EXHIBIT 4.1
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STOCKHOLDERS RIGHTS AGREEMENT
Dated as of June 9, 1997
between
PEAPOD, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
as Rights Agent
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions............................................................... 1
Section 2. Appointment of Rights Agent....................................................... 7
Section 3. Issuance of Rights Certificates................................................... 7
Section 4. Form of Rights Certificates....................................................... 10
Section 5. Countersignature and Registration................................................. 11
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates................................... 12
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights..................... 12
Section 8. Cancellation and Destruction of Rights Certificates............................... 15
Section 9. Reservation and Availability of Preferred Shares.................................. 15
Section 10. Record Date of Preferred Share Ownership......................................... 17
Section 11. Adjustment of Exercise Price, Number and Kind of Shares and Number of Rights..... 17
Section 12. Certificate of Adjusted Exercise Price or Number of Shares....................... 25
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............. 25
Section 14. Fractional Rights and Fractional Shares.......................................... 29
Section 15. Rights of Action................................................................. 30
Section 16. Agreements of Holders of Rights.................................................. 31
Section 17. Rights Certificate Holder Not Deemed a Stockholder............................... 31
Section 18. Concerning the Rights Agent...................................................... 32
Section 19. Merger or Consolidation of the Rights Agent...................................... 32
Section 20. Duties of the Rights Agent....................................................... 33
Section 21. Resignation or Removal of the Rights Agent....................................... 35
Section 22. Issuance of New Rights Certificates.............................................. 36
Section 23. Redemption....................................................................... 37
Section 24. Exchange......................................................................... 39
Section 25. Notice to Holders of Rights Certificates of Certain Events....................... 40
Section 26. Other Notices.................................................................... 41
Section 27. Supplements and Amendments....................................................... 42
Section 28. Successors....................................................................... 43
Section 29. Certain Determinations and Actions by the Board.................................. 43
Section 30. Benefits of this Agreement....................................................... 43
Section 31. Severability..................................................................... ▇▇
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▇▇▇▇▇▇▇ ▇▇. Governing Law.......................................................................... 44
Section 33. Counterparts........................................................................... 44
Section 34. Descriptive Headings................................................................... 44
Exhibit A - Form of Certificate of Designations of
Series A Junior Participating Preferred
Stock.................................................................................. A-1
Exhibit B - Form of Rights Certificate............................................................. B-1
Exhibit C - Summary of Rights to Purchase Shares of
Series A Junior Participating Preferred
Stock.................................................................................. C-1
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STOCKHOLDERS RIGHTS AGREEMENT
-----------------------------
Stockholders Rights Agreement dated as of June 9, 1997 (this
"Agreement") between Peapod, Inc., a Delaware corporation (the "Company"), and
First Chicago Trust Company of New York, a national banking association (the
"Rights Agent").
W I T N E S S E T H :
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WHEREAS, the Board of Directors of the Company desires to provide all
stockholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that all such stockholders
receive fair and equal treatment in the event of any proposed takeover of the
Company; and
WHEREAS, on May 29, 1997, the Board of Directors of the Company
authorized and declared a dividend of one preferred stock purchase right
(individually a "Right" and collectively the "Rights") for each share of Common
Stock (as hereinafter defined) of the Company outstanding at the Close of
Business on the effective date of the Company's initial public offering
registration statement, file no. 333-24341 (the "Record Date"), each Right
representing the right to purchase one one-hundredth of a Preferred Share (as
hereinafter defined) upon the terms and subject to the conditions herein after
set forth, and contemplates that one Right will be issued with respect to each
share of Common Stock which shall become outstanding after the Record Date and
prior to the earlier of the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined), including any shares of Common Stock issued
by reason of the exercise of any option, warrant, right (other than the Rights)
or conversion or exchange privilege contained in any option, warrant, right
(other than the Rights) or convertible or exchangeable security issued by the
Company prior to the Distribution Date, unless the Board (as hereinafter
defined) shall expressly provide to the contrary at the time of issuance of any
such option, warrant, right or convertible or exchangeable security.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Certain Definitions. For all purposes of this Agreement,
unless the context otherwise requires, the following terms shall have the
respective meanings set forth below:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of
Common Stock of the Company then outstanding, but shall not include (i) the
Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan or
other compensation program or arrangement of the Company or of any such
Subsidiary, (iv) any Person holding such shares of Common Stock for or pursuant
to the terms of any such plan, program or arrangement and each Affiliate and
Associate thereof, and (v) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, and each
Affiliate and Associate thereof, including, without limitation, Peapod
Liquidating Corporation, (the Persons specified in clauses (i) through (v) being
hereinafter collectively called "Exempt Persons"). Notwithstanding the preceding
sentence, no Person shall become an "Acquiring Person" as the result of an
acquisition by the Company of shares of its Common Stock which, by reason of
reducing the number of its then outstanding shares of Common Stock, increases
the percentage of its then outstanding shares of Common Stock Beneficially Owned
by such Person to 15% or more; provided, however, that if such Person shall,
after such purchase by the Company, become the Beneficial Owner of any
additional shares of Common Stock of the Company, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares of Common Stock
so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring Person" for any purpose of this
Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2, as in effect on the date of this
Agreement, under the Exchange Act; provided, however, that no director or
officer of the Company shall be deemed an Affiliate or Associate of any other
director or officer of the Company solely as a result of his or her being a
director or officer of the Company.
(c) "Beneficial Owner" (including the terms "Beneficially Own" and
"Beneficial Ownership"), when used with respect to any Person, shall be deemed
to include any securities which:
(i) such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly (determined as provided in Rule
13d-3, as in effect on the date of this Agreement, under the Exchange Act);
(ii) such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has:
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(A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction
of any conditions, or both) pursuant to any written or oral agreement,
arrangement or understanding (other than customary agreements with and
among underwriters and selling group members with respect to a bona
fide public offering of securities), upon the exercise of any options,
warrants, rights (other than the Rights) or conversion or exchange
privileges or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own: (I) securities
tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange or (II)
securities issuable upon exercise of the Rights at any time prior to
the Distribution Date; or
(B) the right to vote pursuant to any written or oral agreement,
arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own, any
security otherwise subject to this item (B) if such agreement,
arrangement or understanding to vote (I) arises solely from a
revocable proxy or consent given to such Person or any of such
Person's Affiliates or Associates in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (II) is
not also then reportable by such Person on Schedule 13D (or any
comparable or successor report then in effect) under the Exchange Act;
or
(C) the right to dispose of pursuant to any written or oral
agreement, arrangement or understanding (other than customary agreements
with and among underwriters and selling group members with respect to a
bona fide public offering of securities); or
(iii) are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or
Associates has any written or oral agreement, arrangement or understanding
(other than customary agreements with and among underwriters and selling
group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to item (B) of subparagraph (ii) of the first
paragraph of this definition) or disposing of any securities of the
Company.
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Notwithstanding the first paragraph of this definition, no director or
officer of the Company shall be deemed to be the "Beneficial Owner" of, or to
"Beneficially Own," shares of Common Stock or other securities of the Company
beneficially owned by any other director or officer of the Company solely as a
result of his or her being a director or officer of the Company.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of Illinois are authorized
or obligated by law or executive order to close.
(f) "Certificate of Designations" shall mean the Certificate of
Designations for the Preferred Shares in substantially the form attached hereto
as Exhibit A.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
Chicago time, on such date or, if such date is not a Business Day, then 5:00
P.M., Chicago time, on the next succeeding Business Day.
(h) "Common Stock," when used with reference to the Company, shall
mean the Common Stock, $.01 par value, of the Company. "Common Stock," when
used with reference to any Person other than the Company, shall mean the capital
stock with the greatest voting power (or the other equity securities or equity
interests having the power to control or direct management) of such Person or,
if such Person is a Subsidiary of another Person, of the Person which ultimately
controls such first-mentioned Person and which has issued and outstanding such
capital stock, equity securities or equity interests.
(i) "Disinterested Director" shall mean (i) any member of the Board,
while such a member, who is not a Restricted Person, or a representative or
nominee of a Restricted Person, and was a member of the Board prior to the date
of this Agreement and (ii) any individual who subsequently becomes a member of
the Board and is not a Restricted Person, or a representative or nominee of a
Restricted Person, if such individual's nomination for election or election to
the Board is recommended or approved by a majority of the Disinterested
Directors then in office.
