EXHIBIT 99.1
ELCOTEL, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
STOCKHOLDER RIGHTS AGREEMENT
Dated as of May 11, 1999
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STOCKHOLDER RIGHTS AGREEMENT, dated as of May 11, 1999 (the "Agreement"),
between Elcotel, Inc., a Delaware corporation (the "Company"), and American
Stock Transfer & Trust Company, a New York corporation (the "Rights Agent").
WHEREAS, on May 5, 1998 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend of one
Right for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the Close of Business (as defined herein) on the Record Date (as
defined herein), and has authorized the issuance of one Right with respect to
each share of Common Stock issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date (as
hereinafter defined), each Right initially representing the right to purchase
one-half (1/2) of one share of Common Stock, upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 10% or more of the shares of Common Stock
then outstanding; provided, however, that the term "Acquiring Person" shall not
include (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan or
employee stock plan of the Company or of any Subsidiary, (iv) any Person or
entity organized, appointed, established or holding Common Stock by, for or
pursuant to the terms of any employee benefit plan or employee stock plan, or
(v) a Person who, together with its Affiliates and Associates, becomes the
Beneficial Owner of 10% or more of the shares of Common Stock then outstanding
solely as a result of a reduction in the number of shares of Common Stock
outstanding due to the repurchase of shares of Common Stock by the Company,
unless and until such time as such Person shall purchase or otherwise become (as
a result of actions taken by such Person or its Affiliates or Associates) the
Beneficial Owner of additional shares of Common Stock constituting 1% or more of
the then outstanding shares of Common Stock. Notwithstanding the foregoing, (i)
no Person (an "Acquiror"), subject to the provisos set forth below, shall become
an "Acquiring Person" as a result of the acquisition in a private transaction
after the date hereof by the Acquiror from Wexford or FMC or from any Person who
is an Affiliate or Associate of either of Wexford or FMC at the time of such
acquisition (collectively, a "Wexford Person" or a "FMC Person, " respectively)
of (1) any shares of Common Stock currently held by any Wexford Person or FMC
Person or (2) any shares of Common Stock issued pursuant to options, warrants or
other rights to purchase shares of Common Stock currently held by any Wexford
Person or FMC Person; provided, however, that, immediately after such
acquisition, the Acquiror together with all of such Acquiror's Affiliates and
Associates are not the Beneficial Owners of more than 21.1% of the shares of
Common Stock then outstanding and provided further that, following such
acquisition, the Acquiror together with all of such Acquiror's Affiliates and
Associates do not become the Beneficial Owners of an additional 1% or more of
the shares of Common Stock then outstanding; (ii) no Person (who is not
otherwise an Acquiring Person) shall become an "Acquiring Person" as a result of
an acquisition in a private transaction of any shares of Common Stock which such
Person can show were held by any Wexford Person or any FMC Person as of the date
of this Agreement or any share of Common Stock issued pursuant to options,
warrants or other rights to purchase shares of Common Stock which such Person
can show were held by any Wexford Person or FMC Person as of the date of this
Agreement, if such Person acquired all of such shares from an Acquiror who
became an Acquiror pursuant to subsection (i) of this sentence or from a Person
who acquired such shares in accordance with this subsection (ii), but in each
case subject to the provisos set
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forth in subsection (i) of this sentence; and (iii) subject to the proviso set
forth below, none of the Wexford Persons or the FMC Persons shall become an
"Acquiring Person" in the event that any Wexford Person together with all other
Wexford Persons or any FMC Person together with all other FMC Persons become the
Beneficial Owner, after the date hereof, of additional shares of Common Stock;
provided, however, that the number of shares of Common Stock of which (A) all
Wexford Persons are the Beneficial Owners does not exceed 21.1% of the shares of
Common Stock then outstanding, or (B) all FMC Persons are the Beneficial Owners
does not exceed 12.9% of the shares of Common Stock then outstanding.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act (as hereinafter defined).
(c) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities: (i) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, owns or has the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of conversion rights, exchange
rights, other rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (A) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event (as defined hereinafter),
or (C) securities issuable upon exercise of Rights from and after the occurrence
of a Triggering Event which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 hereof (the "Original Rights") or pursuant to Section
11(i) hereof in connection with an adjustment made with respect to any Original
Rights; (ii) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing; provided, however, that
a Person shall not be deemed the "Beneficial Owner" of, or to beneficially own,
any security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other Person
(or any Affiliate or Associate thereof) with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (c)) or disposing of any voting
securities of the Company; provided, however, that nothing in this paragraph (c)
shall cause a Person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking or trust institutions in the State of New York or Florida
are authorized or obligated by law or executive order to close.
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(f) "Close of Business" on any given date shall mean 5:00 P.M., New York
City time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business
Day.
(g) "Common Stock" shall mean the shares of common stock, par value $0.01
per share, of the Company. The term "common stock," when used with reference to
any Person other than the Company, shall mean the class of capital stock with
the greatest aggregate voting power, or the class of equity securities or other
equity interests having power to control or direct the management, of such
Person.
(h) "Company" shall mean Elcotel, Inc., a Delaware corporation.
