EXHIBIT 4.2
RIGHTS AGREEMENT
DATED AS OF
MAY 25, 2004
BETWEEN
▇▇▇▇▇ RIVER COAL COMPANY
AND
SUNTRUST BANK
AS RIGHTS AGENT
TABLE OF CONTENTS1
Page
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Section 1. Definitions......................................................................1
Section 2. Appointment of Rights Agent......................................................5
Section 3. Issue of Rights Certificates.....................................................5
Section 4. Form of Rights Certificate.......................................................6
Section 5. Countersignature and Registration................................................7
Section 6. Transfer and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates....................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights....................8
Section 8. Cancellation and Destruction of Right Certificates..............................10
Section 9. Reservation and Availability of Capital Stock...................................10
Section 10. Preferred Stock Record Date....................................................11
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights......................................................................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........21
Section 14. Fractional Rights and Fractional Shares........................................23
Section 15. Rights of Action...............................................................25
Section 16. Agreement of Right Holders.....................................................25
Section 17. Right Certificate Holder Not Deemed a Shareholder..............................26
Section 18. Concerning the Rights Agent....................................................26
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................26
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1 The Table of Contents is not a part of this Agreement.
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Section 20. Duties of Rights Agent.........................................................27
Section 21. Change of Rights Agent.........................................................29
Section 22. Issuance of New Right Certificates.............................................29
Section 23. Redemption.....................................................................30
Section 24. Exchange.......................................................................31
Section 25. Notice of Proposed Actions.....................................................32
Section 26. Notices........................................................................32
Section 27. Supplements and Amendments.....................................................33
Section 28. Successors.....................................................................33
Section 29. Determinations and Actions by the Board of Directors, etc......................34
Section 30. Benefits of this Agreement.....................................................34
Section 31. Severability...................................................................34
Section 32. Governing Law..................................................................35
Section 33. Counterparts...................................................................34
Section 34. Descriptive Headings...........................................................34
Exhibit A - Form of Board Resolution Establishing and Designating Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary
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RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into as of May 25, 2004 (the
"EFFECTIVE DATE"), by and between ▇▇▇▇▇ RIVER COAL COMPANY, a Virginia
corporation (the "COMPANY"), and SUNTRUST BANK, a Georgia bank, as Rights Agent
(the "RIGHTS AGENT").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has approved the
execution of this Agreement and has authorized and declared a dividend
distribution of one Right (as defined below) for each outstanding share of
Common Stock, par value $0.01 per share, of the Company (the "COMMON STOCK") at
the close of business on the Effective Date and has authorized the issuance of
one Right for each share of Common Stock, each Right representing the right to
purchase one one-hundredth of a share of Series A Participating Cumulative
Preferred Stock of the Company having the rights, powers and preferences set
forth in the Board Resolution Establishing and Designating Series A Preferred
Stock attached hereto as EXHIBIT A, upon the terms and subject to the conditions
contained herein (individually, a "RIGHT," and collectively, the "RIGHTS");
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
(a) "ACQUIRING PERSON" means any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding; PROVIDED, HOWEVER,
that, an "ACQUIRING PERSON" shall not include the following Persons: (i) any
Excluded Person, (ii) any Person who is the Beneficial Owner of 15% or more of
the shares of Common Stock outstanding as of the Effective Date, or (iii) any
Person, who alone or together with its Affiliates or Associates becomes the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding
as a result of an Approved Acquisition; PROVIDED, FURTHER, that in the event
that a Person does not become an ACQUIRING PERSON by reason of clause (ii)
above, such Person nonetheless shall become an ACQUIRING PERSON if such Person
thereafter becomes the Beneficial Owner of an additional 2% or more of the
Common Stock then outstanding over and above the shares beneficially owned by
such Person as of the Effective Date, unless the acquisition of such Common
Stock is an Approved Acquisition. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "ACQUIRING PERSON" as defined pursuant to the foregoing
provisions of this SECTION 1(A) has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares of Common Stock
so that such Person would no longer be an "ACQUIRING PERSON" as defined pursuant
to the foregoing provisions of this SECTION 1(A), then such Person shall not be
deemed an Acquiring Person for any purposes of this Agreement. Such sales of
shares should be effected in a manner
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satisfactory to the Board of Directors of the Company with due regard for the
potential adverse impact on the trading markets for the Company's Common Stock.
(b) "AFFILIATE" and "ASSOCIATE" have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act as in effect on the
date hereof.
(c) "APPROVED ACQUISITION" means any acquisition of Common Stock
that (i) causes a Person to become the Beneficial Owner of (A) 15% or more of
the shares of Common Stock then outstanding, or (B) if already a Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding, an
additional 2% or more of the shares of Common Stock then outstanding, and (ii)
is approved in advance by a majority of the Board of Directors.
(d) 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 its Affiliates or Associates
beneficially owns (as determined pursuant to Rule 13d-3 under the
Exchange Act as in effect on the date hereof), directly or indirectly;
(ii) which such Person or any of its Affiliates or
Associates, directly or indirectly, has
(A) the right to acquire (whether such right is
exercisable immediately or only upon the occurrence of certain
events or the passage of time or both) pursuant to any
agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange
rights, rights (other than pursuant to the Rights), warrants,
options or otherwise; PROVIDED, HOWEVER, that a Person shall not
be deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN,"
any securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of its Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or
(B) the right to vote or dispose of (whether such
right is exercisable immediately or only upon the occurrence of
certain events or the passage of time or both) pursuant to any
agreement, arrangement or understanding (whether or not in
writing) or otherwise; PROVIDED, HOWEVER, that a Person shall
not be deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY
OWN," any security under this clause (B) as a result of an
agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding (1) arises solely
from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act, and (2) is not also then
reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
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(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of its 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 SUBSECTION (II)(B) above) or disposing of any such
securities; PROVIDED, HOWEVER, that nothing in this SECTION 1(E) shall
cause any Person engaged in business as an underwriter of securities who
acquires any securities of the Company through such Person's
participation in good faith in a firm commitment underwriting to be
deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN," such
securities until the expiration of 40 days after the date of such
acquisition.
(e) "BUSINESS DAY" means any day other than a Saturday, Sunday or a
day on which banking institutions in the Comonwealth of Virginia and State of
New York are authorized or obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date means 5:00 P.M., Richmond,
Virginia time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day, then it shall mean 5:00 P.M., Richmond, Virginia time, on the next
succeeding Business Day.
