued (whether originally issued or from the Company’s
treasury) after the Distribution Date and prior to the Expiration
Date. Certificates representing such shares of Common Stock shall
also be deemed to be certificates for Rights, and shall bear the following
legend (in addition to any other legends that may be required):
This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in a Rights Agreement between White Mountain Titanium Corporation (the
“Company”) and Interwest Transfer Company, Inc. (the “Rights Agent”) dated as of
January 18, 2011, as the same may be amended from time to time (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices of the
Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights shall be evidenced by separate certificates and shall no
longer be evidenced by this certificate. The Company shall mail to
the holder of this certificate a copy of the Rights Agreement as in effect on
the date of mailing without charge after receipt of a written request
therefor.
6
Under
certain circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, become null and void.
With
respect to such certificates containing the foregoing legend, until the earlier
of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any such certificate shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby. Notwithstanding
this paragraph (b), the omission of the foregoing legend shall not affect the
enforceability of any part of this Agreement or the rights of any holder of the
Rights.
(c) Until
the Distribution Date, (i) the Rights shall be evidenced (subject to the
provisions of paragraph (a) of this Section 3) by the certificates for
Common Stock registered in the names of the holders thereof (which certificates
for Common Stock shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates, and (ii) the Rights shall be transferable only in
connection with the transfer of the underlying shares of Common Stock (including
a transfer to the Company).
(d) As
soon as practicable after the Distribution Date, the Company shall prepare and
execute, the Rights Agent shall countersign and the Company shall send or cause
to be sent (and the Rights Agent shall, if requested, send) by first-class,
insured, postage-prepaid mail, to each record holder of Common Stock as of the
Close of Business on the Distribution Date, at the address of such holder shown
on the records of the Company, a rights certificate, in substantially the form
of EXHIBIT C hereto
(the “Rights
Certificate”), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to Section 11 hereof, at the time of distribution of the Rights
Certificates, the Company shall make necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights shall be evidenced solely by such Rights
Certificates.
(a) The
Rights Certificates (and the forms of election to purchase and of assignment to
be printed on the reverse thereof) shall be substantially the same as
Exhibit C hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Company may
deem appropriate, and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with 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, or to
conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever issued, shall be dated
as of the Record Date, shall show the date of countersignature, and on their
face shall entitle the holders thereof to purchase such number of one
one-thousandths of a share of Preferred Stock as shall be set forth therein at
the price set forth therein (such exercise price per one one-thousandth of a
share, the “Purchase
Price”), but the amount and type of securities purchasable upon exercise
of each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
7
(b) Any
Rights Certificate issued pursuant to Section 3(d) or Section 22
hereof that represents Rights beneficially owned by (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of the members of the Board has
determined is part of an agreement, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
The
Rights represented by this Rights Certificate are or were beneficially owned by
a Person who was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified in
Section 7(e) of such Rights Agreement.
The
Company shall instruct the Rights Agent in writing of the Rights which should be
so legended and shall supply the Rights Agent with such legended Rights
Certificates.
(a) The
Rights Certificates shall be executed on behalf of the Company by its Chief
Executive Officer, President, Chief Financial Officer or General Counsel and by
its Secretary or Assistant Secretary either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
8
(b) Following
the Distribution Date, the Rights Agent shall keep or cause to be kept, at its
principal office or at offices designated as the appropriate place for surrender
of Rights Certificates upon exercise or transfer, 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 of the Rights
Certificates and the date of each of the Rights Certificates.
|
Section
6.
|
Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates.
|
(a) Subject
to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Expiration Date or the
Final Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or following a Triggering Event,
Common Stock, other securities, cash, or other assets, as the case may be) as
the Rights Certificate or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have properly
completed and signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Certificates, as
the case may be, as so requested. The Company may require payment by
the holder of Rights 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.
(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 case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company’s request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights Certificate,
if mutilated, the Company shall execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
9
(a) Subject
to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein
including, without limitation, in the restrictions on exercisability set forth
in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in
whole or in part at any time after the Distribution Date upon surrender of the
Rights Certificate, with the form of election to purchase and the certificate on
the reverse side thereof duly and properly executed, to the Rights Agent at the
office of the Rights Agent designated for such purpose, together with payment of
the Purchase Price for each one one-thousandth of a share of Preferred Stock (or
other securities, cash or other assets, as the case may be) as to which the
Rights are exercised, at or prior to the earliest of (i) the close of
business on January 17, 2021 (the “Final Expiration Date”),
(ii) the time at which the Rights are redeemed (the “Redemption Date”) as provided
in Section 23 hereof or (iii) the time at which the Rights are
exchanged (the “Exchange
Date”) as provided in Section 24 hereof (the earliest of (i), (ii)
and (iii) being herein referred to as the “Expiration
Date”).
(b) Each
Right shall entitle the registered holder thereof to purchase one one-thousandth
of a share of Preferred Stock. The Purchase Price for each one
one-thousandth of a share of Preferred Stock pursuant to the exercise of a Right
shall initially be $4.00, and shall be subject to adjustment from time to time
as provided in Section 11 and Section 13 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) of this
Section 7.
(c) Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate duly and properly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-thousandth of a share of Preferred Stock (or Common Stock,
other securities, cash or other assets, as the case may be) to be purchased and
an amount equal to any applicable transfer tax or governmental charge in cash,
or by certified check or cashier’s check payable to the order of the Company,
the Rights Agent shall, subject to Section 18(k) hereof, thereupon promptly
(i) (A) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the total number of one one-thousandths of a share of Preferred
Stock to be purchased, and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent), and the Company shall direct the depositary to comply with
such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) promptly after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after receipt thereof,
promptly deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. In the event that the Company is
obligated to issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company shall make all arrangements necessary so that such securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate. The Company reserves the right to require prior to
the occurrence of a Triggering Event that, upon any exercise of Rights, a number
of Rights be exercised so that only whole shares of Preferred Stock would be
issued.
10
(d) In
case the registered holder of any Rights Certificate shall exercise less than
all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which a majority of the
members of the Board has determined is part of an agreement, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and 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. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and of Section 4(b) hereof
are complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. The Rights Agent shall endeavor to comply
with the provisions hereof to the extent it has received instructions from the
Company concerning such matters.
(f) Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) properly
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
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
any provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired 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
in such case shall deliver a certificate of destruction thereof to the
Company.
11
(a) The
Company shall cause to be reserved and kept available out of its authorized and
unissued shares of Preferred Stock (and following the occurrence of a Triggering
Event, out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held in its treasury), the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, shares of Common Stock and/or other securities) that, as
provided in this Agreement, including Section 11(a)(iii) hereof, shall be
sufficient to permit the exercise in full of all outstanding
Rights.
(b) In
the event the shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) issuable upon the
exercise of Rights become listed on any national securities exchange, the
Company shall use its reasonable best efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such
exercise.
(c) The
Company shall use its reasonable best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with this
Agreement, or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act with respect
to the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the
Expiration Date. The Company shall also take such action as may be
appropriate under, or to ensure compliance with, the securities or “blue sky”
laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not
to exceed ninety (90) days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Upon any
suspension of exercisability of Rights referred to in this Section 9(c),
the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect, in each case with
simultaneous written notice to the Rights Agent. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
and shall be null and void so long as held by a holder in any jurisdiction where
the requisite qualification to the issuance to such holder, or the exercise by
such holder, of the Rights in such jurisdiction shall not have been obtained or
be obtainable, or the exercise thereof shall not be permitted under applicable
law or a registration statement shall not have been declared
effective. The Rights Agent may assume that any Right exercised is
permitted to be exercised under applicable law and shall have no liability for
acting in reliance upon such assumption.