(i) "Distribution Date" shall mean the earlier of (i) the Close of
Business on the tenth day after the Stock Acquisition Date (or, if the tenth day
after the Stock Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date), or (ii) the Close of Business on the tenth
Business Day (or, if such tenth Business Day occurs before the Record Date, the
Close of Business on the Record Date), after the date that a tender or exchange
offer by any Person (other than the Company, any Subsidiary or any employee
benefit plan of the Company or of any Subsidiary or any Person holding shares of
Common Stock for or pursuant to the terms of any such plan) is first published
or sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would be the beneficial owner of 10% or more of the outstanding shares of Common
Stock.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as may be amended
from time to time.
(k) "Exchange Date" shall have the meaning set forth in Section 7(a)
hereof.
(l) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(m) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(n) "FMC" shall mean Fundamental Management Corporation and each of its
subsidiaries and Affiliates, including without limitation, C. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
any limited partnership of which it is the general partner.
(o) "Outside Directors" shall mean a committee consisting of those members
of the Board who are not officers of the Company, but notwithstanding the
foregoing, shall include any officer who is an Affiliate of Wexford or FMC.
(p) "Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(q) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(r) "Purchase Price" shall have the meaning set forth in Section 4(a) and
11(a)(ii) hereof.
(s) "Record Date" shall mean the close of business on May 11, 1999.
(t) "Redemption Period" shall have the meaning set forth in Section 23(a)
hereof.
(u) "Rights Agent" shall mean American Stock Transfer & Trust Company.
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(v) "Rights Certificate" shall have the meaning set forth in Section 3(d)
hereof.
(w) "Rights Dividend Declaration Date" shall mean the close of business on
May 5, 1999.
(x) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(y) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(z) "Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, as may be amended from
time to time.
(aa) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(bb) "Subsidiary" shall mean any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interests
is owned, directly or indirectly, by the Company, or is otherwise controlled by
the Company. The term "subsidiary," with respect to any Person other than the
Company, shall mean any corporation or other entity of which a majority of the
voting power of the voting equity securities or equity interests is owned,
directly or indirectly, by such Person, or is otherwise controlled by such
Person.
(cc) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(dd) "Wexford" shall mean Wexford Partners Fund, L.P., Wexford Management
LLC and each of its subsidiaries and Affiliates, including without limitation,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
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 hereof,
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. The Rights Agent shall
have no duty to supervise, and in no event shall be liable for, the acts or
omissions of any such Co-Rights Agent. In the event that the Company appoints
one or more Co-Rights Agents, the respective duties of the Rights Agent and any
Co-Rights Agents shall be as the Company shall determine, and any actions which
may be taken by the Rights Agent pursuant to the terms of this Agreement may be
taken by any such Co-Rights Agent.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) As promptly as practicable following the Record Date, the Company will
send or deliver a summary of this Agreement (the "Summary of Rights") to each
record holder of Common Stock as of the Close of Business on the Record Date at
the address of such holder shown on the records of the Company. With respect to
certificates for shares of Common Stock outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such certificates for the
Common Stock and the registered holders of the Common Stock shall also be the
registered holders of the associated Rights. Until the Distribution Date (or the
earlier Expiration Date or Final Expiration Date), the transfer of any
certificate representing shares of Common Stock in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated with the
shares of Common Stock represented thereby.
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(b) Rights shall be issued in respect of all shares of Common Stock issued
(whether originally issued or from the Company's treasury) after the Record Date
but prior to the earlier of the Distribution Date or the Expiration Date or the
Final Expiration Date. Rights shall also be issued to the extent provided in
Section 22 in respect of all shares of Common Stock which are issued (whether
originally issued or from the Company's treasury) after the Distribution Date
and prior to the Expiration Date. Certificates representing such shares of
Common Stock shall also be deemed to be certificates for Rights, and shall bear
the following legend (in addition to any other legends that may be required):
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Elcotel,
Inc. (the "Company") and American Stock Transfer & Trust Company
(the "Rights Agent"), dated as of May 11, 1999 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of
the Rights Agreement as in effect on the date of mailing without
charge after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to,
or held by, any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void. The
Rights shall not be exercisable, and shall be null and void so long
as held, by a holder in any jurisdiction where the requisite
qualification of the issuance to such holder, or the exercise by
such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any such certificate shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby.
(c) Until the Distribution Date (i) the Rights will be evidenced (subject
to the provisions of paragraph (a) of this Section 3) by the certificates for
Common Stock registered in the names of the holders thereof (which certificates
for Common Stock shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates, and (ii) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock (including
a transfer to the Company).
(d) As soon as practicable after the Distribution Date, the Rights Agent
upon notification thereof and delivery to it of a list of holders of Common
Stock will send by first-class, insured, postage prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a rights
certificate, in substantially the form of Exhibit A hereto (the "Rights
Certificate"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section 11
hereof, at the time of distribution of the Rights Certificates, the Company
shall make necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
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SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall be substantially the same
as Exhibit A 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 which do not affect the duties or responsibilities of the Rights
Agent, and as are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever issued, shall be dated as of the Record Date, and on
their face shall entitle the holders thereof to purchase such number of shares
of Common Stock as shall be set forth therein at the price set forth therein
(the "Purchase Price"), but the amount and type of securities purchasable upon
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(d) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person; (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such; or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of the Outside Directors has
determined is part of an agreement, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(e) hereof and provided that the
Company shall have notified the Rights Agent that this Section 4(b) applies, any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement, dated as of May 11, 1999,
between Elcotel, Inc. and American Stock Transfer & Trust Company,
as Rights Agent thereunder). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board or President either manually or by facsimile
signature, and have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a
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proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date and receipt by the Rights Agent of the
list of holders of Common Stock, the Rights Agent will keep or cause to be kept,
at its principal office or at offices designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Expiration Date or Final
Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of shares of Common
Stock (or following a Triggering Event, Common Stock, other securities, cash, or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have properly completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security 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 execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed, or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date, upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly and properly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the
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Purchase Price for each share of Common Stock (or other securities, cash or
other assets, as the case may be) as to which the Rights are exercised, at or
prior to the earlier of (i) the close of business on May 11, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof, (iii) the time at which such Rights are exchanged (the
"Exchange Date") as provided in Section 24 hereof, or (iv) the time at which the
Rights expire pursuant to Section 13(d) hereof (the earliest of (i), (ii), (iii)
and (iv) being herein referred to as the "Expiration Date").