(g) "COMMON STOCK" means the Common Stock, par value $0.01 per
share, of the Company, except that, when used with respect to any Person other
than the Company, "COMMON STOCK" means the capital stock (or other equity
interests) of such Person with the greatest voting power, or the equity
securities or other equity interests having the power to control or direct the
management of such Person.
(h) [INTENTIONALLY OMITTED].
(i) "DISTRIBUTION DATE" means the earlier of (i) the Close of
Business on the tenth day (or such later day as may be designated by action of a
majority of the Board of Directors) after the Share Acquisition Date, and (ii)
the Close of Business on the tenth Business Day (or such later day as may be
designated by action of a majority of the Board of Directors) after the date of
the commencement by any Person (other than an Excluded Person) of, or of the
first public announcement of the intention by any Person (other than an Excluded
Person) to commence, a tender or exchange offer if, upon consummation thereof,
such Person, together with all Affiliates and Associates of such Person, would
be the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding.
(j) "EMPLOYEE BENEFIT PLAN" means any employee benefit plan of the
Company or any of its Subsidiaries or any Person organized, appointed or
established by the Company or any of its Subsidiaries for or pursuant to the
terms of any such plan.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(l) "EXCLUDED PERSON" means the Company, any of its Subsidiaries or
any Employee Benefit Plan.
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(m) "EXPIRATION DATE" means the earlier of (i) the Final Expiration
Date, and (ii) the time at which all Rights are redeemed as provided in SECTION
23 or exchanged as provided in SECTION 24.
(n) "FINAL EXPIRATION DATE" means the Close of Business on May 25,
2014.
(o) "FLIP-IN EVENT" means any event described in SECTION
11(A)(II)(A), (B) OR (C), but excluding any event described in SECTION
11(A)(II)(D).
(p) "FLIP-OVER EVENT" means any event described in SECTION 13(A)(X),
(Y), OR (Z).
(q) "PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or any other entity or organization.
(r) "PREFERRED STOCK" means the Series A Participating Cumulative
Preferred Stock, par value $1.00 per share, of the Company having the terms set
forth in the form of certificate of designation attached hereto as EXHIBIT A.
(s) "PURCHASE PRICE" means the price (subject to adjustment as
provided herein) at which a holder of a Right may purchase one one-hundredth of
a share of Preferred Stock (subject to adjustment as provided herein) upon
exercise of a Right, which price shall initially be $200.00.
(t) "QUALIFYING TENDER OFFER" means a tender or exchange offer for
all outstanding shares of Common Stock of the Company approved by a majority of
the Board of Directors then in office, after taking into account the potential
long-term value of the Company and all other factors that they consider
relevant.
(u) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(v) "SHARE ACQUISITION DATE" means the date of the first public
announcement (including the filing of a report on Schedule 13D under the
Exchange Act (or any comparable or successor report)) by the Company or an
Acquiring Person expressly stating that an Acquiring Person has become such
pursuant to the provisions of the Agreement; provided, that if such Person is
determined by the Board of Directors of the Company not to have become an
Acquiring Person pursuant to Section 1(a) of this Agreement, then no Share
Acquisition Date will be deemed to have occurred.
(w) "SUBSIDIARY" means, with respect to any Person, any other Person
of which securities or other ownership interests having ordinary voting power,
in the absence of contingencies, to elect a majority of the board of directors
or other Persons performing similar functions are at the time directly or
indirectly owned or controlled by such first Person.
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(x) "TRADING DAY" means a day on which the principal national
securities exchange or inter-dealer quotation system on which the shares of
Common Stock are listed, admitted to trading or quoted is open for the
transaction of business or, if the shares of Common Stock are not listed,
admitted to trading or quoted on any national securities exchange or
inter-dealer quotation system, a Business Day.
(y) "TRIGGERING EVENT" means any Flip-in Event or any Flip-over
Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with SECTION 3, shall prior to the Distribution Date also be the
holders of the 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. If
the Company appoints one or more co-Rights Agents, then the respective duties of
the Rights Agent and any co-Rights Agents shall be as the Company shall
determine.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES. (a) Prior to the Distribution
Date, (i) the Rights will be evidenced (subject to SECTION 3(B)) by the
certificates for the Common Stock and not by separate Rights Certificates (as
defined below), and the registered holders of the Common Stock shall be deemed
to be the registered holders of the associated Rights, and (ii) the Rights will
be transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as practicable after
the Company has notified the Rights Agent of the occurrence of a Distribution
Date, the Rights Agent will, subject to SECTION 7(D), send, by first-class,
insured, postage prepaid mail, to each record holder of the Common Stock as of
the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, one or more Rights Certificates, in
substantially the form of EXHIBIT B attached hereto (the "RIGHTS CERTIFICATES"),
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. If an adjustment in the number of Rights per share of
Common Stock has been made pursuant to SECTION 11(p), then the Company shall, at
the time of distribution of the Rights Certificates to record holders of Common
Stock as of the Close of Business on the Distribution Date, make the necessary
and appropriate rounding adjustments (in accordance with SECTION 14(A)) so that
Rights Certificates representing only whole numbers of Rights are distributed to
such holders and cash is paid to such holders in lieu of any fractional Rights.
From and after the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) As soon as practicable after the Effective Date, the Company
will send a summary of the Rights substantially in the form of EXHIBIT C
attached hereto, by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the Close of Business on the Effective Date at the
address of such holder shown on the records of the Company. Until the
Distribution Date, the Rights shall be evidenced by such certificates evidencing
the Common Stock, and the registered holders of such Common Stock shall also be
the registered holders of the associated Rights.
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(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding (on original issuance or out of treasury) after the
Effective Date but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates for the Common Stock that become outstanding or
shall be transferred or exchanged after the Effective Date but prior to the
earlier of the Distribution Date or the Expiration Date shall also be deemed to
be certificates for Rights and shall have impressed on, printed on, written on
or otherwise affixed to them the following legend:
This certificate also evidences certain Rights as set
forth in a Rights Agreement between ▇▇▇▇▇ River Coal Company.
and the Rights Agent identified therein, dated as of the date of
effectiveness of the Company's Plan of Reorganization under
Chapter 11 of the Bankruptcy Code that was confirmed on April
22, 2004 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file
at the principal office of the Company. The Company will mail to
the holder of this certificate a copy of the Rights Agreement
without charge promptly after receipt of a written request
therefor. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may be evidenced by separate
certificates and no longer be evidenced by this certificate, may
be redeemed or exchanged or may expire. As set forth in the
Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or an 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, may be null and void.