12
(d) The
Company shall take all such action as may be necessary to ensure that all one
one-thousandths of a share of Preferred Stock (and, following the occurrence of
a Triggering Event, Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and non-assessable.
(e) The
Company shall pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance or delivery of
the Rights Certificates or of any certificates for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax or charge which
may be payable in respect of any transfer or delivery of Rights Certificates to
a Person other than, or the issuance or delivery of certificates for a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
to issue or deliver any certificates for a number of one one-thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) in a name other than that of the registered holder upon the exercise of
any Rights until any such tax or charge shall have been paid (any such tax or
charge being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company’s satisfaction that
no such tax or charge is due.
Each
Person in whose name any certificate for a number of one one-thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of such fractional shares of Preferred Stock
(or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes and charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities as the case
may be) transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or otherwise) on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities as the case may be)
transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
13
|
Section
11.
|
Adjustment
of Purchase Price, Number and Kind of Shares or Number of
Rights.
|
The
Purchase Price, the number and kind of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In
the event the Company shall at any time after the date of this Agreement (ii)
(A) declare a dividend on the Preferred Stock payable in shares of Preferred
Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and in Section 7(e)
hereof, the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock or the
number and kind of shares of capital stock issuable on such date, as the case
may be, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
aggregate adjusted Purchase Price then in effect necessary to exercise a Right
in full, the aggregate number and kind of shares of Preferred Stock or the
number and kind of shares of capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when the
transfer books of the Company for the Preferred Stock (or other capital stock,
as the case may be) were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination 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
exercise of one Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
14
(ii) Subject
to Section 23 and Section 24 of this Agreement, in the event that any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
organized, appointed or established by the Company for or pursuant to the terms
of any such employee benefit plan), alone or together with its Affiliates and
Associates, shall become an Acquiring Person, unless the event causing such
Person to become an Acquiring Person is a transaction set forth in
Section 13(a) hereof, or is an acquisition of shares of Common Stock
pursuant to a cash tender offer made pursuant to Section 14(d) of the
Exchange Act for all outstanding shares of Common Stock (other than shares of
Common Stock beneficially owned by the Person making the offer or by its
Affiliates or Associates) at a price and on terms determined by at least
two-thirds of the Board, after receiving advice from one or more investment
banking firms, to be (a) at a price which is fair to stockholders (taking
into account all factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value) and (b) otherwise in the best interests of the Company and its
stockholders, proper provision shall be made so that promptly following the
Redemption Period (as defined in Section 23(a)), each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter have
the right to receive, upon exercise thereof and payment of an amount equal to
the then current Purchase Price in accordance with the terms of this Agreement,
in lieu of a number of one one-thousandths of a share of Preferred Stock, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-thousandths of a share of Preferred Stock for which a Right
was or would have been exercisable immediately prior to the first occurrence of
a Section 11(a)(ii) Event, whether or not such Right was then exercisable,
and (y) dividing that product (which, following such first occurrence,
shall thereafter be referred to as the “Purchase Price” for each Right
and for all purposes of this Agreement except to the extent set forth in
Section 13 hereof) by 50% of the current market price per share of Common
Stock (determined pursuant to Section 11(d) hereof) on the date of such
first occurrence; provided, however, that in no event shall the number of shares
be greater than an amount which would exceed a per share value which would be
less than the applicable exercise price of warrants issued pursuant to the
Securities Purchase Agreement dated July 7, 2005, as amended, between the
Company and the purchasers designated therein (such number of shares, the “Adjustment
Shares”).
(iii) The
Company at its option may substitute for a share of Common Stock issuable upon
the exercise of Rights in accordance with the foregoing subparagraph (ii) such
number or fractions of shares of Preferred Stock having an aggregate market
value equal to the current market price (as determined pursuant to Section 11(d)
hereof) per share of the Common Stock. In the event that the number
of shares of Common Stock which is authorized by the Company’s Articles of
Incorporation but not outstanding, or reserved for issuance for purposes other
than upon exercise of the Rights, is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the Board
shall, to the extent permitted by applicable law and by any agreements or
instruments then in effect to which the Company is a party, (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the “Current Value”) over
(2) the Purchase Price (such excess, the “Spread”), and (B) with
respect to each Right (subject to Section 7(e) hereof), make adequate
provision to substitute for some or all of the Adjustment Shares, upon exercise
of a Right and payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Common Stock or other
equity securities of the Company (including, without limitation, shares, or
units of shares, of Preferred Stock which the Board has deemed to have the same
value as shares of Common Stock) (such shares of equity securities being herein
called “common stock equivalents”), (4) debt securities of the Company,
(5) other assets or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has been
determined by the Board based upon the advice of an investment banking firm
selected by the Board; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) hereof expires (the later of (x) and
(y) being referred to herein as the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available), and then, if necessary
such number of fractions of shares of Preferred Stock (to the extent available)
and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread.
15
If, upon
the occurrence of a Section 11(a)(ii) Event, the Board shall determine in
good faith that it is likely that sufficient additional shares of Common Stock
could be authorized for issuance upon exercise in full of the Rights, then if
the Board so elects, the thirty (30) day period set forth above may be extended
to the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the “Substitution
Period”). To the extent that action is to be taken pursuant to
the preceding provisions of this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to the first sentence of
this Section 11(a)(iii) and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of
the Common Stock shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of the Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any “common stock
equivalent” shall be deemed to have the same value as the Common Stock on such
date. The Board may, but shall not be required to, establish
procedures to allocate the right to receive shares of Common Stock upon the
exercise of the Rights among holders of Rights pursuant to this
Section 11(a)(iii).
(b) In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period expiring
within forty-five (45) calendar days after such record date) to subscribe for or
purchase Preferred Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock (“equivalent preferred stock”)) or
securities convertible into Preferred Stock or equivalent preferred stock at a
price per share of Preferred Stock or per share of equivalent preferred stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or equivalent preferred stock) less than the current market
price per share of the Preferred Stock (as determined pursuant to
Section 11(d) hereof) on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock or
equivalent preferred stock outstanding on such record date, plus the number of
shares of Preferred Stock or equivalent preferred stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock or equivalent preferred stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
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 exercise of one Right. In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. Shares of Preferred Stock or equivalent preferred stock
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
16
(c) In
case the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock), or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price
to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the current market price per share of the
Preferred Stock (as determined pursuant to Section 11(d) hereof) on such
record date, less the fair market value (as determined in good faith by the
Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes) of the portion of the
cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Stock, and
the denominator of which shall be such current market price per share of the
Preferred Stock; 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 exercise of one
Right. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(d) (i) For
the purpose of any computation hereunder, the “current market price” of the
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the thirty (30) consecutive Trading
Days (as such term is hereinafter defined) immediately prior to, but not
including, such date, and for purposes of computations made pursuant to
Section 11(a)(iii) hereof, the “current market price” per share of Common
Stock on any date shall be deemed to be the average of the daily closing prices
per share of Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the current
market price of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (i) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into such Common Stock (other than the Rights), or
(ii) any subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of the requisite thirty (30) Trading Day or ten (10)
Trading Day periods, as set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the “current market price”
shall be appropriately 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 takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on a national securities exchange or, if the
shares of Common Stock are not listed or admitted to trading on a national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the OTC Bulletin Board or such other system then in use, or, if on any such date
the shares of Common Stock are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in the shares of Common Stock selected by the
Board.