(b) Each Right shall entitle the registered holder thereof to purchase
one-half (1/2) of one share of Common Stock, and the Purchase Price for each
one-half (1/2) of one share of Common Stock pursuant to the exercise of a Right
shall initially be $10.00, and shall be subject to adjustment from time to time
as provided in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly and properly
executed, accompanied by payment of the Purchase Price with respect to each
Right so exercised and an amount equal to any applicable transfer tax or
governmental charge in cash, or by certified check, cashier's check or bank
draft payable to the order of the Company, the Rights Agent shall, subject to
Section 18(j) hereof, thereupon promptly (i) (A) requisition from the transfer
agent for the Common Stock (or make available, if the Rights Agent is also the
transfer agent) certificates for the total number of shares of Common Stock to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of shares of Common Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of shares of Common Stock as are to
be purchased (in which case, certificates for the shares of Common Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary to comply with such
request, (ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with Section 14,
(iii) promptly after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder and (iv) after receipt thereof, promptly deliver such cash, if any,
to or upon the order of the registered holder of such Rights Certificate. In the
event that the Company is obligated to issue other securities (including Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such securities, cash and/or other property are available for distribution by
the Rights Agent, if and when necessary to comply with this Agreement.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 6 and Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or 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 to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which a
23
majority of the Outside Directors has determined is part of an agreement,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall notify the Rights Agent when this Section 7(e)
applies and shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but neither the
Company nor the Rights Agent shall have any liability to any holder of Rights
Certificates or other Person as a result of the Company's failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
properly completed and signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Rights Certificate surrendered
for such exercise, and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in 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 any provisions of this Rights Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available, and not reserved for other purposes, out of its authorized and
unissued shares of Common Stock (or its authorized and issued shares held in its
treasury), the number of shares of Common Stock that will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) In the event the shares of Common Stock issuable upon the exercise of
Rights become listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Securities Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the Expiration Date. The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the
24
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. In addition, if the
Company shall determine that a registration statement is required following the
Distribution Date, the Company may temporarily suspend the exercisability of the
Rights until such time as a registration statement has been declared effective.
Upon any suspension of exercisability of Rights referred to in this Section
9(c), the Company shall issue a public announcement (with prompt notice thereof
to the Rights Agent) stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement (with prompt notice
thereof to the Rights Agent) at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable and shall be null and void so long as held by a
holder in any jurisdiction where the requisite qualification to the issuance to
such holder, or the exercise by such holder, of the Rights in such jurisdiction
shall not have been obtained or be obtainable, or the exercise thereof shall not
be permitted under applicable law or a registration statement shall not have
been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Common Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and non-assessable.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any certificates for a number of shares of 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 charge which may be payable in respect of
any transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of certificates for a number of shares of Common Stock (or
other securities, as the case may be) in a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of shares of
Common Stock (or other securities, as the case may be) in a name other than that
of the registered holder upon the exercise of any Rights until any such tax or
charge shall have been paid (any such tax or charge being payable by the holder
of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax or charge is due.
SECTION 10. COMMON STOCK RECORD DATE.
Each Person in whose name any certificate for shares of 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
fractional shares of 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 and charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Common Stock (or other securities as the case may be) transfer books
of the Company are closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the Common Stock (or other
securities as the case may be) transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
25
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF
RIGHTS.