(j) "Distribution Date" shall have the meaning set forth in Section
3(a).
(k) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b).
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(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
in effect on the date of this Agreement.
(m) "Exchange Rate" shall have the meaning set forth in Section 24(a).
(n) "Exempt Persons" shall have the meaning set forth in the
definition of "Acquiring Person."
(o) "Exercise Price" shall have the meaning set forth in Section 7(b).
(p) "Fair Market Value" shall have the meaning and be determined as
set forth in Section 11(d).
(q) "Final Expiration Date" shall have the meaning set forth in
Section 7(a).
(r) "Interested Stockholder" shall mean any Restricted Person or any
Affiliate or Associate of any other Person in which such Restricted Person has
an interest, or any Person acting, directly or indirectly, on behalf of or in
concert with any such Restricted Person.
(s) "NASDAQ" shall have the meaning set forth in Section 9(c).
(t) "Permitted Offer" shall mean any tender or exchange offer for all
of the outstanding shares of Common Stock of the Company at a price and on terms
determined, prior to the purchase of shares under such tender or exchange offer,
by at least a majority of the members of the Board who are Disinterested
Directors and who are not officers of the Company to be appropriate (taking into
account all factors which such Disinterested Directors deem relevant, including,
without limitation, prices reasonably obtainable if the Company or its assets
were sold on an orderly basis designed to realize maximum value) and otherwise
in the best interests of the Company and its stockholders (other than the Person
or any Affiliate or Associate thereof on whose behalf or for whose benefit such
tender or exchange offer is being made).
(u) "Person" shall mean any individual, firm, corporation, partnership
or other entity, and shall include any successor (by merger or otherwise) of any
of the foregoing.
(v) "Preferred Shares" shall mean the Series A Junior Participating
Preferred Stock of the Preferred Stock, which series shall have the powers,
preferences and other rights set forth in the Certificate of Designations.
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(w) "Preferred Stock," when used with reference to the Company, shall
mean the Preferred Stock, $.01 par value, of the Company.
(x) "Principal Party" shall have the meaning set forth in Section
13(e).
(y) "Record Date" shall have the meaning set forth in the second
recital clause of this Agreement.
(z) "Redemption Date" shall have the meaning set forth in Section
7(a).
(aa) "Redemption Price" shall have the meaning set forth in Section
23(a).
(bb) "Restricted Person" shall mean an Acquiring Person or any
Affiliate or Associate of an Acquiring Person.
(cc) "Rights" shall have the meaning set forth in the second recital
clause of this Agreement.
(dd) "Rights Certificates" shall mean the certificates evidencing the
Rights after the Distribution Date.
(ee) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii).
(ff) "Section 13 Event" shall mean any transaction described in
Section 13(a).
(gg) "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
(hh) "Security" shall have the meaning set forth in Section 11(d).
(ii) "Share Acquisition Date" shall mean the first date on which there
shall be a public announcement (which shall include, without limitation, any
press release or publicly available filing with the Securities and Exchange
Commission or any other federal or state governmental authority or agency) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(jj) "Stock" shall have the meaning set forth in Section 11(d).
(kk) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power or the other equity securities or
equity interests having the power
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to control or direct management) is owned, directly or indirectly, by such
Person.
(ll) "Summary of Rights" shall mean the Summary of Rights to Purchase
shares of Series A Junior Participating Preferred Stock in substantially the
form attached hereto as Exhibit C.
(mm) "Trading Day" shall have the meaning set forth in Section
11(d)(i).
(nn) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(which holders, as provided in Section 3, shall, prior to the Distribution Date,
also be the holders of the Common Stock of the Company) in accordance with the
terms and conditions of this Agreement. The Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable. In the event the Company appoints one or
more Co-Rights Agents, the respective obligations and duties of the Rights Agent
and of any Co-Rights Agent shall be as the Company shall specify in writing.
The Rights Agent shall have no duty to supervise, and shall not be liable for
the acts or omissions of, any Co-Rights Agent.
Section 3. Issuance of Rights Certificates.
(a) Until the earliest of (i) the Close of Business on the 10th
Business Day after the Share Acquisition Date (or, if the Share Acquisition Date
shall have occurred prior to the Record Date, the Close of Business on the 10th
Business Day after the Record Date) or (ii) the Close of Business on the 10th
Business Day (or, anything in Section 27 to the contrary notwithstanding, such
other Business Day as may be determined by action of the Board prior to the
occurrence of any Section 11(a)(ii) Event) after the date of the commencement by
any Person (other than an Exempt Person) of, or the first public announcement of
the intention of any Person (other than an Exempt Person) to commence, a tender
or exchange offer if, upon the consummation thereof, such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock of the Company
then outstanding (the earliest of the dates specified clauses (i) and (ii) being
hereinafter called the "Distribution Date"), the Rights shall be evidenced and
be transferable only as provided in Section 3(b). As soon as practicable after
the Distribution Date or, in the case of any shares of Common Stock of the
Company which are issued or otherwise become outstanding after the Distribution
Date and prior to the
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earlier of the Redemption Date and the Final Expiration Date, including any
shares of Common Stock issued by reason of the exercise of any option, warrant,
right (other than the Rights) or conversion or exchange privilege contained in
any option, warrant, right (other than the Rights) or convertible or
exchangeable security issued by the Company prior to the Distribution Date,
unless the Board shall have expressly provided to the contrary at the time of
issuance of any such option, warrant, right or convertible or exchangeable
security, simultaneously with the issuance of stock certificates for such shares
of Common Stock, the Company shall prepare and execute, the Rights Agent shall
countersign and the Company shall deliver or cause to be delivered (or the
Rights Agent shall, if requested, deliver), by first-class mail, postage
prepaid, to each record holder of shares of Common Stock of the Company as of
the Close of Business on the Distribution Date or, in the case of shares of
Common Stock issued or otherwise becoming outstanding after the Distribution
Date (unless otherwise provided with respect thereto as aforesaid), to each
record holder of the shares of Common Stock so being issued or becoming
outstanding at the time of such occurrence, at its last address shown on the
registry books of the transfer agent for the Common Stock of the Company, one or
more Rights Certificates evidencing one Right for each share of Common Stock of
the Company so held, issued or becoming outstanding. As of and after the
Distribution Date, the Rights shall be evidenced solely by the Rights
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company shall send a copy of the Summary of Rights, by first-class mail, postage
prepaid, to each record holder of shares of Common Stock of the Company as of
the Close of Business on the Record Date, at its last address shown on the
registry books of the transfer agent for the Common Stock of the Company. Until
the Distribution Date: no Rights Certificates shall be issued; each stock
certificate for shares of Common Stock of the Company outstanding as of the
Record Date, until the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date, shall be deemed also to constitute a certificate
for the Rights associated with the shares represented thereby, together with a
copy of the Summary of Rights attached thereto; and the registered holder of
such shares shall also be the registered holder of the associated Rights. Until
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, the surrender for transfer of any such stock certificate, with
or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the shares of Common Stock
represented thereby.
(c) Any stock certificate for shares of Common Stock of the Company
which shall be delivered by or on behalf of the Company
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(including, without limitation, stock certificates for shares of Common Stock
which are reacquired by the Company and then transferred) after the Record Date
and prior to the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date shall have impressed, printed or written thereon, or
otherwise affixed thereto, the following legend:
"This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Stockholders Rights Agreement dated as
of June 9, 1997 (the "Rights Agreement") between Peapod, Inc. (the
"Company") and First Chicago Trust Company of New York, as Rights Agent,
the terms, provisions and conditions of which are incorporated herein by
reference and made a part hereof. The Rights Agreement is on file at the
principal office of the Company and the principal office of such Rights
Agent, and the Company will mail to the holder of this certificate a copy
without charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. The Rights (i) may be redeemed at a redemption price (subject
to adjustment) $.01 per Right or (ii) under certain circumstances, may be
exchanged, in whole or in part, for shares of Common Stock of the Company
at an exchange rate (subject to adjustment) of one share of Common Stock
per Right, all as set forth in the Rights Agreement. Under certain
circumstances, as set forth in the Rights Agreement, Rights Beneficially
Owned by a Restricted Person (as such terms are defined in the Rights
Agreement), or by specified transferees from a Restricted Person, shall be
or become void."