17
If on any
such date no market maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by the Board shall be
used. The term “Trading Day” shall mean a day
on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business, or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the term “Trading Day” shall mean a
Monday, a Tuesday, a Wednesday, a Thursday or a Friday on which banking or trust
institutions in the State of New York are not authorized or obligated by law or
executive order to close. If the Common Stock is not publicly held or
not listed or traded, “current market price” shall mean the fair value per share
as determined in good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes.
Notwithstanding
the foregoing, the “current market price” of the Common Stock shall not be less
than an amount which for purposes of computations made pursuant to Section
11(a)(ii) hereof, would permit any holder of a Right to receive shares of Common
Stock which would exceed a per share value which would be less than the
applicable exercise price of warrants issued pursuant to the Securities Purchase
Agreement dated July 7, 2005, as amended, between the Company and the purchasers
designated therein.
(ii) For
the purpose of any computation hereunder, the “current market price” per share
of the Preferred Stock shall be determined in the same manner as set forth above
for the Common Stock in clause (i) of this Section 11(d) (other than
the last sentence thereof). If the current market price per share of
the Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the “current market price” per
share of the Preferred Stock shall be conclusively deemed to be an amount equal
to 1,000 (as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the current market
price per share of the Common Stock. If neither the Common Stock nor
the Preferred Stock is publicly held or so listed or traded, the “current market
price” per share of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the “current market
price” of one one-thousandth of a share of Preferred Stock shall be equal to the
“current market price” of one share of Preferred Stock divided by
1,000.
18
(e) Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in such price; provided, however, that any
adjustments which by reason of this Section 11(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 cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), an
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires such
adjustment or (ii) the Expiration Date.
(f) If
as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), (l) and (m) hereof,
and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the Preferred Stock shall apply on like terms to any such other
shares.
(g) All
Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one-thousandths of a share of Preferred Stock
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 its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result of the calculations made
in Sections 11(b) and (c) hereof, each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a share of Preferred Stock (calculated to the nearest one-thousandths of a
share) obtained by (i) multiplying (x) the number of one one-thousandths of
a share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
19
(i) The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in lieu of any adjustment in the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-thousandths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten (10) Business
Days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights Certificates
on such record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective
of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per one one-thousandth of a share and the number
of one one-thousandths of a share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then-par value, if any, of the number of one one-thousandths of a
share of Preferred Stock 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, as fully paid and
non-assessable, such number of one one-thousandths of a share of Preferred Stock
at such adjusted Purchase Price.
(l) In
any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the number of one
one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect 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 additional
shares upon the occurrence of the event requiring such adjustment.
20
(m) Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
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 (i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at less than
the current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for Preferred Stock, (iv) stock dividends or (v) issuance
of rights, options or warrants referred to hereinabove in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.
(n) The
Company shall not, at any time after the Distribution Date, (i) consolidate with
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)
hereof), if (x) at the time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of the Person who constitutes, or would constitute, the
“Principal Party” for purposes of Section 13(a) hereof shall have received
a distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) Except
as permitted by Section 23, Section 24 or Section 27 hereof, the
Company shall not take (or permit any Subsidiary to take) after the Distribution
Date any action if at the time such action is taken it is reasonably foreseeable
that such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company, at any time after the Rights Dividend Declaration Date and prior to the
Distribution Date, shall (i) declare a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock or (iii) combine the outstanding shares
of Common Stock into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each share of Common
Stock following any such event shall equal the result obtained by multiplying
the number of Rights associated with each share of Common Stock immediately
prior to such event by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of such
event.
21
Whenever
an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts and computations accounting for
such adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such certificate
and (c) mail or deliver a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with
Section 25 hereof. Notwithstanding the foregoing sentence, the
failure of the Company to prepare such certificate or statement or make such
filings or mailings shall not affect the validity of, or the force or effect of,
the requirement for such adjustment. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any adjustment unless and until it
shall have received such certificate.
(a) Subject
to Section 23 of this Agreement, in the event that, following the Stock
Acquisition Date, directly or indirectly,
(x) the
Company shall consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,
(y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with, or merge with or into,
the Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or
(z) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets, cash flow or earning power aggregating more than 50% of
the assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company and/or any
Subsidiary of the Company in one or more transactions each of which complies
with Section 11(o) hereof), then, and in each such case (except as may be
contemplated by Section 13(e) hereof), proper provision shall be made so
that:
i.
each holder of a Right, except as provided in Section 7(e)
hereof, shall, upon the expiration of the Redemption Period (as defined in
Section 23(a)), thereafter have the right to receive, upon the exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradable shares of Common Stock of the Principal Party
(as such term is hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the result
obtained by
22
1. multiplying
the then current Purchase Price by the number of one one-thousandths of a share
of Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of one one-thousandths of a share of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior
to such first occurrence), and
2. dividing
that product (which product, following the first occurrence of a Section 13
Event, shall be referred to as the “Purchase Price” for each Right and for all
purposes of this Agreement) by 50% of the current market price per share of the
shares of Common Stock of such Principal Party on the date of consummation of
such Section 13 Event (or the fair market value on such date of other
securities or property of the Principal Party, as provided for
herein);
ii. such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement;
iii. the
term “Company” shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a
Section 13 Event;
iv. such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and
v. the
provisions of Section 11(a)(ii) hereof shall be of no effect following the
first occurrence of any Section 13 Event.
(b) “Principal
Party” shall mean
i. in
the case of any transaction described in clause (x) or (y) of the first sentence
of Section 13(a), (A) the Person (including the Company as successor
thereto or as the surviving corporation) that is the issuer of any securities
into which shares of Common Stock of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer of Common
Stock that has the highest aggregate current market price (determined pursuant
to Section 11(d) hereof) and (B) if no securities or other equity interests are
so issued, the Person (including the Company as successor thereto or as the
surviving corporation) that is the other constituent party to such merger or
consolidation, or, if there is more than one such Person, the Person that is a
constituent party to such merger or consolidation whose Common Stock has the
highest aggregate current market price (determined pursuant to Section 11(d)
hereof); and
23
ii. in
the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion
of the assets, cash flow or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of such assets or earning power cannot be
determined, the Person that has received such assets or earning power whose
Common Stock has the highest aggregate current market price (determined pursuant
to Section 11(d) hereof); provided, however, that in any such
case: (1) if the Common Stock of such Person is not at such time and
has not been continuously over the preceding twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and has been
so registered, “Principal Party” shall refer to such other Person; (2) if
the Common Stock of such Person is not and has not been so registered and such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of two or more of which are and have been so registered,
“Principal Party” shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value; and (3) if the Common
Stock of such Person is not and has not been so registered and such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth in (1) and (2) above shall apply to each of the chains of ownership having
an interest in such joint venture as if such party were a Subsidiary of both or
all of such joint venturers, and the Principal Parties in each such chain shall
bear the obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such
interests.