(d) With respect to the certificates containing the foregoing
legend, until the earlier of the Distribution Date or 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 of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby. If the Company purchases
or acquires any shares of Common Stock after the Effective Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Stock that are no longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATE. (a) The Rights Certificates (and
the forms of assignment, election to purchase and certificates to be printed on
the reverse thereof) shall be substantially in the form of EXHIBIT B attached
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, rule or regulation or
with any rule or regulation of any stock exchange or inter-dealer quotation
system of a registered national
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securities association on which the Rights may from time to time be listed,
traded or quoted or to conform to usage. Subject to SECTIONS 11 AND 22, the
Rights Certificates, whenever distributed, shall be dated as of the Distribution
Date, shall entitle the holders thereof to purchase such number of one
one-hundredths of a share of Preferred Stock as shall be set forth therein at
the price set forth therein, but the number of such one one-hundredths and the
Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate representing Rights beneficially owned by
any Person referred to in SECTION 7(D)(I), (II) OR (III) shall (to the extent
feasible) contain 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). This Rights
Certificate and the Rights represented hereby may be or may
become null and void in the circumstances specified in Section
7(d) of the Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. 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 whose
manual or facsimile signature is affixed to 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 may,
nevertheless, be countersigned by the Rights Agent and issued and delivered with
the same force and effect as though the individual who signed such Rights
Certificates had not ceased to be such officer of the Company. 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 Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise, transfer
or exchange, books for registration and transfer of the Rights Certificates.
Such books shall show with respect to each Rights Certificate the name and
address of the registered holder thereof, the number of Rights indicated on the
certificate, and the certificate number.
SECTION 6. TRANSFER AND EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED,
DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a) Subject to SECTION 4(B),
7(D), AND 14, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the
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Expiration Date, any Rights Certificate(s) may, upon the terms and subject to
the conditions set forth in this SECTION 6(A), be transferred or exchanged for
another Rights Certificate(s) evidencing a like number of Rights as the Rights
Certificate(s) surrendered. Any registered holder desiring to transfer or
exchange any Rights Certificate(s) shall make such request in writing delivered
to the Rights Agent, and shall surrender such Rights Certificate(s) (with, in
the case of a transfer, the form of assignment and certificate on the reverse
side thereof duly executed) to the Rights Agent at the principal office or
offices 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(s) until the
registered holder of the Rights has complied with the requirements of SECTION
7(e). Upon satisfaction of the foregoing requirements, the Rights Agent shall,
subject to SECTIONS 4(B), 7(D), 14 AND 24, countersign and deliver to the Person
entitled thereto a Rights Certificate(s) as so requested. The Company may
require payment of a sum sufficient to cover any transfer tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of any Rights Certificate(s).
(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 will issue and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS; RESTRICTIONS
ON TRANSFER. (a) Subject to SECTION 7(D), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, SECTIONS 7(E), 9(C), 11(A), 13,
23, AND 24), in whole or in part, at any time after the Distribution Date and
prior to the Expiration Date upon surrender of the Rights Certificate, with the
form of election to purchase and the certificate on the reverse side thereof
duly executed (with signatures guaranteed), to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price (in lawful money of the United States of
America by certified check or bank draft payable to the order of the Company)
with respect to the Rights then to be exercised and an amount equal to any
applicable transfer tax or other governmental charge.
(b) Upon satisfaction of the requirements of SECTION 7(A) and
subject to SECTION 20(K), the Rights Agent shall thereupon promptly (i)(A)
requisition from any transfer agent of the Preferred Stock (or make available,
if the Rights Agent is the transfer agent therefor) certificates for the total
number of one one-hundredths 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 shares
of Preferred Stock issuable upon exercise of the Rights with a depository agent,
requisition from the depository agent depository receipts representing such
number of one one-hundredths of a share of Preferred
8
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 depository agent), and the Company will direct the depository
agent 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, and (iii) after receipt of such certificates or
depository receipts and cash, if any, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate (with such
certificates or receipts registered in such name or names as may be designated
by such holder). If the Company is obligated to deliver Common Stock, other
securities or assets pursuant to this Agreement, the Company will make all
arrangements necessary so that such other securities and assets are available
for distribution by the Rights Agent, if and when appropriate.
(c) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the number of 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.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Flip-in Event, any Rights beneficially owed
by (i) an Acquiring Person or an 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 (or any such Associate or
Affiliate) to holders of equity interests in such Acquiring Person (or in any
such Associate or Affiliate) or to any Person with whom the Acquiring Person (or
any such Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, or (B) a transfer which the
Board of Directors have determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
SECTION 7(D), SHALL 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; PROVIDED,
HOWEVER, that the foregoing provisions of this SECTION 7(D) shall not apply to
Rights beneficially owned by an Acquiring Person (or an Associate or Affiliate)
of such Acquiring Person or a transferee thereof if such Person became an
Acquiring Person pursuant to a Qualifying Tender Offer. The Company shall use
all reasonable efforts to insure that the provisions of SECTION 4(B) and THIS
SECTION 7(D) and 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 and
Associates or any transferee of any of them hereunder.
(e) 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 of Rights upon the occurrence of any
purported transfer pursuant to SECTION 6 or exercise pursuant to this SECTION 7
unless such registered holder (i) shall have completed and signed the
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certificate contained in the form of assignment or election to purchase, as the
case may be, set forth on the reverse side of the Rights Certificate surrendered
for such transfer or exercise, as the case may be, (ii) shall not have indicated
an affirmative response to clause 1 or 2 thereof, and (iii) 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.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Rights Certificates surrendered for exercise, transfer or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in canceled form, or, if surrendered to the Rights
Agent, shall be canceled by it, and no Rights Certificates shall be issued in
lieu thereof except as expressly permitted by this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall 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 canceled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled Rights
Certificates, and in either such case shall deliver a certificate of
cancellation or destruction thereof, as appropriate, to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK. (a) The
Company covenants and agrees that it will use reasonable efforts to cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of Triggering Event, out of its
authorized and unissued shares of Common Stock) a number of shares of Preferred
Stock (and, following the occurrence of a Triggering Event, out of its
authorized but unissued shares of Common Stock) that will be, except as provided
in SECTION 11(A)(III), sufficient to permit the exercise in full of all
outstanding Rights as provided in this Agreement.