Each stock certificate containing the foregoing legend, until the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date, shall be deemed also to constitute a certificate for the Rights associated
with the shares represented thereby, and the registered holder of such shares
shall also be the registered holder of the associated Rights. Until the earliest
of the Distribution Date, the Redemption Date and the Final Expiration Date, the
surrender for transfer of any such stock certificate shall also constitute the
transfer of the Rights associated with the shares of Common Stock represented
thereby. The omission of the foregoing legend shall not in any manner whatsoever
affect the application or interpretation of Section 7(d).
(d) In the event that the Company shall reacquire any shares of its
Common Stock after the Record Date and prior to the Distribution Date, the
Rights associated with such shares shall be
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deemed cancelled and retired, the Company not being entitled to exercise any
Rights associated with shares of its Common Stock which are no longer
outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (including the Form of Election to
Purchase and Certification of Status and the Form of Assignment and
Certification of Status to be set forth on the reverse side thereof) shall be in
substantially the form attached hereto as Exhibit B and may have such marks of
identification or designation and such legends, summaries or endorsements set
forth thereon as the Company may deem appropriate and are not inconsistent with
the provisions of this Agreement, or as may be required to conform to customary
practice or to comply with any applicable law or any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed. Subject to Sections 11 and 22, the
Rights Certificates, whenever distributed, shall be dated as of the Record Date
(or, in the case of Rights with respect to shares of Common Stock issued or
becoming outstanding after the Record Date, the same date as the stock
certificate evidencing such shares), shall (if the Company shall so require)
indicate the date of countersignature by the Rights Agent and shall entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share at the Exercise Price as shall be set forth therein, but the number of
such one one-hundredths of a Preferred Share and the Exercise Price shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 that represents Rights Beneficially Owned by: (i) a Restricted Person, (ii) a
transferee from a Restricted Person who becomes a transferee after the Acquiring
Person becomes such or (iii) a transferee from a Restricted Person who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from such Acquiring Person (or any Affiliate or Associate
thereof) to holders of equity interests in such Acquiring Person (or any such
Affiliate or Associate) or to any Person with whom such Acquiring Person (or any
such Affiliate or Associate) has any continuing written or oral agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of Section 7(d), and any
Rights Certificate issued pursuant to Section 6, 11 or 22 upon the transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall have deleted therefrom the second sentence of the legend
on the Form of Rights Certificate attached
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hereto as Exhibit B and, in lieu thereof, shall contain the following two
sentences:
"The Rights represented by this Rights Certificate are or were
Beneficially Owned by a Restricted Person (as such term is defined in such
Agreement). This Rights Certificate and the Rights represented hereby shall
be or become void under the circumstances specified in Section 7(d) of such
Agreement."
The Company shall give prompt written notice to the Rights Agent after
becoming aware of the existence and identity of any Restricted Person. The
failure to insert the foregoing sentences on any such Rights Certificate or any
defect therein shall not in any manner whatsoever affect the application or
interpretation of Section 7(d). The Company shall specify to the Rights Agent in
writing which Rights Certificates are to be so legended.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President, any of its Vice Presidents
or its Treasurer, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof attested by its
Secretary or any of its Assistant Secretaries, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by an
authorized signatory of the Rights Agent and shall not be valid or obligatory
for any purpose unless so countersigned. In case any officer of the Company who
shall have executed any Rights Certificate or who shall have attested the
Company's seal thereon shall cease to be such officer of the Company before such
Rights Certificate shall have been countersigned by an authorized signatory of
the Rights Agent and issued and delivered by or on behalf of the Company, such
Rights Certificate, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by or on behalf of the Company with the same force and
effect as though the individual who executed such Rights Certificate or who
attested the Company's seal thereon had not ceased to be such officer; and any
Rights Certificate may be executed on behalf of the Company and the Company's
seal may be attested by any individual who, at the actual date of such execution
or attestation, shall be a proper officer of the Company, although at the date
of execution of this Rights Agreement such person was not such an officer.
(b) After the Distribution Date, the Rights Agent shall keep or cause
to be kept, at its principal office, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the
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respective holders of the Rights Certificates, the number of Rights evidenced on
its face by each Rights Certificate, the date of each Rights Certificate and (if
required by the Company) the date of countersignature by the Rights Agent.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to Sections 4(b), 7(d) and 14, at any time after the
Close of Business on the Distribution Date and prior to the Close of Business on
the earlier of the Redemption Date and the Final Expiration Date, any Rights
Certificate (other than any Rights Certificate which shall have been exchanged
pursuant to Section 24) may be transferred, split up, combined or exchanged for
one or more other Rights Certificates, entitling the registered holder to
purchase the same number of one one-hundredths of a Preferred Share (or after a
Triggering Event, the securities, cash and other property purchasable in lieu
thereof) as the Rights Certificate or Rights Certificates surrendered entitled
such registered holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange one or more Rights Certificates shall make such
request in a writing delivered to the Rights Agent, and shall surrender the
Rights Certificates to be transferred, split up, combined or exchanged, with the
Form of Assignment and Certification of Status on the reverse side thereof duly
executed, together with such signature guarantees and other documentation as the
Rights Agent may reasonably request, at the principal office of the Rights
Agent. Thereupon the Company shall prepare and execute, the Rights Agent shall
countersign and the Company shall deliver or cause to be delivered (or the
Rights Agent shall, if requested, deliver) to the person entitled thereto one or
more Rights Certificates as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in the case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them or, in the case of
mutilation, upon surrender to the Rights Agent of the mutilated Rights
Certificate, and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, the Company shall
prepare and execute, the Rights Agent shall countersign and the Company shall
deliver or cause to be delivered (or the Rights Agent shall, if requested,
deliver) to the registered holder
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thereof a new Rights Certificate of like tenor in lieu of the Rights Certificate
so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) Subject to Section 7(d), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein), in whole or in part, at any time after the Distribution Date
and prior to the earliest of (i) the Close of Business on the tenth anniversary
of the Record Date (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 (the "Redemption Date") and (iii)
the time at which such Rights are exchanged as provided in Section 24, upon
surrender of such Rights Certificate, with the Form of Election to Purchase and
Certification of Status on the reverse side thereof duly executed, together with
such signature guarantees and other documentation as the Rights Agent may
reasonably request, to the Rights Agent at its principal office, accompanied by
payment (as provided in subsection (c) of this Section 7) of the Exercise Price
for each one one-hundredth of a Preferred Share (or after a Triggering Event,
the securities, cash and other property purchasable in lieu thereof) as to which
the surrendered Rights are then being exercised.
(b) The price (the "Exercise Price") for each one one-hundredth of a
Preferred Share purchased upon exercise of the Rights shall initially be $98.00
shall be subject to adjustment from time to time as provided in Sections 11 and
13 and shall be payable in lawful money of the United States of America in
accordance with subsection (c) of this Section 7.
(c) Upon receipt of a Rights Certificate representing then exercisable
Rights, with the Form of Election to Purchase and Certification of Status on the
reverse side thereof duly executed, together with such signature guarantees and
other documentation as the Rights Agent may reasonably request, accompanied by
payment of the Exercise Price for the number of one one-hundredths of a
Preferred Share (or after a Triggering Event, the securities, cash and other
property purchasable in lieu thereof) being purchased, plus the amount of any
applicable transfer tax (as determined by the Rights Agent) required to be paid
by the holder of such Rights Certificate in accordance with Section 9, by
certified or cashier's check or money order payable to the order of the Company,
the Rights Agent shall, subject to the terms and conditions of this Agreement,
thereupon promptly (i) requisition from any transfer agent for the Preferred
Shares (or, if the Rights Agent is such a transfer agent, make available) stock
certificates for the number of one one-hundredths of a Preferred Share being
purchased, the Company hereby irrevocably authorizing any such transfer agent to
-13-
comply with all such requests, (ii) if the Company shall have elected to deposit
the Preferred Shares issuable upon exercise of the Rights with a depository
agent, requisition from the depository agent depository receipts for the number
of one one-hundredths of a Preferred Share being purchased (in which case stock
certificates for the Preferred Shares represented by such depository receipts
shall be deposited by the transfer agent for the Preferred Shares with the
depository agent), the Company hereby irrevocably authorizing any such
depository agent to comply with all such requests, (iii) after a Triggering
Event, requisition or obtain from the appropriate Person or Persons such
securities, cash and other property as may then be purchasable in lieu of
Preferred Shares, the Company hereby irrevocably authorizing all such requests,
(iv) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of the issuance of any fractional share in accordance with Section
14 and (v) promptly after receipt of such stock certificates, depository
receipts, securities, cash and/or other property, cause the same to be delivered
to or upon the order of the registered holder of such Rights Certificate,
registered (when appropriate) in such name or names as may be designated by such
registered holder.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any Section 11(a)(ii) Event, any Rights
Beneficially Owned by: (i) a Restricted Person, (ii) a transferee from a
Restricted Person who becomes a transferee after the Acquiring Person becomes
such or (iii) a transferee from a Restricted Person who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration)
from such Acquiring Person (or any Affiliate or Associate thereof) to holders of
equity interests in such Acquiring Person (or any such Associate or Affiliate)
or to any Person with whom such Acquiring Person (or any such Associate or
Affiliate) has any continuing written or oral agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
has determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(d) shall be or become
void without any further action; and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise, from and after such first occurrence. The Company
shall use all reasonable efforts to ensure that the provisions of this Section
7(d) and Section 4(b) are complied with, but shall have no liability to any
holder of the Rights Certificates or to any other Person as a result of the
Company's failure to make any applicable finding or determination with respect
to any Restricted Person, or any transferee therefrom.