(c) The
Company shall not consummate any Section 13 Event unless 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 unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any such Section 13 Event,
the Principal Party shall:
i. prepare
and file a registration statement under the Securities Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, and use its best efforts to cause such registration statement
to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
ii. deliver
to holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates that comply in all respects with the requirements for
registration on Form 10 under the Exchange Act;
24
iii. use
its best efforts to obtain any necessary regulatory approvals in respect of the
securities purchasable upon exercise of outstanding Rights; and
iv. use
its best efforts, if such Common Stock of the Principal Party shall be listed or
admitted to trading on a national securities exchange, to list or admit to
trading (or continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on such national securities exchange, or if the
securities of the Principal Party purchasable upon exercise of the Rights shall
not be listed or admitted to trading on a national securities exchange, to cause
the Rights and the securities purchasable upon exercise of the Rights to be
reported by such other system then in use.
(d) In
case the Principal Party that is to be a party to a transaction referred to in
this Section 13 has at the time of such transaction, or immediately following
such transaction shall have, a provision in any of its authorized securities or
in its certificate or articles of incorporation or by-laws or other instrument
governing its affairs, or any other agreements or arrangements, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal Party
at less than the then current market price per share (as determined pursuant to
Section 11(d) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then current market price (other
than to holders of Rights pursuant to this Section 13), (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of this
Section 13 or (iii) otherwise eliminating or substantially diminishing the
benefits intended to be afforded by the Rights in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, then, in such event, the Company shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been cancelled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision shall have no effect in connection with, or as a
consequence of, the consummation of such transaction.
(e) Notwithstanding
anything in this Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraphs (x) and (y) of
Section 13(a) if (i) such transaction is consummated with a Person or
Persons (or a wholly owned subsidiary of any such Person or Persons) who
acquired shares of Common Stock pursuant to a cash tender offer for all
outstanding shares of Common Stock which complies with the provisions of
Section 11(a)(ii) hereof, (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of Common Stock
paid to all holders of Common Stock whose shares were purchased pursuant to such
cash tender offer and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the
same as the form of consideration paid pursuant to such cash tender
offer. Upon consummation of any such transaction contemplated by this
Section 13(e), all Rights hereunder shall expire.
(f) The
provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in
Section 13(a) hereof.
25
Section 14. Fractional Rights and Fractional Shares.
(a) The
Company shall not be required to issue fractions of Rights except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute
Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of the whole Right. For the purposes of this
Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, or, in case no such sale
takes place on such day, the average of the high bid and low asked prices, in
either case as reported by a national securities exchange or, if the Rights are
not listed or admitted to trading on a national securities exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or such other system then in use or,
if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board. If
on any such date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by the Board shall
be used. In the event the Rights are listed or admitted to trading on
a national securities exchange, the closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the high bid and low asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to the national securities exchange on which the Rights are listed or admitted
to trading.
(b) The
Company shall not be required to issue fractions of shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock). In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share of Preferred
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one one-thousandth of a share
of Preferred Stock. For purposes of this Section 14(b), the
current market value of one one-thousandth of a share of Preferred Stock shall
be one one-thousandth of the closing price of a share of Preferred Stock (as
determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
26
(c) Following
the occurrence of one of the events specified in Section 11 giving rise to
the right to receive Common Stock, common stock equivalents or other securities
upon the exercise of a Right, the Company shall not be required to issue
fractions of shares of Common Stock, common stock equivalents or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock, common stock equivalents or other
securities. In lieu of fractional shares of Common Stock, common
stock equivalents or other securities, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one (1) share of Common Stock, common stock equivalents or other
securities. For purposes of this Section 14(c), the current
market value of one share of Common Stock shall be the closing price of one
share of Common Stock (as determined pursuant to Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.
(d) The
holder of a Right by the acceptance of the Rights expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise of
a Right, except as permitted by this Section 14.
Section 15. Rights of Action.
All
rights of action in respect of this Agreement, except the rights of action
vested in the Rights Agent pursuant to Section 18 and Section 19
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations hereunder of any Person subject to
this Agreement.
Section 16. Agreement of Rights Holders.
Every
holder of a Right by accepting such Right 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 in connection
with the transfer of the Common Stock;
(b) after
the Distribution Date, the Rights Certificates shall be transferable only on the
registry books of the Rights Agent if surrendered at the office of the Rights
Agent designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate form of assignment and the
certificate contained therein duly completed and executed;
27
(c) subject
to Section 6(a) and Section 7(f) hereof, the Company and the Rights
Agent may deem and treat the Person in whose name the Rights Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary;
and
(d) notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree,
judgment or ruling (whether interlocutory or final) issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company shall use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as practicable.
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 to be deemed for any purpose the holder of the Preferred Stock or
any other securities of the Company which may at any time be issuable on the
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 matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Duties of Rights Agent.
The
Rights Agent undertakes only the duties and obligations expressly imposed by
this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The
Rights Agent may consult with legal counsel of its selection (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent, and the
Rights Agent shall incur no liability, for or in respect of any action taken or
omitted by it in good faith and in accordance with such advice or
opinion.
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 (including, without
limitation, the identity of any Acquiring Person and the determination of
“current market price”) be proved or established by the Company prior to taking
or suffering or omitting to take any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any person believed by the Rights Agent to be any one of the Chief Executive
Officer, President, Chief Financial Officer or General Counsel of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent, and the Rights Agent shall incur no
liability, for or in respect of any action taken, omitted or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The
Rights Agent shall be liable hereunder only for its own 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 as to its countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed to have been made
by the Company only.
(e) The
Rights Agent is serving as an administrative agent and shall not be under any
responsibility in respect of the validity of any provision of this Agreement or
the execution and delivery of this Agreement (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming null
and void pursuant to Section 7(e) hereof) or any adjustment required under
any of the provisions hereof or responsible for the manner, method, or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after the Rights Agent’s actual receipt of
notice of any such adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any shares of Common Stock or shares of Preferred Stock to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of Common
Stock or shares of Preferred Stock will, when so issued, be validly authorized
and issued, fully paid and non-assessable, nor shall the Rights Agent be
responsible for the legality of the terms hereof in its capacity as an
administrative agent.
(f) The
Company shall perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of this
Agreement.
29
(g) The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any person believed by
the Rights Agent to be any one of the Chairman of the Board, the Chief Executive
Officer, President, Chief Financial Officer or General Counsel of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken, omitted to be taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken, suffered or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken or suffered or such omission shall be effective. The Rights
Agent shall not be liable for any action taken or suffered by, or omission of,
the Rights Agent in accordance with a proposal included in any such application
on or after the date specified in such application (which date shall not be less
than five (5) Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instruction in response to such application specifying the action to be
taken, suffered or omitted.
(h) The
Rights Agent and any stockholder, affiliate, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person or legal
entity.
(i) The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys or agents or for any
loss to the Company resulting from any such act, default, neglect or misconduct;
provided, however, that the Rights Agent exercised reasonable care in the
selection and continued employment thereof.
(j) The
Rights Agent shall not be obligated to take any action hereunder which may, in
the Rights Agent’s sole judgment, involve any expense or liability to the Rights
Agent unless it shall have been furnished with an indemnity against such expense
or liability which, in the Rights Agent’s sole judgment, is
adequate.