The Purchase Price, the number of shares of Common Stock (or other
securities, as provided for in this Agreement) covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)(i) In the event the Company shall, at any time after the date of this
Agreement, (A) declare a dividend on the Common Stock payable in shares of
Common Stock, (B) subdivide the outstanding Common Stock, (C) combine the
outstanding shares of Common Stock into a smaller number of shares or (D) issue
any shares of its capital stock in a recapitalization or reclassification of the
Common Stock (including any such recapitalization or reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination, recapitalization or reclassification, and the number and kind of
shares of Common Stock or the number and kind of shares of capital stock
issuable on such date, as the case may be, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive, upon payment of the aggregate adjusted Purchase Price then in effect
necessary to exercise a Right in full, the aggregate number and kind of shares
of Common Stock or the number and kind of shares of capital stock, as the case
may be, which, if such Right had been exercised immediately prior to such date
and at a time when the Common Stock (or other capital stock, as the case may be)
transfer books of the Company were open, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination, recapitalization or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon the exercise of one Right. If an event occurs which would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) Subject to Sections 23 and 24 of this Agreement, in the event that
any Person (other than the Company, any Subsidiary, any employee benefit plan or
employee stock plan of the Company or of any Subsidiary, or any Person
organized, appointed or established by the Company for or pursuant to the terms
of any such plan), alone or together with its Affiliates and Associates, shall,
at any time after the Rights Dividend Declaration Date, become an Acquiring
Person, unless the event causing such Person to become an Acquiring Person is a
transaction set forth in Section 13(a) hereof, or is an acquisition of shares of
Common Stock pursuant to a cash tender offer made pursuant to Section 14(d) of
the Exchange Act for all outstanding shares of Common Stock (other than shares
of Common Stock beneficially owned by the Person making the offer or by its
Affiliates or Associates) at a price and on terms determined by at least a
majority of the Outside Directors, after receiving advice from one or more
investment banking firms, to be (a) at a price which is fair to stockholders
(taking into account all factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value) and (b) otherwise in the best interests of the Company and its
stockholders, proper provision shall be made so that promptly following the
Redemption Period (as defined in Section 23(a)), then each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter have the
right to receive, upon exercise thereof and payment of an amount equal to the
then current Purchase Price in accordance with the terms of this Agreement, such
number of shares of Common Stock as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one-half shares of
Common Stock for which a Right was or would have been exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event, whether or not such
Right was then exercisable, and dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase Price" for
each Right and
26
for all purposes of this Agreement except to the extent set forth in Section 13
thereof) by (y) 50% of the current market price per share of Common Stock
(determined pursuant to Section 11(d) hereof) on the date of such first
occurrence (such number of shares, the "Adjustment Shares"); provided, however,
that if the transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13 of this Agreement,
then only the provisions of Section 13 of this Agreement shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the number of shares of Common Stock authorized by
the Company's Certificate of Incorporation, but not outstanding, or reserved for
issuance for purposes other than upon exercise of the Rights, is not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) or, if any regulatory approvals for the issuance of such
Common Stock has not been obtained by the Company, and the Rights become so
exercisable, notwithstanding any other provision of this Agreement, at least a
majority of the Outside Directors shall, with respect to each Right and to the
extent permitted by applicable law and by material agreements then in effect to
which the Company is a party or by which it or its assets are bound, (A)
determine the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right (subject to Section
7(e) hereof), make adequate provision, on a pro rata or such other basis as the
Board (with the concurrence of at least a majority of the Outside Directors)
deems appropriate in its sole discretion, to substitute for some or all of the
Adjustment Shares, upon exercise of a Right and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) other
equity securities of the Company (such equity securities being herein called
"common stock equivalents"), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value has been determined by at least
a majority of the Outside Directors based upon the advice of an investment
banking firm selected by at least a majority of the Outside Directors.
If, upon the occurrence of a Section 11(a)(ii) Event, at least a majority
of the Outside Directors shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then if the Board (with the concurrence of
at least a majority of the Outside Directors) so elects, the Company may seek
stockholder approval, and take all other action necessary or appropriate for the
authorization of such additional shares. To the extent that action is to be
taken pursuant to the preceding provisions of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights during such period necessary (but not to exceed
ninety (90) days after the date of the Section 11(a)(ii) Event) in order to seek
any authorization of additional shares and to complete such other actions,
and/or to decide the appropriate form of distribution to be made pursuant to the
first sentence of this Section 11(a)(iii) and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public announcement
(with prompt notice thereof to the Rights Agent) stating that the exercisability
of the Rights has been temporarily suspended, as well as a public announcement
(with prompt notice thereof to the Rights Agent) at such time as the suspension
is no longer in effect. For purposes of this Section 11(a)(iii), the value of
the Common Stock shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of the Common Stock on the date of the Section
11(a)(ii) Event and the value of any "common stock equivalent" shall be deemed
to have the same value as the Common Stock on such date. At least a majority of
the Outside Directors may, but shall not be required to, establish procedures to
allocate the right to receive shares of Common Stock upon the exercise of the
Rights among holders of Rights pursuant to this Section 11(a)(iii).
(b) In the event that the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling them
(for a period expiring within forty-five (45) calendar days after such record
date) to subscribe for or purchase Common Stock (or shares having the same
rights, privileges and preferences as the shares of Common Stock ("equivalent
common stock") or
27
securities convertible into Common Stock or equivalent common stock at a price
per share of Common Stock or per share of "equivalent common stock" (or having a
conversion price per share of Common Stock, if a security convertible into
Common Stock) less than the current per share market price of the Common Stock
(as defined in Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding on
such record date, plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock and/or equivalent
common stock so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price, and the denominator of which shall be the number of shares of
Common Stock outstanding on such record date, plus the number of additional
shares of Common Stock and/or equivalent common stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by at least a
majority of the Outside Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
Shares of Common Stock owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights 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.