-14-
(e) Notwithstanding subsection (a) of this Section 7, a Right may be
exercised by the holder thereof on or after the Distribution Date and prior to
the receipt of the associated Rights Certificate by notifying the Rights Agent
in writing and furnishing to the Rights Agent such information and evidence as
to such election as the Rights Agent may reasonably request; provided, however,
that the Rights Agent shall not be required to take any of the actions specified
in subsection (c) of this Section 7 until such holder shall have fully satisfied
the applicable requirements specified therein.
(f) Neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to any Rights or Rights Certificate upon the
purported exercise or transfer thereof unless the registered holder thereof
shall have (i) completed and signed the Certification of Status following the
Form of Election to Purchase or the Form of Assignment, as the case may be, set
forth on the reverse side of the Rights Certificate surrendered for such
exercise or transfer and (ii) provided such additional evidence as to the
identity of the Beneficial Owner (or former Beneficial Owner) thereof or the
Affiliates or Associates thereof as the Company shall reasonably request.
(g) In case the registered holder of any Rights Certificate shall
exercise less than all of the Rights evidenced thereby, then, subject to the
provisions of Section 14, a new Rights Certificate evidencing the Rights
remaining unexercised shall be prepared and executed by the Company and
countersigned and delivered by the Rights Agent to the registered holder of such
surrendered Rights Certificate or to such registered holder's duly authorized
assigns.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form
or, if surrendered to the Rights Agent, shall be cancelled by it; and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation,
and the Rights Agent shall cancel, any other Rights Certificate purchased or
reacquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates and deliver a certificate of the destruction thereof to the
Company.
-15-
Section 9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares, or any
authorized and issued Preferred Shares held in its treasury, the number of
Preferred Shares required to permit the exercise in full of all outstanding
Rights.
(b) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares delivered upon exercise
of the Rights shall, at the time of delivery of the stock certificates therefor
in accordance with Section 7(c) (including the receipt of payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(c) The Company covenants and agrees that it will use its best efforts
to cause, from and after such time as the Rights shall become exercisable, all
Preferred Shares issued or reserved for issuance to be listed, upon official
notice of issuance, on the principal national securities exchange, if any, on
which its Common Stock is listed or, if the principal market for Common Stock is
not on any national securities exchange, to be eligible for quotation on the The
Nasdaq Stock Market ("NASDAQ") or any successor thereto or other comparable
quotation system.
(d) The Company covenants and agrees that it will use its best efforts
to (i) file, as soon as practicable after the occurrence of any Section
11(a)(ii) Event for which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iv),
or as soon as required by law after the Distribution Date, as the case may be, a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (ii) cause
such registration statement to become effective as soon as practicable after
such filing and (iii) cause such registration statement to remain effective
(with a prospectus which at all times meets the requirements of the Securities
Act) until the earliest of (A) the date as of which the Rights are no longer
exercisable for such securities, (B) the Redemption Date and (C) the Final
Expiration Date. The Company further covenants and agrees that it will take
such action as may be appropriate under, and which will ensure compliance with,
the securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate in connection with the exercisability of the Rights. The Company
may temporarily suspend, for not more than 90 days after the applicable date
specified in the first sentence of this subsection (d), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to
-16-
become effective and to complete such securities or "blue sky" law action. Upon
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, and the Company
shall also issue a public announcement at such time as the suspension shall no
longer be in effect. Failure of the Company to notify the Rights Agent of any
such suspension shall not affect the effectiveness thereof. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification or exemption in such
jurisdiction shall have been effected. Until otherwise notified in writing by
the Company, the Rights Agent may assume that each purported exercise of the
Rights is permitted by this Agreement and by applicable law, and the Rights
Agent shall not be liable for acting in reliance upon such assumption.
(e) The Company covenants and agrees that, subject to Section 6, it
will pay when due and payable any and all federal and state original issue or
transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Rights or the Rights Certificates or of any stock certificate
for Preferred Shares issued upon exercise of the Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of any Rights Certificate to a Person other than, or
the issuance of any stock certificate for Preferred Shares upon exercise of any
of the Rights represented by such Rights Certificate in a name other than, the
registered holder of such Rights Certificate or to issue or deliver any Rights
Certificate or stock certificate for Preferred Shares upon such transfer or
exercise until any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender thereof) or until
it has been established to the Company's reasonable satisfaction that no such
tax is due.
(f) After a Triggering Event, the provisions of this Section 9 shall
apply, to the extent applicable and appropriate, to all shares of capital stock
and other securities then purchasable upon exercise of the Rights.
Section 10. Record Date of Preferred Share Ownership. The Person in
whose name any stock certificate for Preferred Shares is issued upon exercise of
any of the Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Shares represented thereby on, and such stock
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered to the Rights Agent with proper
payment of the Exercise Price (and all applicable transfer taxes, if any);
provided, however, that if the date of such surrender and payment shall be a
date upon which the registry books of the transfer agent for the Preferred
Shares are closed, such Person shall be deemed to
-17-
have become the record holder of such Preferred Shares on, and such stock
certificate shall be dated, the next succeeding Business Day on which such
registry books are open.
Section 11. Adjustment of Exercise Price, Number and Kind of Shares
and Number of Rights. The Exercise Price, the number and kind of shares of
capital stock for which each Right is exercisable and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event that the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares into a greater
number of Preferred Shares, (C) combine or consolidate the outstanding Preferred
Shares into a smaller number of Preferred Shares or (D) issue any shares of
capital stock of any class in a reclassification of the Preferred Shares
(including any such reclassification in connection with a combination or merger
in which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and in Section 7(d), the Exercise Price
in effect at the Close of Business on the record date for such dividend or at
the effective time of such subdivision, combination, consolidation or
reclassification, and the number and kind of shares of capital stock issuable
upon exercise of the Rights at such date or time, shall be proportionately
adjusted so that the registered holder of each Right exercised after such date
or time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date or time and at a time when the registry books of the transfer agent for the
Preferred Shares were open, such registered holder would have been entitled to
receive by reason of such dividend, subdivision, combination, consolidation or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon the exercise thereof.
If an event shall occur which would require an adjustment under both this
paragraph (i) and paragraph (ii) of this subsection (a), the adjustment provided
for in this paragraph (i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to such paragraph (ii).
(ii) Subject to Section 24, in the event that any Person, either alone
or together with its Affiliates and Associates, shall become an Acquiring
Person, then, in such case and promptly following such occurrence, proper
provision shall be made so that the registered holder of each Right, except
as otherwise provided in Section 7(d), shall thereafter have the right to
receive, upon exercise thereof and payment of an amount equal to the
product determined by multiplying the then
-18-
current Exercise Price by the number of one one-hundredths of a Preferred
Share for which such Right was exercisable immediately prior to such
occurrence, in accordance with this Agreement, in lieu of Preferred Shares,
the number of shares of Common Stock determined dividing such product by
50% of the Fair Market Value (determined as provided in subsection (d) of
this Section 11) of one share of Common Stock on the date of such
occurrence.