(b) So long as the Preferred Stock (and, following the occurrence of
a Triggering Event, Common Stock and other securities) issuable and deliverable
upon the exercise of the Rights may be listed on any national securities
exchange or inter-dealer quotation system of a registered national securities
association, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all securities reserved for such
issuance to be listed on any such exchange or quotation system upon official
notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the occurrence of a Flip-in Event,
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 issuable upon exercise of the Rights, (ii) to cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) to 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 will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or blue sky
10
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 90 days
after the date set forth in this SECTION 9(C)(I), the exercisability of the
Rights in order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall notify the Rights
Agent and 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 that the rights are currently
exercisable. Notwithstanding any such provision of this Agreement to the
contrary, the Rights shall not be exercisable for securities in any jurisdiction
if the requisite qualification in such jurisdiction shall not have been
obtained, such exercise therefor shall not be permitted under applicable law or
a registration statement in respect of such securities shall not have been
declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-hundredths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock or other securities) issuable upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment of
the Purchase Price), be duly authorized, validly issued, fully paid, and
nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and other
governmental charges which may be payable in respect of the issuance or delivery
of the Rights Certificates and of any certificates for Preferred Stock (or
Common Stock 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
other governmental charge which may be payable in respect of any transfer
involved in the issuance or delivery of any Rights Certificates or of any
certificates for Preferred Stock (or Common Stock or other securities, as the
case may be) to a Person other than the registered holder of the applicable
Rights Certificate, and prior to any such transfer, issuance or delivery any
such tax or other governmental charge shall have been paid by the holder of such
Rights Certificate or it shall have been established to the Company's
satisfaction that no such tax or other governmental charge is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person (other than the
Company) in whose name any certificate for Preferred Stock (or Common Stock 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
Preferred Stock (or Common Stock 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 or other governmental
charges) was made; PROVIDED, HOWEVER, that if the date of such surrender and
payment is a date upon which the transfer books of the Company relating to the
Preferred Stock (or Common Stock or other securities, as the case may be) are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the applicable transfer books of the Company are open.
11
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) If the Company shall at any time after the date of this Agreement
(A) declare or pay a dividend on the Preferred Stock payable in shares of
Preferred Stock (or other capital stock), (B) subdivide the outstanding
Preferred Stock into a greater number of shares, (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 involving the
Company in which the Company is the surviving or continuing corporation), except
as otherwise provided in SECTION 7(D) and this SECTION 11(A), then the Purchase
Price in effect immediately prior to 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 other capital stock issuable on
such date shall be proportionately adjusted so that each holder of a Right shall
thereafter be entitled to receive, upon exercise thereof at the Purchase Price
in effect immediately prior to such date, the aggregate number and kind of
shares of Preferred Stock or other 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 applicable transfer books of the Company were open, such holder would have
been entitled to receive upon such exercise and by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which requires
an adjustment under both this SECTION 11(A)(I) and SECTION 11(A)(II), 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).
(ii) Subject to SECTIONS 23 AND 24, if:
(A) any Person, alone or together with its
Affiliates and Associates, shall, at any time after the date of
this Agreement become an Acquiring Person (other than pursuant
to a Qualifying Tender Offer), or
(B) during such time as there is an Acquiring
Person, there shall be a reclassification of securities
(including any reverse stock split), recapitalization of the
Company, or any merger or consolidation of the Company with any
of its Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries
(whether or not with or into or otherwise involving an Acquired
Person), other than a Flip-over Event(s), which has the effect,
directly or indirectly, of increasing by more than 2% the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Company or any of its
Subsidiaries which is directly or indirectly beneficially owned
by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, or
(C) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date of
this Agreement, directly or
12
indirectly, (1) shall merge into the Company or otherwise
combine or consolidate with the Company and the Company shall be
the continuing or surviving corporation of such merger,
combination or consolidation and, in connection with such
merger, combination or consolidation, none of the outstanding
shares of the Common Stock of the Company shall be changed into
or exchanged for stock or other securities of the Company or of
any other Person or cash or any other property, (2) shall, in
one transaction or a series of transactions, other than in
connection with the exercise of a Right or Rights and other than
in connection with the exercise or conversion of securities
exercisable for or convertible into securities of the Company
which securities were outstanding prior to the time such
Acquiring Person became such, transfer any assets to the Company
or to any of its Subsidiaries in exchange (in whole or in part)
for shares of Common Stock, for other equity securities of the
Company, or for securities exercisable for or convertible into
shares of equity securities of the Company (Common Stock or
otherwise) or otherwise obtain from the Company, with or without
consideration, any additional shares of such equity securities
or securities exercisable for or convertible into shares of such
equity securities (other than pursuant to a pro rata offer or
distribution to all holders of Common Stock), (3) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of assets (in one or more transactions), to,
from, with or of, as the case may be, the Company or any of its
Subsidiaries (including, in the case of Subsidiaries, by way of
a merger, combination or consolidation of any Subsidiary), on
terms and conditions less favorable to the Company than the
Company would be able to obtain in arm's-length negotiations
with an unaffiliated third party, other than pursuant to a
Flip-over Event, (4) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of in
one transaction or a series of transactions, to, from or with
(as the case may be) the Company or any of its Subsidiaries
(other than incidental to the lines of business, if any, engaged
in as of such date between the Company and such Acquiring Person
or Associates or Affiliate) assets having an aggregate fair
market value of more than $4,000,000, other than pursuant to a
transaction set forth in SECTION 13(A), (5) shall receive any
compensation from the Company or any of its Subsidiaries other
than compensation for full-time employment as a regular
employee, or fees for serving as a director, at rates in
accordance with the Company's (or its Subsidiaries') past
practices, or (6) shall receive the benefit, directly or
indirectly (except proportionately as a shareholder and except
if resulting from a requirement of law or governmental
regulation), of any loans, assumptions of loans, advances,
guarantees, pledges or other financial assistance, or any tax
credits or other tax advantage, provided by the Company or any
of its Subsidiaries,
(D) provided that the events described in SECTIONS
11(A)(II)(A), (B) AND (C) shall not include a repurchase by the
Company of Common Stock that is approved by a majority of the
Board of Directors, promptly following five days after the date
of the occurrence of the event described in SECTION 11(A)(II)(A)
13
hereof and promptly following the occurrence of any event
described in SECTION 11(A)(B) or (C) hereof,
then proper provision shall promptly be made so that each holder of a
Right shall (except as otherwise provided herein, including, without
limitation, SECTION 7(D)) thereafter be entitled to receive, upon
exercise of the Right, without payment of the Purchase Price and in lieu
of Preferred Stock, such number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock of the Company (such
shares being referred to herein as the "ADJUSTMENT SHARES") as shall be
equal to the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable (such product
being thereafter referred to as the "PURCHASE PRICE" for each Right and
for all purposes of this Agreement), and dividing that product by (y)
50% of the current market price (determined pursuant to SECTION
11(D)(I)) per share of Common Stock on the date of such first
occurrence; PROVIDED, HOWEVER, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of SECTION 13, then only the provisions of SECTION 13 shall
apply and no adjustment shall be made pursuant to this SECTION
11(A)(II).