(c) In the event that the Company shall fix a record date for a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Common Stock, but
including any dividend payable in stock other than Common Stock), or
subscription rights 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 per share market
price of the Common Stock (as defined in Section 11(d)) on such record date,
less the fair market value (as determined in good faith by at least a majority
of the Outside Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to a share of Common Stock
and the denominator of which shall be such current per share market price of the
Common Stock. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the "current market
price" per share of the Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to but not including such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of Common Stock for the ten (10)
consecutive Trading Days immediately following but not including such date;
provided, however, that in the event that the current market price of the Common
Stock is determined during a period following the announcement by the issuer of
such Common Stock of (i) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities convertible into such Common Stock
(other than the Rights), or (ii) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision,
28
combination or reclassification, then, and in each such case, the "current
market price" shall be appropriately adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on 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, as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on another 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 National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system then in use, or, if
on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares of Common Stock selected
by the Board. If on any such date no market maker is making a market in the
Common Stock, the fair value of such shares on such date as determined in good
faith by at least a majority of the Outside Directors shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
is open for the transaction of business, or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, the term
"Trading Day" shall mean a Monday, Tuesday, Wednesday, Thursday or Friday on
which banking or trust institutions in the State of New York or Florida are not
authorized or obligated by law or executive order to close. If the Common Stock
is not publicly held or not listed or traded, "current market price" shall mean
the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
such price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten-thousandth of a share
of Common Stock. Notwithstanding the first sentence of this Section 11(e), an
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 11(a) through
11(c) and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the Common Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-half shares of
Common Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), 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-half shares of
Common Stock (calculated to
29
the nearest hundred-thousandth) obtained by (i) multiplying (x) the number of
one-half shares of Common Stock covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(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-half shares of Common Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-half shares of Common Stock
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement (with prompt
notice thereof to the Rights Agent) of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten (10) days later than
the date of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one-half shares of Common Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per share and the number of one-half 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 then-par value, if any, of the number of shares of
Common 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 non-assessable
such number of shares of Common 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, and shall provide the Rights Agent with
notice of such election, until the occurrence of such event, the issuance to the
holder of any Right exercised after such record date the number of shares of
Common Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of shares of Common Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due ▇▇▇▇ or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
30
(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 Common Stock, (ii)
issuance wholly for cash of any shares of Common Stock at less than the current
market price, (iii) issuance wholly for cash of shares of Common Stock or
securities which by their terms are convertible into or exchangeable for Common
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company to
holders of its Common Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or Section 27 hereof, 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 diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts and computations accounting for such
adjustment, (b) promptly file with the Rights Agent and with the transfer agent
for the Common Stock (if the Rights Agent is not also the transfer agent for the
Common Stock) a copy of such certificate and (c) mail or deliver a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of Common Stock) in
accordance with Section 25 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) Subject to Section 23 of this Agreement, in the event that, on or
after the Stock Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person (other than a
Subsidiary in a transaction which complies with Section 11(n) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary in a
transaction which complies with Section 11(n) hereof) shall consolidate with, or
merge with or into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for
31
stock or other securities of any other Person or cash or any other property, or
(z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any Subsidiary in one
or more transactions each of which complies with Section 11(n) hereof), then,
and in each such case (except as may be contemplated by Section 13(d) hereof),
proper provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall, upon the expiration of the Redemption
Period (as defined in Section 23(a)), thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of validly authorized and issued, fully
paid, non-assessable and freely tradable shares of common stock of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price by the
number of one-half shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of one-half shares of Common Stock for which a
Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately prior to such first
occurrence), and (2) dividing that product (which product, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by 50% of the current
market price per share of the shares of common stock of such Principal Party on
the date of consummation of such Section 13 Event (or the fair market value on
such date of other securities or property of the Principal Party, as provided
for herein); (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof (other than Sections 11(a)(ii)
and 11(a)(iii)) shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its common stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of common stock thereafter deliverable upon the exercise of the Rights;
and (v) the provisions of Section 11(a)(ii) and Section 11(a)(iii) hereof shall
be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean (i) in the case of any transaction
described in clause (x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which shares of Common Stock
are converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the first
sentence of Section 13(a), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions; provided, however, that in any such case, (1) if the common
stock of such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect subsidiary of another Person the
common stock of which is and has been so registered, "Principal Party" shall
refer to such other Person; and (2) 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 Section 13 Event unless the
Principal Party shall have a sufficient number of authorized shares of its
common stock which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless,
prior thereto, the Company and such Principal Party shall have executed and
delivered to the
32
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any such Section 13 Event, the Principal Party
will: (i) prepare and file a registration statement under the Securities Act,
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the 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. If the Principal Party as
determined pursuant to paragraph (b) above is not a corporation or does not have
shares of common stock, proper provision shall be made so that such Principal
Party shall create or otherwise make available for purposes of the exercise of
the Rights in accordance with the terms of this Agreement, cash or a type or
types of securities having a fair market value (as determined by a
nationally-recognized investing banking firm selected by at least a majority of
the Outside Directors equal to at least the value of the shares of Common Stock
which each holder of a Right would have been entitled to receive if such
Principal Party had been a corporation or had shares of common stock.