(iii) In the event that there shall not be sufficient authorized and
unissued or treasury shares of Common Stock to permit the exercise in full
of the Rights in accordance with paragraph (ii) of this subsection (a), the
Company shall take all necessary action to authorize and reserve for
issuance such number of additional shares of Common Stock as may from time
to time be required to be issued upon the exercise in full of all
outstanding Rights and, if necessary, shall use its best efforts to obtain
stockholder approval thereof. Notwithstanding the preceding sentence, if at
least a majority of the Disinterested Directors shall determine that such
action is necessary or appropriate and is not contrary to the best
interests of the holders of the Rights, such Disinterested Directors may
cause the Company, in lieu of issuing shares of Common Stock in accordance
with such paragraph (ii), to distribute, or if a sufficient number of
shares of Common Stock cannot be issued for such purpose in accordance with
the provisions hereof, the Company shall distribute, upon the exercise of
each Right, cash, debt securities, Preferred Shares, other shares of
Preferred Stock, other property or any combination thereof having an
aggregate Fair Market Value (determined as provided in subsection (d) of
this Section 11) equal to the Fair Market Value (as so determined) of the
number of shares of Common Stock which otherwise would have been issuable
pursuant to such paragraph (ii). Any such decision by a majority of the
Disinterested Directors must be made and publicly announced within 30 days
after the occurrence of any Section 11(a)(ii) Event.
(b) In the event that the Company shall fix a record date for the
making of any distribution to all registered holders of Preferred Shares of
options, warrants or rights entitling them (for a period expiring not later than
45 calendar days after such record date) to subscribe for or purchase Preferred
Shares (or shares of capital stock of any class of the Company having the same
(or more favorable) powers, preferences and rights as the Preferred Shares
("Equivalent Preferred Shares"), or securities convertible into or exchangeable
for Preferred Shares or Equivalent Preferred Shares, at a price per Preferred
Share or per Equivalent Preferred Share (or having a conversion or exchange
price per share, in the case of securities convertible into or exchangeable for
Preferred
-19-
Shares or Equivalent Preferred Shares) less than the Fair Market Value
(determined as provided in subsection (d) of this Section 11) of one Preferred
Share on such record date, the Exercise Price to be in effect after such record
date shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Preferred Shares outstanding on such record date, plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or Equivalent Preferred Shares so to be offered (and/or the
aggregate initial conversion or exchange price, in the case of convertible or
exchangeable securities so to be offered) would purchase at such Fair Market
Value, and the denominator of which shall be the number of Preferred Shares
outstanding on such record date, plus the total number of Preferred Shares
and/or Equivalent Preferred Shares so to be offered (and/or into or for which
the convertible or exchangeable securities so to be offered are initially
convertible or exchangeable); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
the exercise thereof. In case all or part of such subscription price may be
paid in a form other than cash, the value of such non-cash consideration shall
be its Fair Market Value (determined as provided in such subsection (d)).
Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any computation provided for in this
subsection (b). The adjustment required by this subsection (b) shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Exercise Price shall be adjusted to the
Exercise Price which would have been in effect if such record date had not been
fixed.
(c) In the event that the Company shall fix a record date for the
making of any distribution to all registered holders of Preferred Shares
(including any such distribution made in connection with a combination or merger
in which the Company is the continuing or surviving corporation) of cash (other
than a regular quarterly cash dividend), options, warrants, rights (other than
those referred to in subsection (b) of this Section 11), securities, evidences
of indebtedness or other property (excluding any dividend payable in Preferred
Shares, but including any dividend payable in other shares of capital stock),
the Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Fair Market Value (determined
as provided in subsection (d) of this Section 11) of one one-hundredth of a
Preferred Share on such record date, less the Fair Market Value (as so
determined) of the cash, options, warrants, rights, securities, evidences of
indebtedness or other property so to be distributed and properly
-20-
attributable to one one-hundredth of a Preferred Share, and the denominator of
which shall be such Fair Market Value of one one-hundredth of a Preferred Share;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon the exercise thereof. The adjustment
required by this subsection (c) shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Exercise Price shall be adjusted to the Exercise Price which would have been
in effect if such record date had not been fixed.
(d) For the purpose of any computation required under this Agreement,
"Fair Market Value," when used with respect to Preferred Shares or shares of
Common Stock or other capital stock of any class (collectively, a "Stock"), to
any option, warrant, right or other security or evidence of indebtedness
(collectively, a "Security") or to any other property, shall be determined as
provided in this subsection (d):
(i) In the case of any Stock or Security which is publicly traded, the
Fair Market Value on any date shall be deemed to be the average of the
daily closing prices per share of such Stock or per unit of such Security
for the 30 consecutive Trading Days immediately prior to such date;
provided, however, that in the event that the Fair Market Value per share
of any Stock is determined during a period commencing after the public
announcement by its issuer of (A) a dividend or distribution on such Stock
payable in shares of such Stock or securities convertible into or
exchangeable for shares of such Stock or (B) a subdivision, combination,
consolidation or reclassification of such Stock, and ending prior to the
expiration of the 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination, consolidation or reclassification, then, in each such case,
the Fair Market Value of such Stock shall be properly adjusted to take into
account "ex-dividend" trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale shall take place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if such Stock or Security is not listed or admitted
to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the principal national securities exchange on
which such Stock or Security is listed or admitted to trading; or if such
Stock or Security is not listed or
-21-
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the last quoted high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or any
other similar system then in use; or if on any such day no bid for such
Stock or Security is quoted by any such organization, the average of the
closing bid and asked prices, as furnished by a professional market maker
making a market in such Stock or Security selected by the Board. If during
any relevant period no market maker is making a market in such Stock or
Security, its Fair Market Value on a specified date shall be determined
reasonably and with utmost good faith to the holders of the Rights by the
Board; provided, however, that if at the time of such determination there
shall be an Acquiring Person, the Fair Market Value of such Stock or
Security on such date shall be determined by a nationally recognized
investment banking firm selected by the Board, which determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Company, the Rights Agent and the holders of the Rights. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which such Stock or Security is listed or admitted to trading
is open for the transaction of business or, if such Stock or Security is
not listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) In the case of any Stock or Security which is not publicly traded,
the Fair Market Value on any date shall be the fair value per share of such
Stock or per unit of such Security as determined reasonably and with utmost
good faith to the holders of the Rights by the Board; provided, however,
that if at the time of such determination there shall be an Acquiring
Person, the Fair Market Value of such Stock or Security on such date shall
be determined by a nationally recognized investment banking firm selected
by the Board, which determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Company, the Rights Agent
and the holders of the Rights.
(iii) In the case of any property which is not a Stock or a Security,
the Fair Market Value on any date shall be determined reasonably and with
utmost good faith to the holders of Rights by the Board; provided, however,
that if at the time of such determination there shall be an Acquiring
Person, the Fair Market Value of such property on such date shall be
determined by a nationally recognized investment banking firm selected by
the Board, which determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Company, the Rights Agent and
the holders of the Rights.
-22-
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Exercise
Price then in effect; provided, however, that any adjustments which by reason of
this subsection (e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest whole cent, to the nearest one ten-
thousandth of a share of Common Stock or other capital stock of any class (other
than Preferred Shares) or to the nearest one one-millionth of a Preferred Share,
as the case may be. Notwithstanding the first sentence of this subsection (e),
any adjustment required by this Section 11 shall be made no later than the
earliest of (i) three years after the date of the occurrence requiring such
adjustment, (ii) the Redemption Date and (iii) the Final Expiration Date.
(f) If as a result of an adjustment required by any Triggering Event
the holder of any Rights thereafter exercised shall become entitled to receive
any shares of capital stock of any class of the Company (other than Preferred
Shares), the number of such other shares so receivable upon exercise of any
Rights shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as reasonably possible to the provisions with respect to
the Preferred Shares contained in this Section 11, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised the option provided in
subsection (i) of this Section 11, upon each adjustment of the Exercise Price as
a result of the calculations required by subsection (b) or (c) of this Section
11, each Right outstanding immediately prior to the making of such Exercise
Price adjustment shall thereafter evidence the right to purchase, at the
adjusted Exercise Price, the number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth) determined by (i) multiplying the
number of one one-hundredths of a Preferred Share purchasable upon exercise of
such Right immediately prior to such adjustment by the Exercise Price in effect
immediately prior to such adjustment and (ii) dividing the product so obtained
by the Exercise Price in effect immediately after such adjustment.