(iii) If the number of shares of Common Stock which are
authorized by the Company's articles of incorporation but not
outstanding or reserved for issuance other than upon exercise of the
Rights is insufficient to permit the exercise in full of the Rights in
accordance with SECTION 11(A)(II), the Company shall (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (computed using the "CURRENT MARKET PRICE" used to
determine the number of Adjustment Shares), over (2) the Purchase Price
(such excess being referred to herein as the "SPREAD"), and (B) with
respect to each Right, make adequate provision to substitute for the
Adjustment Shares, (1) (to the extent available) Common Stock and then,
(2) (to the extent available) other equity securities of the Company
which a majority of the Board of Directors has determined to be
essentially equivalent to shares of Common Stock in respect to dividend,
liquidation and voting rights (such securities being referred to herein
as "COMMON STOCK EQUIVALENTS"), and then, if necessary, (3) other equity
or debt securities of the Company, cash or other assets, a reduction in
the Purchase Price or any combination of the foregoing, having an
aggregate value (as determined by the Board of Directors based upon the
advice of a nationally recognized investment banking firm selected by
the Board of Directors) equal to the value of the Adjustment Shares;
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 latter of (x) the first occurrence of a Flip-in Event and
(y) the date on which the Company's right of redemption pursuant to
SECTION 23 expires, 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),
shares of Preferred Stock of the Company, and then, if necessary, cash,
which shares and cash have an aggregate value equal to the Spread. If
the Board of Directors of the Company shall determine in good faith that
it is likely that sufficient additional shares of Common Stock
14
could be authorized for issuance upon exercise in full of the Rights,
the 30 day period set forth above (such period, as it may be extended,
being referred to herein as the "SUBSTITUTION PERIOD") may be extended
to the extent necessary, but not more than 90 days following the first
occurrence of a Flip-In Event, in order that the Company may seek
shareholder approval for the authorization of such additional shares. If
the Company determines that some action is to be taken pursuant to the
first or second sentence of this SECTION 11(A)(III), then the Company
(x) shall provide, subject to SECTION 7(D), 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 or to
decide the appropriate form and value of any consideration to be
delivered as referred to in such first or second sentence. If any such
suspension occurs, 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 per share of Common
Stock (as determined pursuant to SECTION 11(D)) on the later of the date
of the first occurrence of a Flip-in Event and the first date that the
right to redeem the Rights pursuant to SECTION 23 shall expire; any
common stock equivalent shall be deemed to have the same value as the
Common Stock on such date; and the value of other securities or assets
shall be determined pursuant to SECTION 11(D)(III).
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or securities having the same rights,
privileges and preferences as the shares of Preferred Stock ("EQUIVALENT
PREFERRED STOCK")) or securities convertible into or exercisable for Preferred
Stock (or equivalent preferred stock) at a price per share of Preferred Stock
(or equivalent preferred stock) (in each case, taking account of any conversion
or exercise price) less than the current market price (as determined pursuant to
SECTION 11(D)) per share of Preferred Stock 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 date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate price (taking account of any conversion or exercise price) of the
total number of shares of Preferred Stock (and/or equivalent preferred stock) 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 outstanding on such
record date, plus the number of additional shares of Preferred Stock (and/or
equivalent preferred stock) so to be offered. In case such subscription price
may be paid by delivery of consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes. Shares of 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 if 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.
15
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger involving the Company in which
the Company is the surviving entity) of evidences of indebtedness, equity
securities other than Preferred Stock, cash or assets (other than a regular
periodic cash dividend out of the earnings or retained earnings of the Company)
or rights, options or warrants (excluding those referred to in SECTION 11(B)),
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 (as
determined pursuant to SECTION 11(D)) per share of Preferred Stock on such
record date, less the value (as determined pursuant to SECTION 11(D)(III)) of
such evidences of indebtedness, equity securities, assets, rights, options or
warrants so to be distributed with respect to one share of Preferred Stock, and
the denominator of which shall be such current market price per share of
Preferred Stock (as determined by SECTION 11(D)). Such adjustment shall be made
successively whenever such a record date is fixed, and if such distribution is
not so made, 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.
(d)(i) For the purpose of any computation hereunder other than
computations made pursuant to SECTION 11(A)(III) OR 14, 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 such Common Stock for the 30
consecutive Trading Days immediately prior to such date; for purposes of
computations made pursuant to SECTION 11(A)(III), 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 such Common Stock for the 10 consecutive Trading
Days immediately following such date; and for purposes of computations made
pursuant to SECTION 14, the "CURRENT MARKET PRICE" per share of Common Stock for
any Trading Day shall be deemed to be the closing price per share of Common
Stock for such Trading Day; PROVIDED, HOWEVER, that if the current market price
per share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities exercisable for or convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or reclassification
of such Common Stock, and prior to the expiration of the requisite 30 Trading
Day or 10 Trading Day period after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "CURRENT MARKET PRICE" shall
be properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, on the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market or
16
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
Common Stock selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, then the fair value
of such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. If the Common Stock is not publicly held
or not so listed or traded, the "CURRENT MARKET PRICE" per share means the fair
value per share as determined in good faith by the Board of Directors of the
Company, which determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"CURRENT MARKET PRICE" per share of Preferred Stock shall be determined
in the same manner set forth above for the Common Stock in SECTION
11(D)(I) (other than the last sentence thereof). If the current market
price per share of Preferred Stock cannot be determined in such manner,
or if the Preferred Stock is not publicly held or listed or traded in a
manner described in SECTION 11(D)(I), then the "CURRENT MARKET PRICE"
per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (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 Common Stock (as
determined pursuant to SECTION 11(D)(I) (other than the last sentence
thereof)). 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 be determined in the same manner as
set forth in the last sentence of SECTION 11(D)(I). For all purposes of
this Agreement, the "CURRENT MARKET PRICE" of one one-hundredth of a
share of Preferred Stock shall be equal to the "CURRENT MARKET PRICE" of
one share of Preferred Stock divided by 100.