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
(or a wholly-owned subsidiary of any such Person or Persons) who acquired shares
of Common Stock pursuant to a cash tender offer for all outstanding shares of
Common Stock which complies with the provisions of Section 11(a)(ii) hereof,
(ii) the price per share of Common Stock offered in such transaction is not less
than the price per share of Common Stock paid to all holders of Common Stock
whose shares were purchased pursuant to such cash tender offer and (iii) the
form of consideration being offered to the remaining holders of shares of Common
Stock pursuant to such transaction is the same as the form of consideration paid
pursuant to such cash tender offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
(e) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a) hereof.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights except
prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, or, in case no such sale takes place on such day, the average of the
high bid and low asked prices, in either case as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights selected
by the Board. If on any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in good faith by
at least a majority of the Outside Directors shall be used. In the event the
Rights are listed or admitted to trading on a national securities exchange, the
closing price for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the high bid and low asked
prices, regular way, in either
33
case as reported in the principal consolidated transaction reporting system with
respect to the national securities exchange on which the Rights are listed or
admitted to trading.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights (taking into account all such Rights
held by the holder) 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 as herein provided, an amount in cash equal to the
same fraction of the current market value of one share of Common Stock. For
purposes of this Section 14(b), the current market value of one share of Common
Stock shall be the closing price of a share of Common Stock (as determined
pursuant to Section 14(a) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) Following the occurrence of one of the events specified in Section 11
giving rise to the right to receive Common Stock, common stock equivalents or
other securities upon the exercise of a Right, the Company shall not be required
to issue fractions of shares of Common Stock, common stock equivalents or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock, common stock equivalents or other
securities. In lieu of fractional shares of Common Stock, common stock
equivalents or other securities the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one (1)
share of Common Stock, common stock equivalents or other securities. For
purposes of this Section 14(c), the current market value of one share of Common
Stock shall be the closing price of one share of Common Stock (as determined
pursuant to Section 11(d) hereof) for the Trading Day immediately prior to the
date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly waives
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, except the rights of
action vested in the Rights Agent pursuant to Section 18 and Section 19 hereof,
are vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock); and
any registered holder of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of
the Common Stock), may, in his own behalf and for his own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations hereunder of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right by accepting 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 the Common Stock; (b) after the Distribution
Date, the Rights Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the office of the Rights Agent designated for
such purposes, duly endorsed or accompanied by a proper instrument of transfer
and with the appropriate form of assignment and the certificate contained
therein
34
duly completed and executed; (c) subject to Section 6(a) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat the Person in whose
name the Rights Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary; and (d)
notwithstanding anything in this Agreement to the contrary, neither the Company
nor the Rights Agent shall have any liability to any holder of a Right or other
Person as a result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other order,
decree, judgment or ruling (whether interlocutory or final) issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any government authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, 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 STOCKHOLDER.
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 Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
SECTION 18. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes only the duties and obligations expressly
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent, and the
Rights Agent shall incur no liability, for or in respect of any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
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 or suffering or omitting to take any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any person believed by the Rights Agent to be any one of
the Chairman of the Board, President, Chief Executive Officer, a Vice President,
the Treasurer or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization and protection to the Rights
Agent, and the Rights Agent shall incur no liability, for or in respect of any
action taken, omitted or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
35
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent is serving as an administrative agent and shall not
have any liability for, nor be under any responsibility in respect of, the
validity of any provision of this Agreement or the execution and delivery of
this Agreement (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any transfer to an Acquiring
Person or change in the exercisability of the Rights (including the Rights
becoming null and void pursuant to Section 7(e) hereof) or any adjustment
required under any of the provisions hereof or responsible for the manner,
method, or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after 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 to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock will, when so issued, be
validly authorized and issued, fully paid and non-assessable.
(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 any
person believed by the Rights Agent to be any one of the Chairman of the Board,
the President, Chief Executive Officer, a Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken, omitted to be taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer. Any application by the Rights
Agent for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken, suffered or omitted
by the Rights Agent under this Rights Agreement and the date on or after which
such action shall be taken or suffered or such omission shall be effective. The
Rights Agent shall not be liable for any action taken or suffered by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instruction in response to such application specifying the action to be
taken, suffered or omitted.
(h) The Rights Agent and any stockholder, affiliate, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other Person or legal entity.
36
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect, or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect, or misconduct; provided, however, the Rights Agent was not grossly
negligent 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
it believes in good faith 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 properly completed or indicates an affirmative response to clause 1 and/or
2 thereof, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
(l) The Rights Agent undertakes only the express duties and obligations
imposed on it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.
SECTION 19. COMPENSATION AND INDEMNIFICATION OF 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 preparation, delivery, administration, execution
and any amendment of this Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent, its
officers, employees, agents and directors for, and to hold each of them harmless
against, any loss, liability, or expense, incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent, for any action
taken, suffered or omitted by the Rights Agent or such other indemnified party
in connection with the acceptance and administration of this Agreement and the
exercise of its duties hereunder, including but not limited to the costs and
expenses of defending against any claim of liability in the premises. The
indemnity provided for hereunder shall survive the expiration of the Rights and
the termination of this Agreement.
(b) The Rights Agent shall be authorized and protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its acceptance and administration of this Agreement or the
exercise of its duties hereunder in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons.
(c) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
37
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof.
(b) In case at any time the name of the Rights Agent shall be changed and
at any such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
SECTION 21. CHANGE OF RIGHTS AGENT.
(a) The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company and to the transfer agent of the Common Stock by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to the transfer agent
of the Common Stock by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (i) a Person organized and doing business
under the laws of the United States or of the State of New York (or of any other
state of the United States so long as such Person is authorized to do business
in the State of New York), in good standing, having an office in the State of
New York or (ii) an affiliate of such a Person. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
(b) In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have
38
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.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by at least a majority of the
Outside Directors to reflect any adjustment or change in the Purchase Price per
share and the number or kind of class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date (other than upon exercise
of a Right) and prior to the redemption or expiration of the Rights, the Company
(a) shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement, or upon
the exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board (with the concurrence of at least a majority of the Outside
Directors), issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 23. REDEMPTION.