-23-
(i) The Company may elect, on or after the date on which any
adjustment of the Exercise Price is required to be made hereunder, to adjust the
number of Rights outstanding in substitution for making an adjustment in the
number of one one-hundredths of a Preferred Share purchasable upon exercise of
each Right. Each Right outstanding after such an adjustment in the number of
Rights shall be exercisable for the same number of one one-hundredths of a
Preferred Share as such Right was exercisable for immediately prior to such
adjustment; but each Right held of record prior to such adjustment shall become
the number of Rights (calculated to the nearest one ten-thousandth) determined
by dividing the Exercise Price in effect immediately prior to the occurrence
requiring the adjustment of the Exercise Price by the Exercise Price in effect
immediately after such adjustment of the Exercise Price. The Company shall make
a prompt public announcement of its election to adjust the number of Rights
outstanding, indicating the record date for the adjustment and, if known at the
time of such announcement, the amount of the adjustment to be made. Such record
date may be the date on which the Exercise Price is required to be adjusted or
any day thereafter, unless the Rights Certificates shall have been issued, in
which case such record date shall be at least 10 days after the date of such
public announcement. If the Rights Certificates shall have been issued, upon
each adjustment of the number of Rights outstanding pursuant to this subsection
(i), the Company shall, as promptly as practicable, cause to be distributed to
each registered holder of the Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14, the additional Rights to which
such registered holder shall be entitled as a result of such adjustment; or, at
its option, the Company shall cause to be distributed to each such registered
holder, in substitution and replacement for the Rights Certificates held by such
registered holder prior to the date of such adjustment, but only upon surrender
thereof (if so required by the Company), new Rights Certificates evidencing all
the Rights to which such registered holder shall be entitled after such
adjustment. Rights Certificates so distributed shall be executed and
countersigned in the manner provided in Section 5 (and may designate, at the
option of the Company, the adjusted Exercise Price) and shall be registered in
the names of the registered holders of the Rights Certificates on the record
date specified in the aforesaid public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or
the number of one one-hundredths of a Preferred Share issuable upon exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to designate the Exercise Price and the number of one one-hundredths of
a Preferred Share which were designated in the Rights Certificates originally
issued hereunder.
-24-
(k) Before taking any action which would cause an adjustment reducing
the Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require an adjustment
of the Exercise Price effective as of the record date for a particular event,
the Company may elect to defer until the occurrence of such event the issuing to
the holder of any Rights exercised after such record date of the Preferred
Shares (and/or the other shares of capital stock, securities or other property
of the Company, if any) issuable upon such exercise in excess of the Preferred
Shares (and/or the other shares of capital stock, securities or other property
of the Company, if any) issuable upon such exercise on the basis of the Exercise
Price in effect immediately prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due ▇▇▇▇ or other appropriate
instrument evidencing such holder's right to receive such excess upon the
occurrence of such event.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Board shall be entitled to make reductions in the Exercise Price, in addition to
the adjustments expressly required by this Section 11, as and to the extent that
the Board, in its sole discretion, shall determine to be advisable in order that
any dividend on the Preferred Shares payable in Preferred Shares, any
subdivision, combination or consolidation of the Preferred Shares (by
reclassification or otherwise than by payment of dividends in Preferred Shares)
into a greater or lesser number of Preferred Shares, any issuance of Preferred
Shares solely for cash at less than the Fair Market Value thereof, any issuance
solely for cash of Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares or any issuance of
options, warrants, rights, securities, evidences of indebtedness or other
property subject to subsection (b) or (c) of this Section 11, hereafter made by
the Company to the holders of the Preferred Shares, shall not be taxable to such
holders.
(n) In the event that the Company shall at any time after the date of
this Agreement and prior to the Distribution Date (i) declare a dividend on its
outstanding shares of Common Stock payable in shares of Common Stock or (ii)
effect a subdivision, combination or consolidation of its outstanding shares of
Common Stock (by reclassification or otherwise than by payment of dividends in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in each such case: (i) the number of one one-hundredths of a
Preferred Share purchasable after
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such event upon proper exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event; and (ii) each share of Common Stock outstanding
immediately after such event shall have issued with respect to it the same
number of Rights which each share of Common Stock outstanding immediately prior
to such event had issued with respect to it. The adjustment required by this
subsection (n) shall be made successively whenever such a dividend is declared
or such a subdivision, combination or consolidation is effected.
(o) Except as permitted by Sections 23 and 27, the Company covenants
and agrees that, after the Distribution Date, it will not take, or permit any of
its Subsidiaries to take, any action if at the time such action would be taken
it is reasonably foreseeable that such action would eliminate or substantially
diminish the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Exercise Price or Number of
Shares. Whenever any adjustment shall be required by Section 11, 13 or 23(g),
the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts requiring such adjustment, (b)
file with the Rights Agent and with each transfer agent for the Preferred Shares
or the Common Stock of the Company a copy of such certificate and (c) mail a
brief summary thereof to each registered holder of the Rights in accordance with
Section 26. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment described therein and shall not be deemed to
have knowledge of any such adjustment unless and until it shall have received
such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, on or after the occurrence of any Section
11(a)(ii) Event, directly or indirectly: (i) the Company shall consolidate with,
or merge with and into, any Interested Stockholder or, if in such consolidation
or merger all holders of the Common Stock of the Company are not treated the
same, any other Person (other than a wholly-owned Subsidiary of the Company in a
transaction not prohibited by Section 11(o)), so that the Company shall not be
the continuing or surviving corporation, (ii) any Interested Stockholder or, if
in such merger all holders of the Common Stock of the Company are not treated
the same, any other Person (other than a wholly-owned Subsidiary of the Company
in a
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transaction not prohibited by Section 11(o)) shall merge with and into the
Company, so that the Company shall be the continuing or surviving corporation,
and in connection with such merger either (A) all or part of the outstanding
shares of Common Stock of the Company shall be converted or changed into or
exchanged for capital stock or other securities of any other Person (or the
Company), cash and/or other property or (B) such shares of Common Stock shall
remain outstanding, unconverted and unchanged, or (iii) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or a series of related transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Interested Stockholder
or, if in such transaction or transactions the holders of the Common Stock of
the Company are not treated the same, any other Person or Persons (other than
the Company or one or more of its wholly-owned Subsidiaries in one or more
transactions, each of which is not prohibited by Section 11(o)), then, in each
such case, proper provision shall be made so that (w) the registered holder of
each Right, except as otherwise provided in Section 7(d), shall thereafter have
the right to receive, upon exercise thereof and payment of an amount equal to
the product determined by multiplying the then current Exercise Price by the
number of one one-hundredths of a Preferred Share for which such Right is then
exercisable, in accordance with this Agreement, in lieu of Preferred Shares, the
number of freely tradable shares (which shall be duly authorized, validly
issued, fully paid and non-assessable) of Common Stock of the Principal Party
or, in the case of a merger described in clause (ii) of this sentence in which
the Common Stock of the Company shall remain outstanding, unconverted and
unchanged, of the Company, free and clear of all rights of call or first
refusal, liens, encumbrances or other adverse claims, determined by dividing
such product by 50% of the Fair Market Value (determined as provided in Section
11(d)) of the shares of Common Stock of such Principal Party (or, if
appropriate, the Company) on the date of consummation of such Section 13 Event;
(x) such Principal Party shall thereafter be liable for, and shall assume, by
reason of the consummation of such Section 13 Event, all the obligations and
duties of the Company under this Agreement; (y) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 shall apply to such Principal Party;
and (z) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its shares of Common Stock to
permit exercise of all outstanding Rights in accordance with this subsection (a)
and the distribution of cash, debt securities, shares and other property in
accordance with Section 11(a)(iv))in connection with the consummation of such
Section 13 Event as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably possible, in relation to the
-27-
shares of Common Stock thereafter deliverable upon exercise of the Rights.
(b) After the Distribution Date, the Company shall not consolidate or
merge with any other Person (other than a wholly-owned Subsidiary of the Company
in a transaction not prohibited by Section 11(o)), or sell or otherwise transfer
(or permit one or more of its Subsidiaries to sell or otherwise transfer), in
one or a series of related transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company or one
or more of its wholly-owned Subsidiaries in one or more transactions, each of
which is not prohibited by Section 11(o)), if (i) at the time of or immediately
after the consummation of such transaction there are any options, warrants,
rights, conversion or exchange privileges or securities outstanding or any
written or oral agreements, arrangements or understandings (including provisions
contained in the Company's Certificate of Incorporation or By-laws) in effect
which, as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights, or
(ii) prior to, at the time of or immediately after the consummation of such
transaction the stockholders of the Person who constitutes, or would constitute,
the Principal Party for the purpose of subsection (a) of this Section 13 shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates or Associates.