(k) If,
with respect to any Rights Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the form of assignment or form
of election to purchase, as the case may be, has either not been properly
completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the
Company.
(l) Notwithstanding
any other provision of the Agreement, the Rights Agent shall not be obligated to
perform any obligation hereunder and shall not incur any liability for the
nonperformance or breach of any obligation hereunder to the extent that the
paying agent is delayed in performing, unable to perform or breaches such
obligation because of acts of God, war, terrorism, fire, floods, strikes,
electrical outages, equipment or transmission failures or other causes
reasonably beyond its control.
30
(m) In
no event shall the Rights Agent be liable, directly or indirectly, for
any special, indirect or consequential losses or damages of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the possibility of such losses or damages and regardless of
the form of action.
(n) In
the event that the Rights Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands which, in its
opinion, are in conflict with any of the provisions of the Agreement, it shall
be entitled to refrain from taking any action until the questions regarding its
duties and rights are clarified to its satisfaction or it shall be directed
otherwise by a final judgment of a court of competent jurisdiction.
Section 19. Compensation
and Indemnification of the Rights Agent.
(a)
The Company agrees to pay to the Rights Agent compensation for all services
rendered by it hereunder in accordance with the fee schedule between the Company
and the Rights Agent which is on file with the Rights Agent (the “Fee
Schedule”). From time to time, on demand of the Rights Agent
and in accordance with the Fee Schedule, the Company agrees to pay to the Rights
Agent its expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent hereunder (which gross negligence bad faith or
willful misconduct must be determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction), for anything
done or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability arising therefrom, directly or
indirectly.
(b) The
Rights Agent shall be authorized and protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement or the exercise of its duties hereunder in
reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed and executed by the proper person or persons.
Section 20. Merger or Consolidation or Change of Name
of Rights Agent.
(a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any Person succeeding to all or substantially all the stock transfer
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
31
(b) In
case at any time the name of the Rights Agent shall be changed and at any such
time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
Section 21. Change of Rights Agent.
The
Rights Agent or any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon fifteen (15) days’ notice in writing
mailed to the Company. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days’ notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and the Preferred Stock by registered or certified
mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment
within a period of fifteen (15) days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the Rights Agent or the registered holder of any Rights
Certificate may, at the expense of the Company, apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (i)
a Person organized and doing business under the laws of the United States, in
good standing, having an office in the United States which is authorized under
such laws to exercise corporate trust power and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50 million or (ii) an affiliate of such a Person. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date
of any such appointment, the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and, if such appointment occurs after the Distribution Date,
mail a notice thereof in writing 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 the appointment
of the successor Rights Agent, as the case may be.
32
Section 22. Issuance of New Rights Certificates.
Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board to reflect any adjustment or change in
the Purchase Price per share and the number or kind of class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock following the
Distribution Date (other than upon exercise of a Right) and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect
to shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by the
Board, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificates would be issued, and (ii) 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
and Review.
(a) The
Board may, at its option, at any time during the period commencing on the Rights
Dividend Declaration Date and ending on the earlier of (i) the Close of
Business on the tenth Business Day following the Stock Acquisition Date (or, if
the Stock Acquisition Date shall have occurred prior to the Record Date, the
Close of Business on the tenth Business Day following the Record Date), or
(ii) the Close of Business on the Final Expiration Date (the “Redemption Period”), cause the
Company to redeem all but not less than all the then outstanding Rights at a
redemption price of $0.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the “Redemption
Price”); provided, however, that, if the Board authorizes redemption of
the Rights on or after the time a Person becomes an Acquiring Person, then such
authorization shall require the concurrence of two-thirds of the Directors.
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii)
Event or a Section 13 Event until such time as the Company’s right of redemption
hereunder has expired. The redemption of the Rights by the Board
pursuant to this paragraph (a) may be made effective at such time, on such basis
and with such conditions as the Board in its sole discretion may
establish. The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the current market price of the Common
Stock at the time of redemption) or any other form of consideration deemed
appropriate by the Board.
33
(b) Immediately
upon the action of the Board ordering the redemption of the Rights, evidence of
which shall have been filed with the Rights Agent, and without any further
action and without any notice, the right to exercise the Rights shall terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of the Board ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption shall state the method by
which the payment of the Redemption Price will be made.
(c) At
least once every three years the Committee (as defined below) shall review and
evaluate this Agreement in order to consider whether the maintenance of this
Agreement continues to be in the interests of the Company and its
stockholders. Following each such review, the Committee will communicate
its conclusions to the full Board, including any recommendation in light thereof
as to whether this Rights Agreement should be modified or the Rights should be
redeemed. The committee reviewing and evaluating this Agreement
pursuant to this Section 23(c) shall be the Audit Committee of the Board or
such other committee designated by the Board and comprised of directors who are
independent of the management of the Company and free from any relationship
that, in the opinion of the Board, would interfere with their exercise of
independent judgment (the “Committee”).
Section 24. Exchange.
(a) The
Board may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become null and void pursuant to the
provisions of Section 7(e) hereof) for shares of Common Stock at an exchange
ratio of one share of Common Stock per each outstanding Right, as appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the “Exchange
Ratio”). Notwithstanding the foregoing, the Board shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary, or any entity holding Common Stock for or pursuant to
the terms of any such employee benefit plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding. The exchange 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.
34
(b) Immediately
upon the action of the Board ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange shall
state the method by which the exchange of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights that
will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In
any exchange pursuant to this Section 24, the Company, at its option, may
substitute common stock equivalents (as defined in Section 11(a)(iii)) for
shares of Common Stock exchangeable for Rights, at the initial rate of one
common stock equivalent for each share of Common Stock, as appropriately
adjusted to reflect adjustments in dividend, liquidation and voting rights of
common stock equivalents pursuant to the terms thereof, so that each common
stock equivalent delivered in lieu of each share of Common Stock shall have
essentially the same dividend, liquidation and voting rights as one share of
Common Stock.
(d) In
the event that there shall not be sufficient shares of Common Stock issued but
not outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Common Stock
for issuance upon exchange of the Rights.
(e) The
Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common
Stock. In lieu of such fractional shares, the Company shall pay to
the registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share of Common
Stock. For the purposes of this paragraph (e), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second and the following
sentences of Section 11(d) hereof) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 24.
35
Section 25. Notice of Certain Events.
(a) In
case the Company shall propose, at any time after the Distribution Date,
(i) to pay any dividend payable in capital stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings) or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of capital stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding Preferred Stock), or (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of the shares of Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the shares of Preferred Stock for purposes of such action
and, in the case of any such other action, at least twenty (20) days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock, whichever shall be the
earlier.
(b) In
case any Section 11(a)(ii) Event shall occur, then, in any such case,
(i) the Company shall as soon as practicable thereafter give to each holder
of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.
Section 26. Notices.
Notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by email, overnight delivery service,
first-class mail, postage prepaid, or by facsimile addressed (until another
address/facsimile number is filed in writing with the Rights Agent) as
follows:
▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
White
Mountain Titanium Corporation
Attention: President
& Chief Executive Officer
Email: ▇▇▇@▇▇▇▇▇▇▇.▇▇▇
FAX: +44
(1342) 717109*
Subject
to the provisions of Section 21 hereof, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by email, overnight delivery service, first-class mail, postage prepaid, or
by facsimile addressed (until another address/facsimile number is filed in
writing with the Rights Agent) as follows:
36
Interwest
Transfer Company, Inc.
19▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Email: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
FAX: (▇▇▇)
▇▇▇-▇▇▇▇
Notices
or demands authorized by this Agreement to be given or made by the Company or
the Rights Agent to the holder of any Rights Certificate shall be sufficiently
given or made if sent by email, overnight delivery service, first-class mail,
postage prepaid, or by facsimile addressed (until another address/facsimile
number is filed in writing with the Rights Agent) addressed to any such holder
at the address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments.
Except as
provided in the penultimate sentence of this Section 27, for so long as the
Rights are then redeemable, the Company may in its sole and absolute discretion,
and the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any holders
of the Rights. At any time when the Rights are no longer redeemable,
except as provided in the penultimate sentence of this Section 27, the Company
may, and the Rights Agent shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Rights; provided, however,
that no such supplement or amendment may (a) adversely affect the interests of
the holders of Rights as such (other than an Acquiring Person or any Affiliate
or Associate of an Acquiring Person), (b) cause this Agreement again to become
amendable other than in accordance with this sentence or (c) cause the Rights
again to become redeemable. Notwithstanding anything contained in
this Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price. Upon the delivery of a certificate from
an appropriate officer of the Company which states that the 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 any
supplement or amendment that does not amend Section 18, 19, 20 or 21 hereof or
this Section 27 in a manner adverse to the Rights Agent shall become effective
immediately upon execution by the Company, whether or not also executed by the
Rights Agent.
Section 28. Successors.
All the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
37
Section 29. Determinations and Actions by the Board,
Etc.
For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board (with, where specifically provided for
herein, the concurrence of two-thirds of the members of the Board) shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of two-thirds of the members
of 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 (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including without limitation a determination to redeem or not redeem
the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations which are done or made by the
Board (with, where specifically provided for herein, the concurrence of
two-thirds of the members of the Board) in good faith, shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other Persons.
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 Common
Stock) 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 Common
Stock). Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the holders of shares
of Common Stock.
Section 31. Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that notwithstanding anything in
this Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board determines in its good faith judgment that severing
the invalid language from this Agreement would materially and adversely affect
the purpose or effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until the Close
of Business on the tenth Business Day following the date of such determination
by the Board.
38
Section 32. Governing Law,
Venue and Jurisdiction.
This
Agreement and each Right Certificate issued hereunder shall be governed by and
construed in accordance with the laws of the State of Utah applicable to
contracts made in Utah by persons domiciled in Salt Lake City and without regard
to its principles of conflicts of laws. Each of the Parties agrees to
submit himself to the in
personam jurisdiction of the state and federal courts situated within the
State of Utah with regard to any controversy arising out of or relating to this
Agreement. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. The parties hereby waive all rights
to a trial by jury.
Section 33. Counterparts.
This
Agreement may be executed in any number of counterparts. It shall not
be necessary that the signature of or on behalf of each party appears on each
counterpart, but it shall be sufficient that the signature of or on behalf of
each party appears on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement. It
shall not be necessary in any proof of this Agreement to produce or account for
more than a number of counterparts containing the respective signatures of or on
behalf of all of the parties.
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.
SIGNATURE
PAGE FOLLOWS
39
Signature
Page
IN
WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be duly
executed, all as of the day and year first above written.
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WHITE
MOUNTAIN TITANIUM CORPORATION
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||
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By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
|
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Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
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||
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Title: President
and Chief Executive Officer
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||
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INTERWEST
TRANSFER COMPANY, INC.
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||
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By:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Title: Vice
President
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40
Exhibit
A
CERTIFICATE
OF DESIGNATION,
PREFERENCES
AND RIGHTS OF
SERIES
B JUNIOR PARTICIPATING PREFERRED STOCK
OF
WHITE
MOUNTAIN TITANIUM CORPORATION
White
Mountain Titanium Corporation (the "Corporation"), a corporation
organized and existing under the Nevada Revised Statutes: Chapter 78 ("NRS-78"), does hereby certify
that, pursuant to authority conferred upon the Board of Directors of the Company
(the “Board”) by the
Articles of Incorporation, as amended, of the Company, and pursuant to Section
78.195 of NRS-78, the Board at a meeting duly held, adopted resolutions (i)
authorizing a series of the Corporation’s previously authorized preferred stock,
par value $0.001 per share, and (ii) providing for the designations, preferences
and relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, of Five Hundred Thousand (500,000) shares
of Series B Junior Participating Preferred Stock of the Company, as
follows:
RESOLVED,
that the Corporation is authorized to issue 500,000 shares of Series B
Convertible Preferred Stock, par value $0.001 per share, which shall have the
following powers, designations, preferences and other special
rights:
Section
1. Designation and Amount.
The
shares of such series, par value $0.001 per share, shall be designated as
“Series B Junior Participating Preferred Stock” and the number of shares
constituting such series shall be 500,000.
Section
2. Dividends and Distributions.
(a) Subject
to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series B Junior
Participating Preferred Stock with respect to dividends, the holders of shares
of Series B Junior Participating Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the 15th day
of January, April, July and October, in each year (each such date being referred
to herein as a “Quarterly Dividend Payment Date”), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series B Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of common stock, par
value $0.001 per share, of the Corporation (the “Common Stock”), or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series B Junior Participating Preferred Stock. In the event
the Corporation shall at any time after January 28, 2011 (the “Rights
Declaration Date”) (i) declare or pay any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series B Junior
Participating Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
A-1
(b) The
Corporation shall declare a dividend or distribution on the Series B Junior
Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series B Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(c) Dividends
shall begin to accrue and be cumulative on outstanding shares of Series B Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series B Junior Participating
Preferred Stock, unless the date of issue of such shares is prior to the record
date set for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series B Junior
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which event such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series B Junior
Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series B Junior Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than thirty (30) days prior to the
date fixed for the payment thereof.
Section
3.
Voting Rights.
The
holders of shares of Series B Junior Participating Preferred Stock shall have
the following voting rights:
A-2
(a) Subject
to the provision for adjustment hereinafter set forth, each share of Series B
Junior Participating Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series B Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
(b) Except
as otherwise provided by law, the holders of shares of Series B Junior
Participating Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of the
stockholders of the Corporation.
(c) Except
as set forth herein, holders of Series B Junior Participating Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
Section
4. Certain Restrictions.
(a) Whenever
dividends or distributions payable on the Series B Junior Participating
Preferred Stock as provided in Section 2 are not paid, thereafter and until
such dividends and distributions, whether or not declared, on shares of Series B
Junior Participating Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
i. declare
or pay dividends on, or make any other distributions on, or redeem or purchase
or otherwise acquire for consideration any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Junior Participating Preferred Stock; or
ii. declare
or pay dividends on, or make any other distributions on, any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series B Junior Participating Preferred Stock, except
dividends paid ratably on the Series B Junior Participating Preferred Stock and
all such parity stock on which dividends are payable in proportion to the total
amounts to which the holders of all such shares are then entitled;
or
iii. redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series B Junior Participating Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series B Junior Participating Preferred Stock; or
A-3
iv. purchase
or otherwise acquire for consideration any shares of Series B Junior
Participating Preferred Stock, or any shares of stock ranking on a parity with
the Series B Junior Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective Series Bnd classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(b) The
Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such
manner.