(a) At least a majority of the Outside Directors may, at its option, at
any time during the period commencing on the Rights Dividend Declaration Date
and ending on the earlier of (i) the Close of Business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth day
following the Record Date), as such period may be extended or shortened in the
discretion of at least a majority of the Outside Directors or (ii) the Close of
Business on the Final Expiration Date (the "Redemption Period"), cause the
Company to redeem all but not less than all the then outstanding Rights at a
redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). If, following the occurrence of a Stock
Acquisition Date and following the expiration of the Company's right of
redemption hereunder (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 a Beneficial Owner of 5% or
less of the outstanding shares of Common Stock, (ii) there are no other Persons,
immediately following the occurrence of the event described in clause (i), who
are Acquiring Persons, and (iii) at least a majority of the Outside Directors
shall so approve, then the Company's right of redemption shall be reinstated and
thereafter be subject to the provisions of this Section 23. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii) Event or a Section
13 Event until such time as the Company's right of redemption hereunder has
expired. The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the current market price of the Common Stock at
the time of redemption) or any other form of consideration deemed appropriate by
the Board (with the concurrence of at least a majority of the Outside
Directors).
39
(b) Immediately upon the action of at least a majority of the Outside
Directors ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
Promptly after the action of at least a majority of the Outside Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
SECTION 24. EXCHANGE.
(a) The Board (with the concurrence of at least a majority of the Outside
Directors) may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become null and void pursuant to the
provisions of Section 11(a)(ii) or Section 7(e) hereof) for shares of Common
Stock at an exchange ratio of one-half (1/2) 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"). Notwithstanding the foregoing,
the Board shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary, any employee benefit plan of the
Company or any Subsidiary, any entity holding shares of Common Stock for or
pursuant to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and Associates of such
Person, has become the Beneficial Owner of 50% or more of the shares of Common
Stock then outstanding.
(b) Immediately upon the action of the Board (with the concurrence of at
least a majority of the Outside Directors) ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that number
of shares of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
(as well as prompt notice to the Rights Agent) of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of 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 the provisions of Section
11(a)(ii) or Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Stock issued
but not outstanding or authorized but unissued to permit any exchange of Rights
as contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Common Stock
for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the
40
current market value of a whole share of Common Stock. For the purposes of this
paragraph (d), the current market value of a whole share of Common Stock shall
be the closing price of a share of Common Stock (as determined pursuant to the
second sentence of Section 11(d) hereof) for the Trading Day immediately prior
to the date of exchange pursuant to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In the event that 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 Common Stock or to make any other distribution to the holders of
Common Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings) or (ii) to offer to all the holders of Common Stock rights or
warrants to subscribe for or to purchase any additional shares of Common Stock
or shares of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding Common Stock), or
(iv) to effect any consolidation or merger into or with, or to effect any sale
or other transfer (or to permit one or more of its subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Rights Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the shares of Common Stock for purposes
of such action and in the case of any such other action, at least twenty (20)
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock, whichever
shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each holder of
a Rights Certificate, to the extent feasible and in accordance with Section 26
hereof, a notice of the occurrence of such event which shall specify the event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
hereof.
SECTION 26. NOTICES.
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows: Elcotel, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: President. Subject to the provisions of Section 21 hereof, any notice
or demand authorized by this Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows: American Stock Transfer & Trust Company, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Compliance Department. Notices or demands authorized by
this Agreement to be given or made by the Company or the Rights Agent to the
holder of any Rights Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to any such holder at the address
of such holder as shown on the registry books of the Company.
41
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date and subject to the third last sentence of
this Section 27, the Company may, 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.
From and after the Distribution Date and subject to the third last sentence of
this Section 27, the Company may, and the Rights Agent shall at any time and
from time to time, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the Rights Agent
or the holders of Rights Certificates (other than an Acquiring Person or an
Affiliate or Associate of any such Person); provided, however, that this
Agreement may not be supplemented or amended (A) to lengthen a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) to lengthen any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights (other than an Acquiring
Person or an Affiliate or Associate of any such Person). 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
27, the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration Date, the
number of one half of one share of Common Stock for which a Right is exercisable
or the Purchase Price; provided, however, that at any time prior to the
Distribution Date, the Company may amend this Agreement to increase the Purchase
Price, and provided further, that the Company may amend this Agreement to
increase, from one-half of one share, to one whole share, the number of shares
of Common Stock for which a Right is exercisable. In addition, no supplement or
amendment that changes or increases the rights, duties and obligations of the
Rights Agent under this Agreement shall be effective without the consent of the
Rights Agent. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of shares of
Common Stock.
SECTION 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, ETC.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) promulgated under the
Exchange Act. A majority of the Outside Directors (except where otherwise
specifically provided in this Agreement or otherwise required by applicable law)
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including without limitation a
determination to redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by a majority of the Outside Directors (or Board, as
applicable) in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of
42
the Rights and all other Persons, and (y) not subject any director to any
liability to the holders of the Rights. The Rights Agent is entitled to always
assume that a majority of the Outside Directors (or Board, as applicable) acted
in good faith and shall be fully protected and incur no liability in reliance
thereon.
SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders 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 at least a majority of the Outside Directors
determines in its good faith judgment that severing the invalid language from
this Agreement would materially and adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the Close of Business on the tenth day
following the date of such determination.
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 State of New York
and for all purposes shall be governed by and construed in accordance with laws
of such State.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts. It shall not
be necessary that the signature of or on behalf of each party appears on each
counterpart, but it shall be sufficient that the signature of or on behalf of
each party appears on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of or on behalf of all of the
parties.
SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement
to be duly executed and attested, all as of the day and year first above
written.
43
ELCOTEL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
44
Exhibit A
[Form of Rights Certificate]
Certificate No. R-__________ __________ Rights
NOT EXERCISABLE AFTER MAY 11, 2009 OR EARLIER IF REDEEMED OR
EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH
IN THE STOCKHOLDER RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF ANY SUCH ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE STOCKHOLDER RIGHTS AGREEMENT), OR CERTAIN OF THEIR RESPECTIVE
TRANSFEREES, MAY BECOME NULL AND VOID PURSUANT TO THE TERMS OF THE
STOCKHOLDER RIGHTS AGREEMENT. THE RIGHTS SHALL NOT BE EXERCISABLE,
AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION
WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR
THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION
SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE.
RIGHTS CERTIFICATE
ELCOTEL, INC.
This certifies that ______, or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Stockholder
Rights Agreement, dated as of May 11, 1999 (the "Rights Agreement"), between
Elcotel, Inc., a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company (the "Rights Agent"), to purchase from the Company at
any time prior to the close of business on May 11, 2009 at the office or offices
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one-half of one fully paid, non-assessable share of common stock, par
value $0.01 per share (the "Common Stock"), of the Company, at a purchase price
of $10.00 (subject to adjustment as provided for in the Rights Agreement) per
one-half of one share of Common Stock (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of one-half shares of Common Stock or other
securities that may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of May 11,
1999, based on the Common Stock as constituted at such date, and are subject to
adjustment upon the occurrence of certain events as provided in the Rights
Agreement.
Pursuant to the terms of the Rights Agreement (including, without
limitation, Section 7(e) thereof), from and after the first occurrence of a
Section 11(a)(ii) Event (as defined in the Rights Agreement), any Rights
beneficially owned, as evidenced by this Rights Certificate, by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, or (ii) under
certain circumstances specified in the Rights Agreement, certain of their
respective transferees, shall become null and void without further action, and
no holder hereof shall have any right whatsoever with respect to such Rights,
whether under any provision of the Rights Agreement, this Rights Certificate or
otherwise.
45
The Rights evidenced by this Rights Certificate shall not be exercisable,
and shall be void so long as held, by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable.
As provided in the Rights Agreement, the Purchase Price and the shares of
Common Stock, or the Purchase Price and number and kind of other securities,
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the occurrence of
certain events, including Triggering Events (as such term is defined in the
Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates, which limitations of rights
include the temporary suspension of the exercisability of such Rights under the
specific circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and are
also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Right Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive, upon surrender hereof, another Rights Certificate
or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Rights Certificate may be redeemed by the Company, at its option, at a
redemption price of $.001 per Right at any time during the period commencing on
the Rights Dividend Declaration Date (as such term is defined in the Rights
Agreement) and ending on the earlier of (i) the close of business on the tenth
day following the Stock Acquisition Date (as such term is defined in the Rights
Agreement) (or, if the Stock Acquisition Date shall have occurred prior to the
Record Date, the close of business on the tenth day following the Record Date),
as such period may be extended or shortened in the discretion of at least a
majority of the Outside Directors, or (ii) the close of business on the Final
Expiration Date (as defined in the Rights Agreement) (the "Redemption Period").
Pursuant to the terms of the Rights Agreement, after the expiration of the
Redemption Period, the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to 5% or less of the
outstanding shares of Common Stock in a transaction or series of transactions
not involving the Company, and such reinstatement is approved by at least a
majority of the Outside Directors.
At any time after a person or entity becomes an Acquiring Person, the
Board of Directors of the Company (with the concurrence of at least a majority
of the Outside Directors) may exchange the Rights (other than Rights
beneficially owned by such Acquiring Person or an Associate or Affiliate of an
Acquiring Person, or certain of their respective transferees, which have become
void), in whole or in part, at an exchange ratio of one-half of one share of
Common Stock per Right (subject to adjustment).
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof, a cash payment will
be made, as provided in the Rights Agreement.
46
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of Common
Stock with respect to which the Rights are exercisable, or of any other
securities which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders of the Company at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
47
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ___________________, _______
Attest: ELCOTEL, INC.
___________________________ By:________________________
Name:______________________
Title:_____________________
Countersigned:
________________
________________
By:____________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED ______________________________________________ hereby sells,
assigns and transfers unto ____________________________________________________
________________________________________________ (Please print name and address
of transferee) this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
__________________ Attorney, to transfer the within Rights Certificate on the
books of the within-named Company, with full power of substitution.
Dated:_________________________, ______
______________________________
Signature
Signature Guaranteed:
48
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); (2) after due inquiry and to the best
knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person.
Dated:_________________________, _________
______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise Rights represented
by the Rights Certificate.)
To: __________________
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
________________________________________________________________________________
(Please print name and address)
Please insert social security or other identifying number:
______________________________. If such number of Rights shall not be all the
Rights evidenced by this Rights Certificate, a new Rights Certificate for the
balance of such Rights shall be registered in the name of and delivered to:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Please insert social security or other identifying number: ____________________.
Dated:________________________________
______________________________
Signature
Signature Guaranteed:
49
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being
exercised by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement); (2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person.
Dated: _______________, ____
______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
50