(c) The Company shall not consummate any Section 13 Event unless
prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and (ii) the Company, the Principal Party and each other Person who
may become the Principal Party as a result of the consummation of such Section
13 Event shall have executed and delivered to the Rights Agent a supplemental
agreement providing (x) for the implementation of all the terms and conditions
set forth in this Section 13 and (y) that, as soon as practicable after the date
of such Section 13 Event, the Principal Party, at its own expense, shall:
(A) prepare and file a registration statement on an appropriate
form under the Securities Act with respect to the Rights and the securities
purchasable upon exercise thereof, and use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and to remain effective (with a prospectus which at all times
meets the requirements of the Securities Act) until the earliest of
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the date as of which the Rights are no longer exercisable for such
securities, the Redemption Date and the Final Expiration Date;
(B) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise thereof under the securities or
"blue sky" laws of such jurisdictions as may be necessary or appropriate in
connection with the exercisability of the Rights;
(C) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise thereof on a
national securities exchange or to meet the eligibility requirements for
quotation on NASDAQ; and
(D) deliver to the registered holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
complying in all material respects with the requirements for registration
of securities on Form 10 under the Exchange Act.
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not apply to a transaction described in clause (i) or (ii) of
subsection (a) thereof if (i) such transaction is consummated with a Person or
Persons who acquired their shares of Common Stock of the Company pursuant to a
Permitted Offer, (ii) the price per share of Common Stock of the Company
provided in such transaction shall not be less than the price per share of
Common Stock of the Company paid to all holders whose shares were purchased
pursuant to such Permitted Offer and (iii) the form of consideration being
offered to the remaining holders of the Common Stock of the Company pursuant to
such transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any transaction authorized by this
subsection (d), all Rights shall expire.
(e) "Principal Party" shall mean: in the case of any transaction
described in clause (i) or (ii) of subsection (a) of this Section 13, the Person
which is the issuer of the securities into which shares of Common Stock of the
Company are being converted or changed in such transaction or, if there shall be
more than one such issuer, the issuer having shares of Common Stock with the
greatest aggregate market value; or if no securities are being issued in such
transaction for shares of Common Stock of the Company, the Person which is the
other party to such transaction or, if there shall be more than one such Person,
the Person having shares of Common Stock with the greatest aggregate market
value; and in the case of any transaction described in clause (iii) of such
subsection (a), the Person which is the party receiving the
-29-
greatest portion of the assets or earning power sold or otherwise transferred
pursuant to such transaction or transactions; provided, however, that in any
such case (i) if the shares of Common Stock of such Person shall not at the time
of the consummation of such transaction have been continuously registered under
Section 12 of the Exchange Act during the immediately preceding 12-month period,
and such Person shall be a direct or indirect Subsidiary or Affiliate of another
Person the shares of Common Stock of which shall have been so registered,
"Principal Party" shall mean such other Person; and (ii) if such Person shall be
a direct or indirect Subsidiary or Affiliate of more than one other Person, the
shares of Common Stock of two or more of which shall have been so registered,
"Principal Party" shall mean whichever of such other Persons shall have Common
Stock with the greatest aggregate market value; and (iii) if such Person shall
be owned, directly or indirectly, by a joint venture formed by two or more
Persons which are not owned, directly or indirectly, by the same Person, the
rules set forth in clauses (i) and (ii) of this proviso shall apply to each
chain of ownership of any joint venturer as though such joint venture were a
"Subsidiary" of all of such joint venturers, and the Principal Party in each
such chain shall bear the obligations and duties set forth in this Section 13 in
the same proportion as their direct or indirect ownership interest in such
Person bears to the total of such ownership interests.
(f) If, in the case of any transaction described in clause (iii) of
subsection (a) of this Section 13, the Person or Persons to whom assets or
earning power are sold or otherwise transferred are individuals, then, in lieu
of any other payment or distribution required by this Section 13, and the
Company shall require as a condition to such transaction that, such Person or
Persons shall pay to each holder of a Rights Certificate, upon its surrender to
the Rights Agent and in exchange therefor (without requiring any payment by such
holder), cash in the amount determined by multiplying the then current Exercise
Price by the number of one one-hundredths of a Preferred Share for which a Right
is then exercisable.
(g) In no event shall the Rights Agent have any obligations or duties
in respect of any Section 13 Event, except as expressly set forth in this
Agreement. The Rights Agent may rely, and shall be fully protected in relying
upon, a certificate of the Company stating that the provisions of this Section
13 have been fulfilled. The prior written consent of the Rights Agent shall be
required in connection with any supplemental agreement which alters or impairs
the rights, obligations, duties or immunities of the Rights Agent hereunder.
(h) The provisions of this Section 13 shall similarly apply to
successive consolidations, mergers, sales or other
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transfers. In the event that any Section 13 Event shall occur at any time after
the occurrence of any Section 11(a)(ii) Event, the Rights which have not been
theretofore exercised shall thereafter be exercisable in the manner described in
this Section 13.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional Rights or
to distribute Rights Certificates which evidence fractional Rights. If the
Company shall determine not to issued fractional Rights, the Company shall pay,
in lieu of issuing fractional Rights, to the registered holders of the Rights
with respect to which fractional Rights would otherwise be issuable an amount in
cash equal to the same fraction of the Fair Market Value (determined as provided
in Section 11(d) for the Trading Day immediately prior to the date on which such
fractional Rights would otherwise have been issued) of one Right.
(b) The Company shall not be required to issue fractional Preferred
Shares (other than fractions which are multiples of one one-hundredth of a
Preferred Share) upon exercise of the Rights or to distribute stock certificates
which evidence fractional Preferred Shares (other than fractions which are
multiples of one one-hundredth of a Preferred Share). If the Company shall
determine not to issue fractional Preferred Shares that are not multiples of one
one-hundredth of a Preferred Share, the Company shall pay to the registered
holders of the Rights Certificates at the time Rights represented thereby are
exercised, in lieu of such fractional Preferred Shares, an amount in cash equal
to the same fraction of the Fair Market Value (determined as provided in Section
11(d) for the Trading Day immediately prior to the date of such exercise) of one
one-hundredth of a Preferred Share.
(c) Each holder of a Right, by accepting the same, expressly waives
such holder's right to receive or exercise any fractional Right or to receive
any fractional Preferred Share upon the exercise of such Right (except as
provided in this Section 14).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action which the Rights Agent may have under
Sections 18 and 20, are vested in the registered holders of the Rights
Certificates (or, prior to the Distribution Date, the registered holders of the
Common Stock of the Company); and the registered holder of any Rights
Certificate (or, prior to the Distribution Date, of any stock certificate for
shares of such Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of
any other stock certificate for shares of Common Stock), may, on such registered
holder's own behalf and
-31-
for such registered holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such registered holder's right to exercise the
Rights evidenced by such Rights Certificate (or, prior to the Distribution Date,
such stock certificate) in the manner provided in such Rights Certificate and in
this Agreement. Without limiting the generality of the foregoing or any remedies
available to the holders of the Rights, it is specifically acknowledged that the
registered holders of the Rights would not have an adequate remedy at law for
any breach of this Agreement and will be entitled to specific performance of the
obligations and duties under, and injunctive relief against any actual or
threatened violations of the obligations and duties of any Person subject to,
this Agreement.