Section
5. Reacquired Shares.
Any
shares of Series B Junior Participating Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section
6. Liquidation, Dissolution or Winding Up.
(a) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series B Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series B Junior Participating Preferred Stock
shall have received $1,000 per share, plus any unpaid dividends and
distributions payable thereon, whether or not declared, to the date of such
payment (the “Series B Junior Liquidation Preference”). Following the
payment of the full amount of the Series B Junior Liquidation Preference, no
additional distributions shall be made to the holders of Series B Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the “Common Adjustment”)
equal to the quotient obtained by dividing (i) the Series B Junior
Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set
forth in subparagraph (C) below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii) immediately above being referred to as the “Adjustment
Number”). Following the payment of the full amount of the Series B
Junior Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series B Junior Participating Preferred Stock and Common
Stock, respectively, holders of Series B Junior Participating Preferred Stock
and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to one (1) with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
A-4
(b)
In the event, however, that there are not sufficient assets available to permit
payment in full of the Series B Junior Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series B Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In
the event, however, that there are sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(c) In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section
7. Consolidation, Merger, etc.
In case
the Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any such
case the shares of Series B Junior Participating Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series B Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section
8. Redemption.
The
Series B Junior Participating Preferred Stock shall not be subject to redemption
by the Corporation.
Section
9. Ranking.
Notwithstanding
anything contained herein to the contrary, the Series B Junior Participating
Preferred Stock shall rank junior to all other series of the Corporation’s
Preferred Stock as to voting rights, the payment of dividends and the
distribution of assets in liquidation, unless the terms of any such series shall
provide otherwise.
A-5
Section
10. Amendment.
The
Articles of Incorporation of the Corporation shall not be further amended in any
manner which would materially alter or change the powers, preferences or special
rights of the Series B Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority of the
outstanding shares of Series B Junior Participating Preferred Stock, voting
separately as a class.
Section
11. Fractional Shares.
Series B
Junior Participating Preferred Stock may be issued in fractions of a share which
shall entitle the holders, in proportion to such holders fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series B Junior Participating
Preferred Stock.
IN
WITNESS WHEREOF, I have executed and subscribed this Certificate and do affirm
the foregoing as true under the penalties of perjury this 18th day of
January, 2011.
White
Mountain Titanium Corporation
|
By:
|
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
|
||
|
Title: President
and Chief Executive Officer
|
||
A-6
Exhibit
B
SUMMARY
OF RIGHTS TO PURCHASE
SERIES
B JUNIOR PARTICIPATING
PREFERRED
STOCK
Effective
January 18, 2011, the Board of Directors of White Mountain Titanium Corporation
(the “Company”) declared a dividend distribution of one right (“Right”) for each
outstanding share of common stock, par value $0.001 per share (the “Common
Stock”), of the Company, payable to stockholders of record on January 28,
2011. Each Right, when exercisable, entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series B Junior
Participating Preferred Stock (the “Preferred Stock”) at a price of $4.00 per
one one-thousandth share (the “Purchase Price”), subject to
adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the “Rights Agreement”) dated as of January 18, 2011,
between the Company and Interwest Transfer Company, Inc., as Rights Agent (the
“Rights Agent”).
Initially,
the Rights will be attached to all certificates representing shares of Common
Stock then outstanding, and no separate certificates evidencing the Rights will
be distributed. The Rights will separate from the Common Stock and a
distribution of Rights Certificates (as defined below) will occur upon the
earlier to occur of (i) ten (10) days following a public announcement that a
person or group of affiliated or associated persons (an “Acquiring Person”) has
acquired beneficial ownership of 15% or more of the outstanding shares of Common
Stock (the “Stock Acquisition Date”) or (ii) ten (10) Business Days (or
such later date as the Board of Directors of the Company may determine)
following the commencement of, or the first public announcement of the intention
to commence, a tender offer or exchange offer the consummation of which would
result in the beneficial ownership by a person of 15% or more of the outstanding
shares of Common Stock (the earlier of such dates being called the “Distribution
Date”).
Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates, and will be transferred with and only with the Common Stock
certificates, (ii) new Common Stock certificates issued after January 28,
2011, upon transfer or new issuance of the Common Stock will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender
for transfer of any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
The
Rights are not exercisable until the Distribution Date and will expire at the
close of business on January 17, 2021, unless such date is extended, the Rights
Agreement is terminated, or the Rights are earlier redeemed or exchanged by the
Company as described below. The Rights will not be exercisable by a
holder in any jurisdiction where the requisite qualification to the issuance to
such holder, or the exercise by such holder, of the Rights has not been obtained
or is not obtainable.
B-1
As soon
as practicable following the Distribution Date, separate certificates evidencing
the Rights (“Rights Certificates”) will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will evidence the
Rights. Except as otherwise determined by the Board of Directors of
the Company, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the
event that a Person becomes the beneficial owner of 15% or more of the then
outstanding shares of Common Stock, except pursuant to an offer for all
outstanding shares of Common Stock which the Directors determine to be fair to
and otherwise in the best interests of the Company and its stockholders (a
“Qualifying Offer”), each holder of a Right will, after the end of a redemption
period referred to below, have the right to exercise the Right by purchasing,
for an amount equal to the Purchase Price, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a value
equal to two times such amount, provided that the per share value of the Common
Stock received shall not be less than the current exercise price of warrants
issued pursuant to the Securities Purchase Agreement dated July 7, 2005, as
amended, which exercise price is currently $0.50 per
share. Notwithstanding any of the foregoing, following the occurrence
of the events set forth in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person will be null and void. However, Rights
are not exercisable following the occurrence of the events set forth above until
such time as the Rights are no longer redeemable by the Company as set forth
below.
For
example, at a Purchase Price of $4.00 per Right, each Right not owned by an
Acquiring Person (or by certain related parties) following an event set forth in
the preceding paragraph would entitle its holder to purchase $8.00 worth of
Common Stock (or other consideration, as noted above) for
$4.00. Assuming that the Common Stock had a per share value of $2.00
at such time, the holder of each valid Right would be entitled to purchase four
shares of Common Stock for $4.00.
In the
event that at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction (other
than a merger that follows a Qualifying Offer), or (ii) 50% or more of the
Company’s assets or earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set forth above) shall,
after the expiration of the redemption period referred to below, have the right
to receive, upon exercise, common stock of the acquiring company having a value
equal to two times the Purchase Price of the Right (e.g., common stock of the
acquiring company having a value of $8.00 for the $4.00 Purchase
Price).
At any
time after a person or group of affiliated or associated persons becomes an
Acquiring Person and prior to the acquisition by such person of 50% or more of
the outstanding Common Stock, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which have become
void), in whole or in part, at an exchange ratio of one share of Common Stock
(or, in certain circumstances, other equity securities of the Company that are
deemed by the Board of Directors of the Company to have the same value as shares
of Common Stock) per Right (subject to adjustment).
B-2
The
Purchase Price payable, and the number of one one-thousandths of a share of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution under
certain circumstances.
With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional shares will be issued (other than fractions
which are integral multiples of one one-thousandth of a share of Preferred
Stock) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.