(iii) For the purpose of any computation hereunder, the value
of any securities or assets other than Common Stock or Preferred Stock
shall be the fair value as determined in good faith by the Board of
Directors of the Company, which determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(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 2% in the Purchase 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.
(f) If at any time, as a result of an adjustment made pursuant to
SECTION 11(A)(II) or SECTION 13(a), the holder of any Right shall be entitled to
receive upon exercise of such Right any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares
17
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) AND (M), and
the provisions of SECTIONS 7, 9, 10, 13 AND 14 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 hereunder shall evidence the right to purchase, at the Purchase
Price then in effect, the then applicable number of one one-hundredths of a
share of Preferred Stock and other capital stock of the Company issuable 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), 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-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share for which a
Right was exercisable 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.
(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-hundredths 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-hundredths of a
share of Preferred Stock for which such 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 10 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 Right Certificates evidencing, subject to
SECTION 14, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
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
18
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-hundredths 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-hundredth of a
share and the number of shares 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 par value, if any, of the number of one
one-hundredths 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 fully paid and nonassessable such number of one one-hundredths 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-hundredths of a share of Preferred Stock or other capital
stock of the Company, if any, issuable upon such exercise over and above the
number of one one-hundredths of a share of Preferred Stock or other capital
stock 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.
(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 it, 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 Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of Preferred Stock or securities which by
their terms are convertible into or exercisable for Preferred Stock, (iv) stock
dividends, or (v) issuance of rights, options or warrants referred to in this
SECTION 11, hereafter made by the Company to the holders of its Preferred Stock,
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it will not at any time
after the Distribution Date, (i) consolidate with any other Person, (ii) merge
with or into any other Person, (iii) effect a statutory share exchange with any
Person, or (iv) sell, lease or otherwise transfer (and/or permit any of its
Subsidiaries to sell, lease or otherwise transfer), in one transaction or a
series of related transactions, assets aggregating more than 50% of the assets
(measured by either book value or fair market value) or generating more than 50%
of operating income or cash flow of the Company and its Subsidiaries, taken as a
whole, to any other Person or Persons if (x) at the
19
time of or immediately after such consolidation, merger, statutory share
exchange, sale, lease or transfer there are any rights, warrants or other
instruments or securities outstanding or any agreements or arrangements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, or (y) prior to, simultaneously with or
immediately after such consolidation, merger, statutory share exchange, sale,
lease or transfer, the shareholders of a Person who constitutes, or would
constitute, the "PRINCIPAL PARTY" for the purposes of SECTION 13 shall have
received a distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company covenants and agrees that after the Distribution
Date, it will not, except as expressly permitted hereunder, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, if
at any time after the Effective Date and prior to the Distribution Date the
Company shall (i) pay a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock
into a larger number of shares, or (iii) combine the outstanding 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 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.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in SECTIONS 11 AND 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Preferred Stock and
the Common Stock a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of Common Stock) in
the manner set forth in SECTION 26. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment contained therein.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) Except for any transaction with a Person who has consummated
a Qualifying Tender Offer which transaction is approved by a majority of the
Board of Directors, if following the Share Acquisition Date, directly or
indirectly,
(w) the Company shall consolidate with, merge with
or into, or otherwise combine with, any other Person, and the
Company shall not be the
20
continuing or surviving corporation of such consolidation,
merger or combination, or
(x) any Person shall consolidate with, merge with or
into, or otherwise combine with, the Company, and the Company
shall be the continuing or surviving corporation of such
consolidation, merger or combination and, in connection with
such consolidation, merger or combination, all or part of the
outstanding shares of Common Stock shall be changed into or
exchanged for other stock or securities of the Company or any
other Person or cash or any other property, or
(y) the Company shall be a party to any statutory
share exchange with any other Person after which the Company is
a subsidiary of any other Person, or
(z) the Company and/or one or more of its
Subsidiaries shall sell, lease or otherwise transfer, in one
transaction or a series of related transactions, assets
aggregating more than 50% of the assets (measured by either book
value or fair market value) or generating more than 50% of the
operating income or cash flow of the Company and its
Subsidiaries, taken as a whole, to any other Person or Persons,
then, and in each such case, proper provision shall promptly be made so that (i)
each holder of a Right, except as provided in SECTION 7(D), shall thereafter be
entitled to receive, upon exercise thereof at the then current Purchase Price,
such number of duly authorized, validly issued, fully paid and nonassessable
shares of freely tradable Common Stock of the Principal Party (as defined
below), not subject to any rights of call or first refusal, liens, encumbrances
or other claims, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Flip-over Event (or, if a Flip-in Event has previously occurred,
multiplying the number of such one one-hundredths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first occurrence of a
Flip-in Event by the Purchase Price in effect immediately prior to such first
occurrence) (such product being thereafter referred to as the "PURCHASE PRICE"
for each Right and for all purposes of this Agreement), and dividing that
product by (B) 50% of the current market price (determined pursuant to SECTION
11(D)(I)) per share of the Common Stock or other securities of such Principal
Party) on the date of consummation of such consolidation, merger, combination,
statutory share exchange, sale, lease or transfer;
(ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, combination,
statutory share exchange, sale, lease or transfer, 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 shall apply only to such Principal Party
following the first occurrence of a Flip-over Event;
21
(iv) such Principal Party shall take such steps (including,
without limitation, the authorization and reservation of a sufficient
number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this SECTION 13(A)) 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 the shares of its Common
Stock thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of SECTION 11(A)(II) shall be of no
effect following the first occurrence of a Flip-over Event.