In
general, the Board of Directors of the Company may cause the Company to redeem
the Rights in whole, but not in part, at any time during the period commencing
on January 18, 2011, and ending on the tenth Business Day following the Stock
Acquisition Date (the “Redemption Period”) at a price of $0.001 per Right
(payable in cash, Common Stock or other consideration deemed appropriate by the
Board of Directors of the Company). Under certain circumstances set
forth in the Rights Agreement, the decision to redeem the Rights will require
the concurrence of a two-thirds majority of the Board of
Directors. After the Redemption Period has expired, the Company’s
right of redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to 10% or less of the outstanding shares of Common Stock in
a transaction or series of transactions not involving the Company and there are
no other Acquiring Persons. Immediately upon the action of the Board
of Directors of the Company ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
$0.001 redemption price.
Until a
Right is exercised, the holder thereof, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends. While the distribution of the Rights will not
be subject to federal taxation to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of the acquiring company as set forth
above.
Except
with respect to the Redemption Price of the Rights, any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company prior
to the Distribution Date. After the Distribution Date, the provisions
of the Rights Agreement may be amended by the Board of Directors of the Company
in order to cure any ambiguity, defect or inconsistency or to make changes which
do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; provided however, no amendment to adjust the time
period governing redemption may be made at such time as the Rights are not
redeemable.
B-3
The
Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being acquired,
or in a manner or on terms not approved by the Board of Directors of the
Company. The Rights, however, should not deter any prospective
offeror willing to negotiate in good faith with the Board of Directors of the
Company, nor should the Rights interfere with any merger or other business
combination approved by the Board of Directors of the Company.
At least
once every three years the Corporate Governance and Nominating Committee of the
Board or another committee of directors comprised of directors who are
independent of management and free from any relationship that, in the opinion of
the Board would interfere with their exercise of independent judgment, shall
review and evaluate the Rights Agreement in order to consider whether
the maintenance of the Rights Agreement continues to be in the interests of the
Company and its stockholders. Following each such review, the committee
will communicate its conclusions to the full Board, including any recommendation
in light thereof as to whether the Rights Agreement should be modified or the
Rights should be redeemed.
A copy of
the Rights Agreement has been filed with the Securities and Exchange Commission
as an exhibit to a Current Report on Form 8-K. A copy of the Rights
Agreement is also available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
B-4
Exhibit C
[Form of
Rights Certificate]
Certificate
No. R- Rights
NOT
EXERCISABLE AFTER JANUARY 17, 2021, OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF ANY SUCH PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE,
AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE
REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH
HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE
OBTAINABLE. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]
The
portion of the legend in brackets shall be inserted only if applicable and shall
replace the preceding sentence.
Rights
Certificate
WHITE
MOUNTAIN TITANIUM CORPORATION
This
certifies that _____________________, or its registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of January 18, 2011, as the same may be amended from time to
time (the “Rights Agreement”), between White Mountain Titanium Corporation, a
Nevada corporation (the “Company”), and Interwest Transfer Company, Inc., a New
York corporation, (the “Rights Agent”), to purchase from the Company at any time
prior to January 28, 2021, at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, non-assessable share of Series B Junior
Participating Preferred Stock, par value $0.001 per share (the “Preferred
Stock”) of the Company, at a purchase price of $4.00 per one one-thousandth
share (the “Purchase Price”), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights Certificate
(and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the number
and Purchase Price as of January 28, 2011, based on the Preferred Stock as
constituted at such date, and are subject to adjustment upon the happening of
certain events as provided in the Rights Agreement. Capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in
the Rights Agreement.
C-1
From and
after the occurrence of an event described in Section 11(a)(ii) of the
Rights Agreement, the Rights evidenced by this Rights Certificate beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of any such Person
(as such terms are defined in the Rights Agreement), which the Board, in its
sole discretion, determines is or was involved in or caused or facilitated,
directly or indirectly (including through any change in the Board), such
Section 11(a)(ii) Event, (ii) a transferee of any such Acquiring Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a Person who, concurrently with or after such
transfer, became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
The
Rights evidenced by this Rights Certificate shall not be exercisable, and shall
be void so long as held, by a holder in any jurisdiction where the requisite
qualification to the issuance to such holder, or the exercise by such holder, of
the Rights in such jurisdiction shall not have been obtained or be
obtainable.
As
provided in the Rights Agreement, the Purchase Price and the number and kind of
shares of Preferred Stock or other securities, which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events.
This
Rights Certificate is subject to all of the terms, provisions and conditions of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights
Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
This
Rights Certificate, with or without other Rights Certificates, upon surrender at
the office or offices of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of one one-thousandths of a share of Preferred Stock as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
C-2
Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Board at its option at a redemption price of
$0.001 per Right at any time during the period commencing on the Rights Dividend
Declaration Date and ending on the earlier of (i) the Close of Business on
the tenth Business Day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the Close of
Business on the tenth Business Day following the Record Date), or (ii) the
Close of Business on the Final Expiration Date. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem shall
require the concurrence of two-thirds of the Board. After the
expiration of the Redemption Period, the Company’s right of redemption may be
reinstated if the Acquiring Person reduces its beneficial ownership to 10% or
less of the outstanding shares of Common Stock in a transaction or series of
transactions not involving the Company, and such reinstatement is approved by
two-thirds of the Board.
At any
time after a Person becomes an Acquiring Person and prior to the acquisition by
such Person of 50% or more of the outstanding Common Stock, the Board may
exchange the Rights (other than Rights owned by such Acquiring Person which have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock per Right each outstanding Right or, in certain circumstances, other
equity securities of the Company which are deemed by the Board to have the same
value as shares of Common stock, subject to adjustment.
No
fractional shares of Preferred Stock will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder
of this Rights Certificate, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
C-3
WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal.
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Dated
as of
,
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ATTEST:
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White
Mountain Titanium Corporation
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By:
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Name:
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Title:
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Countersigned:
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By:
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Authorized
Signature
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[Form of
Reverse Side of Rights Certificate]
C-4
FORM OF ASSIGNMENT
(To be
executed by the registered holder if
such
holder desires to transfer the
Rights
Certificate.)
FOR VALUE
RECEIVED ___________________________________________________________________
hereby
sells, assigns and transfers unto
(Please
print name and address of transferee)
this
Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ,
Signature
Medallion
Signature Guarantee:
C-5
Certificate
The
undersigned hereby certifies by checking the appropriate boxes
that:
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(1)
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this
Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Person (as such
terms are defined pursuant to the Rights
Agreement);
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(2)
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after
due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently became
an Acquiring Person or an Affiliate or Associate of any such
Person.
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Dated: ,
Signature
Medallion
Signature Guarantee:
NOTICE
The
signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
C-6
FORM OF ELECTION TO PURCHASE
(To be
executed if the registered holder
desires
to exercise Rights represented
by the
Rights Certificate.)
To:
The
undersigned hereby irrevocably elects to exercise Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
(Please
print name and address)
Please
insert social security
or other
identifying
number: _____________________________________________________________
If such
number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
(Please
print name and address)
Please
insert social security
or other
identifying
number: ______________________________________________________
Dated: ,
Signature
Medallion
Signature Guarantee:
C-7
Certificate
The
undersigned hereby certifies by checking the appropriate boxes
that:
(1) the
Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any such Person (as
such terms are defined in the Rights Agreement);
(2) after
due inquiry and to the best knowledge of the undersigned, it [ ] did
[ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of any such Person.
Dated: ,
Signature
Medallion
Signature Guarantee:
NOTICE
The
signature to the foregoing Election to Purchase and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
C-8