(b) "PRINCIPAL PARTY" means:
(i) in the case of any transaction described in SECTIONS
13(A) (W), (X) OR (Y), (A) the Person that is the issuer of any
securities into which shares of Common Stock of the Company are
converted in such merger, consolidation, or combination or for which
shares of Common Stock of the Company are exchanged in such statutory
share exchange, or, if there is more than one such issuer, the issuer of
the Common Stock of which has the greatest aggregate market value, or
(B) if no securities are issued, (x) the person that survives such
consolidation or is the other party to the merger, combination or
statutory share exchange, or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate market
value, or (y) if the Person that is the other party to the merger does
not survive the merger, the Person that does survive the merger
(including the Company if it survives); and
(ii) in the case of any transactions described in SECTIONS
13(A)(Z), the Person that is the party receiving the greatest portion of
the assets, operating income or cash flow 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,
operating income or cash flow so transferred, or, if the Person
receiving the greatest portion of the assets, operating income or cash
flow cannot be determined, the person the Common Stock of which has the
greatest aggregate market value;
PROVIDED, HOWEVER, that in any such case, (A) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, 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; and
(B) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stock 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.
(c) The Company shall not consummate any such consolidation, merger,
combination, statutory share exchange, sale, lease or transfer unless the
Principal Party shall have
22
a sufficient number of authorized shares of its Common Stock which are not
outstanding or otherwise 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 SECTIONS
13(A) AND (B) and further providing that, as soon as practicable after the date
of any consolidation, merger, combination, statutory share exchange, sale, lease
or transfer mentioned in SECTION 13(A), the Principal Party will (i) prepare and
file a registration statement under the Securities Act with respect to the
Rights and the securities issuable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such registration statement (A) to
become effective as soon as practicable after such filing, and (B) to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date; and (ii) deliver to holders of the
Rights historical financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for registration
on Form 10 under the Exchange Act.
(d) The provisions of this SECTION 13 shall similarly apply to
successive mergers, consolidations, combinations, statutory share exchanges,
sales, leases or other transfers. If any Flip-over Event shall occur at any time
after the occurrence of a Flip-in Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
SECTION 13(A).
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), or to distribute Rights
Certificates which evidence fractional Rights. In lieu of any such fractional
Rights, the Company shall pay 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
price of a whole Right. For purposes of this SECTION 14(A), the current market
price of a whole Right shall be the closing price of a Right for the Trading Day
immediately prior to the date on which such fractional Rights would otherwise
have been issuable. The closing price of a Right for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price, or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market 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 of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the current market price of the Rights on such date shall
be as determined in good faith by the Board of Directors of the Company.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of
23
Preferred Stock (other than fractions which are multiples of one one-hundredth
of a share of Preferred Stock). In lieu of any such fractional shares of
Preferred Stock, the Company shall 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 price of one
one-hundredth of a share of Preferred Stock. For purposes this SECTION 14(B),
the current market price of one one-hundredth of a share of Preferred Stock
shall be one one-hundredth of the closing price of a share of Preferred Stock
(as determined pursuant to SECTION 11(D)) for the Trading Day immediately prior
to the date of such exercise.
(c) Following the occurrence of any Triggering Event or upon any
exchange pursuant to SECTION 24, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company shall pay to the registered
holders of Rights Certificates at the time such Rights are exercised or
exchanged as provided herein an amount in cash equal to the same fraction of the
current market price of a share of Common Stock. For purposes of this SECTION
14(C), the current market price of a share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to SECTION 11(D)(I))
for the Trading Day immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right expressly
waives his 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 are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock), and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of any 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 any 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 will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of, any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
24
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to SECTIONS 6(A) AND 7(E), the Company and the Rights
Agent may deem and treat the Person in whose name a Rights Certificate (or,
prior to the Distribution Date, a certificate representing Common Stock) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificate
or the certificate representing shares of Common Stock 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(D),
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 or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; PROVIDED, HOWEVER, that the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
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 shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in SECTION 25), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the execution or
administration 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, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this
25
Agreement or the exercise or performance of its duties hereunder, including the
costs and expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with the administration of this Agreement or the exercise or performance 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,
instruction, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; PROVIDED, HOWEVER, that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of SECTION 21.
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 a 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.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver 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 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and
26
protection to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(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, suffering or omitting to take any action hereunder, such fact
or matter (unless other evidence in respect thereof is specifically prescribed
herein) may be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any Vice President, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent. Any such certificate shall be full authorization to the Rights Agent for
any action taken, suffered or omitted 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
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any 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 void pursuant to SECTION 7(D)) or any adjustment
in the terms of the Rights (including the manner, method or amount thereof)
provided for in SECTIONS 3, 11, 13, 23 OR 24, 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 actual 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 Preferred Stock to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any shares of Common Stock or Preferred
Stock will, when issued, be duly authorized, validly issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President
27
any Vice President, the Secretary or any Assistant Secretary of the Company, and
to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken, suffered or omitted to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or to any holders of Rights resulting from
any such act, default, neglect or misconduct; PROVIDED, HOWEVER, that reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(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 completed or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' written notice mailed to the Company and to each transfer agent of
the Common Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Rights Certificates
by first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' written notice, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock by registered or certified mail, and subsequent
to the Distribution Date, 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 30 days of 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
28
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. 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,
subsequent to 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, 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.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities issuable or property purchasable upon exercise of the Rights made in
accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION AND TERMINATION. (a) The Company may, at its
option, but only upon the vote of a majority of the Board of Directors then in
office, at any time prior to the earlier of (i) the Close of Business on the day
that is ten (10) calendar days after the Share Acquisition Date, or (ii) the
Final Expiration Date, redeem all but not less than all of 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
referred to herein as the "REDEMPTION PRICE"), and the Company may, at its
option, pay the Redemption Price in shares of Common Stock (based on the
"CURRENT MARKET VALUE," as defined in SECTION 11(D), of the shares of Common
Stock at the time of redemption), cash or any other form of consideration deemed
appropriate by the Board of Directors; PROVIDED, HOWEVER, that any redemption of
Rights shall also be subject to any additional approval procedures required by
the articles of incorporation or bylaws of the Company. Notwithstanding anything
in this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Flip-in Event until such time as the Company's right of
redemption hereunder has expired.
(b) If, following the occurrence of a Share Acquisition Date (i) a
Person who is an Acquiring Person shall have transferred or otherwise disposed
of a number of shares of Common Stock in one transaction or series of
transactions, not directly or indirectly involving the Company or any of its
Subsidiaries, which did not result in the occurrence of a Triggering Event such
that such Person is thereafter the Beneficial Owner of 15% or less of the
outstanding Common Stock, and (ii) there are no other Persons immediately
following the occurrence of the event described in clause (i) who are Acquiring
Persons, then the right of redemption shall be reinstated and thereafter be
subject to the provisions of this SECTION 23.
29
(c) Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights and without any further action and without
any notice, the right to exercise the Rights will terminate and thereafter the
only right of the holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly thereafter give notice of such
redemption to the Rights Agent and the holders of the Rights in the manner set
forth in SECTION 26; PROVIDED, HOWEVER, that the failure to give, or any defect
in, such notice shall not affect the validity of such redemption. Any notice
which is mailed in the manner provided herein shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
SECTION 24. EXCHANGE. (a) At any time after any Person becomes an
Acquiring Person, the Board of Directors may, at its option, exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to SECTION 7(D)) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, 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").
(b) Immediately upon the action of the Board of Directors electing
to exchange any Rights pursuant to SECTION 24(A) and without any further action
and without any notice, the right to exercise such Rights will terminate and
thereafter the only right 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 thereafter
give notice of such exchange to the Rights Agent and the holders of the Rights
to be exchanged in the manner set forth in SECTION 26; PROVIDED, HOWEVER, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. Any notice which is mailed in the manner provided herein shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of Common
Stock for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
pursuant to SECTION 7(D)) held by each holder of Rights.
(c) If there shall not be sufficient Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated by this SECTION 24, the Company shall take all such action as may
be necessary to authorize additional Common Stock for issuance upon exchange of
the Rights. In the event the Company shall, after a good faith effort, be unable
to take all such action as may be necessary to authorize such additional Common
Stock, the Company 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
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Common Stock shall have essentially the same dividend, liquidation and voting
rights as one share of Common Stock.
(d) The Company shall not be required to issue fractional shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of Rights Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole share of
Common Stock. For purposes of this SECTION 24(D), 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 SECTION 11(D)) for the Trading Day immediately
prior to the date of the exchange.
SECTION 25. NOTICE OF PROPOSED ACTIONS. (a) If the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in 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 of the Company),
(ii) to offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision or combination of outstanding
shares of Preferred Stock), (iv) to effect any consolidation or merger with or
into any other Person, or to effect a statutory share exchange with any Person,
or to effect and/or to permit one or more of its Subsidiaries to effect any
sale, lease or other transfer, in one transaction or a series of related
transactions, of assets aggregating more than 50% of the assets (measured by
either book value or fair market value) or generating more than 50% of the
operating income or cash flow of the Company and its Subsidiaries, taken as a
whole, to any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, to the extent feasible and in accordance
with SECTION 26, a notice of such proposed action, which shall specify the
record date for the purposes of any such dividend, distribution or offering of
rights or warrants, or the date on which any such reclassification,
consolidation, merger, statutory share exchange, sale, lease, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders 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 20 days prior to the record date for
determining holders of the Preferred Stock entitled to participate in such
dividend, distribution or offering, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Preferred Stock, whichever shall
be the earlier. The failure to give notice required by this Section or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the contrary,
prior to the Distribution Date a public filling by the Company with the
Securities and Exchange Commission shall constitute sufficient notice to the
holders of securities of the Company, including the Rights, for purposes of this
Agreement and no other notice need be given to such holders.
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(c) If a Triggering Event shall occur, then, in any such case, (i)
the Company shall as soon as practicable thereafter give to each holder of a
Right, in accordance with SECTION 26, 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) OR 13, as the case may be, and (ii) all
references in SECTION 25(A) to Preferred Stock shall be deemed thereafter to
refer to Common Stock or other capital stock, as the case may be.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right to or on the
Company shall be sufficiently given or made if sent by first-class, postage
prepaid mail to the address of the Company indicated on the signature page
hereof or such other address as the Company shall specify in writing to the
Rights Agent. Subject to the provisions of SECTION 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right to or on the Rights Agent shall be sufficiently given or made if
sent by first-class, postage prepaid mail to the address of the Rights Agent
indicated on the signature page hereof or such other address as the Rights Agent
shall specify in writing to the Company. 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 (or, prior to the Distribution Date, to the holder of
any certificate representing shares of Common Stock) shall be sufficiently given
or made if sent by first-class, postage prepaid mail to the address of such
holder shown on the registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this SECTION 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock, so long as the duties, liabilities and
indemnification of the Rights Agent are not affected. From and after the
Distribution Date, and subject to the penultimate sentence of this SECTION 27,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Right Certificates
in order (a) to cure any ambiguity, (b) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (c) to shorten or lengthen any time period hereunder, (d) to
increase the number of shares which must be Beneficially Owned in order for a
Person to be deemed to be an Acquiring Person hereunder, or (e) to change or
supplement the provisions hereof in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); PROVIDED, HOWEVER, that this Agreement may not be
supplemented or amended pursuant to SECTION 27(C) to lengthen (i) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (ii) any other time period, unless lengthening such other
time period is for the purpose of protecting, enhancing, or clarifying the
rights of, or benefits to the holders of, the Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the
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contrary, no supplement or amendment shall be made which changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number of one
one-hundredths of a share of Preferred Stock for which a Right is exercisable.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
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.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of 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) under the Exchange Act as in effect on
the date of this Agreement. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board 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 (a) interpret the provisions of this
Agreement, and (b) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or
exchange or not to redeem or exchange the Rights or to amend this Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board of Directors of the
Company to any liability to the holders of the Rights.
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 certificates representing the shares of 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 certificates representing the 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 of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in SECTION 23 hereof
shall
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be reinstated and shall not expire until the close of business on the tenth day
following the date of such determination by the Board of Directors.
SECTION 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the Commonwealth of Virginia and for all purposes shall be governed by
and construed in accordance with the laws of such Commonwealth (other than its
conflicts of laws rules) applicable to contracts to be made and performed
entirely within such Commonwealth.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute one and
the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. The captions herein are included for
convenience of reference only, do not constitute a part of this Agreement and
shall be ignored in the construction and interpretation hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
▇▇▇▇▇ RIVER COAL COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: President and Chief Executive Officer
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▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SUNTRUST BANK
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Vice President
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