Section 16. Agreements of Holders of Rights. Each holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be transferable
only simultaneously and together with the transfer of shares of Common Stock of
the Company;
(b) after the Distribution Date, the Rights Certificates shall be
transferable on the registry books of the Rights Agent only if surrendered at
the principal office of the Rights Agent, with the Form of Assignment and
Certification of Status on the reverse side thereof duly executed, together with
such signature guarantees and other documentation as the Rights Agent may
reasonably request;
(c) subject to Sections 6 and 7(d), the Company and the Rights Agent
may deem and treat the Person in whose name any Rights Certificate (or, prior to
the Distribution Date, any stock certificate for Common Stock of the Company) is
registered as the absolute owner thereof and of the Rights represented thereby
(notwithstanding any notations of ownership or other writing on such Rights
Certificate or stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary; and
(d) neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or to any other Person because of its inability to
perform any of its obligations or duties under this Agreement by reason of any
applicable law, any preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission or
-32-
any rule, regulation or executive order promulgated or enacted by any such
governmental authority prohibiting or otherwise restraining performance of any
such obligation or duty; provided, however, that the Company shall use its best
efforts to have any such injunction, order, decree or ruling lifted or otherwise
overturned as soon as reasonably possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, to receive
dividends or other distributions on or to exercise any preemptive rights with
respect to, or shall be deemed for any other purpose to be the holder of, the
Preferred Shares or other shares of capital stock of any class of the Company
which may at the time be issuable upon exercise of the Rights represented
thereby; nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company, or any right to vote for the
election of directors or upon any other matter submitted to stockholders at any
meeting thereof, to give or withhold consent to any corporate action, to receive
notice of meetings or other actions affecting stockholders (except as provided
in Section 25) or to receive dividends, subscription rights or other
distributions, until the Rights represented by such Rights Certificate shall
have been exercised, in whole or in part, in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) The Company covenants and agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time on the written request of the Rights Agent, to reimburse it for all
reasonable expenses and counsel fees incurred in connection with the acceptance
and administration of this Agreement and the performance of its obligations and
duties hereunder. The Company also covenants and agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability or expense,
incurred without negligence, bad faith or willful misconduct on its part, for
any action taken, suffered or omitted by it in connection with the acceptance
and administration of this Agreement and the performance of its obligations and
duties hereunder, including the costs and expenses of defending against any
claim of liability arising therefrom, directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of, any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate, stock certificate for Preferred Shares, Common Stock or other
shares of capital stock of the Company, instrument of assignment or transfer,
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power of attorney, endorsement, affidavit, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be executed and, where necessary, verified or acknowledged by the proper
Person or Persons.
Section 19. Merger or Consolidation of the Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stockholder services or corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as successor Rights Agent under Section 21. In case at
the time any successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates countersigned by its predecessor Rights
Agent shall not have been delivered, such successor Rights Agent may adopt the
counter signature of its predecessor Rights Agent and deliver the Rights
Certificates so countersigned; or in case at such time any of the Rights
Certificates shall not have been countersigned, such successor Rights Agent may
countersign such Rights Certificates either in the name of its predecessor
Rights Agent or in the name of such successor Rights Agent; and in all such
cases, such Rights Certificates shall have the full force and effect provided
therein and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver the Rights Certificates so countersigned; or in case at
such time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases, such Rights Certificates shall
have the full force and effect provided therein and in this Agreement.
Section 20. Duties of the Rights Agent. The Rights Agent undertakes
the obligations and duties imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of the Rights
Certificates (or, prior to the Distribution Date, the stock certificates for
Common Stock of the Company), by accepting the same, shall be bound, and no
implied obligations or duties shall be read into this Agreement against the
Rights Agent:
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(a) the Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the written opinion of such legal counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken, suffered or omitted by it in good faith and in accordance with
such opinion;
(b) whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate executed by any one of the Chairman of the Board,
the President, any Vice President, the Treasurer or the Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full and
complete authorization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith in reliance upon such
certificate;
(c) the Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct;
(d) the Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereon) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only;
(e) the Rights Agent shall not be responsible for the validity of
this Agreement or the execution and delivery hereof (except for its due
execution hereof) or for the validity or execution of any Rights Certificate
(except for its countersignature thereon); nor shall the Rights Agent be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall the Rights Agent be
responsible for any change in the exercisability of the Rights (including Rights
becoming void pursuant to Section 7(d)), for any adjustment or change (or for
the manner or method of determining same) in the terms of the Rights (including
any adjustment or change in the Exercise Price or in the number or kind of
shares, securities or other property issuable upon the exercise thereof)
required by Section 11, 13, 23 or 24 or for ascertaining the existence of facts
which would require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after actual notice, in the
manner provided in Section 12, that such change or adjustment is required); nor
shall the Rights Agent by any act hereunder be
-35-
deemed to have made any representation or warranty as to the authorization or
reservation of any Preferred Shares or shares of Common Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any
Preferred Shares or shares of Common Stock will, when issued, be validly
authorized and issued and fully paid and nonassessable;
(f) the Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement;
(g) the Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its obligations and duties
hereunder from any one of the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its obligations and
duties; and the Rights Agent shall not be liable for any action taken, suffered
or omitted by it in good faith and in accordance with the written instructions
of any such officer or for any delay in acting while waiting for such
instructions;
(h) the Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in the Rights or in any other
securities of the Company (including the Preferred Shares and its Common Stock)
or become pecuniarily interested in any transaction in which the Company (or any
of its Subsidiaries) may be interested, or contract with or lend money to the
Company (or any of its Subsidiaries), and may otherwise act as fully and freely
as though it were not the Rights Agent under this Agreement; and nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Company, any of its Subsidiaries or any other entity;
(i) the Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any of its obligations or duties hereunder
either directly or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorney or agent or for any loss to the Company
resulting from any such act, default, neglect or misconduct, provided the Rights
Agent exercised reasonable care in the selection and continued employment of
such attorney or agent;
(j) if, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the Form of Certification of Status
attached to the Form of Election to
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Purchase or the Form of Assignment, as the case may be, has either not been
completed or indicates an affirmative response to Question 1 and/or 2 thereof,
the Rights Agent shall not take any further action with respect to the requested
exercise or transfer without first consulting with the Company; and
(k) no provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its obligations or duties or in the exercise of its rights
or powers hereunder if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured.
Section 21. Resignation or Removal of the Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be discharged from its
obligations and duties under this Agreement upon 30 days' prior notice to the
Company and to each transfer agent for the Preferred Shares and for the Common
Stock of the Company, sent by registered or certified mail, postage prepaid, and
to each registered holder of the Rights Certificates, sent by first-class mail,
postage prepaid. The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' prior notice to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent for the Preferred Shares and for
the Common Stock of the Company, sent by registered or certified mail, postage
prepaid, and to each registered holder of the Rights Certificates, sent by
first-class mail, postage prepaid. If the Rights Agent or any successor Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor Rights Agent. If the Company shall fail to
make such appointment within 30 days after giving notice of such removal or
after receiving notice of such resignation or incapacity, either from the
resigning or incapacitated Rights Agent or from the registered holder of any
Rights Certificate (who shall, with such notice, submit its Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or the
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a successor Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
of America, the State of Delaware, the State of New York or the State of
Illinois (or of any other state so long as such corporation is authorized to do
business as a banking institution in the State of Delaware, the State of New
York or the State of Illinois), be in good standing under the laws of the
jurisdiction of its incorporation, have an office in the State of Delaware, the
State of New York or the State of Illinois, be authorized under such laws to
exercise corporate trust or stock transfer powers, be subject to
-37-
supervision or examination by federal or state authority and have at the time of
its appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an affiliate of a corporation described in clause (a) of this
sentence. After its appointment, the successor Rights Agent shall be vested with
the same rights, powers, obligations, duties and immunities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent for
the Preferred Shares and for the Common Stock of the Company, and mail notice
thereof to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or any successor Rights Agent or the appointment of any successor
thereto.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
provision of this Agreement or of the Rights Certificates to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing the Rights
in such form as may be approved by the Board to reflect any adjustment or change
in the Exercise Price or in the number or kind of shares, securities or other
property issuable upon exercise of the Rights in accordance with the provisions
of this Agreement; provided, however, that (a) no such Rights Certificates shall
be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance could create a significant risk of material adverse tax
consequences to the Company or to the Persons to whom such Rights Certificates
would be issued and (b) no such Rights Certificates shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. Redemption.
(a) The Board may, at its option, at any time prior to the earliest
of (i) the Close of Business on the 10th Business Day after the Share
Acquisition Date (or, if the Share Acquisition Date shall have occurred prior to
the Record Date, the Close of Business on the 10th Business Day after the Record
Date), (ii) the occurrence of any Section 13 Event and (iii) the Final
Expiration Date, redeem all, but not less than all, of the then outstanding
Rights at a redemption price of $.01 per Right, adjusted as provided in
subsection (g) of this Section 23 (such redemption price being hereinafter
called the "Redemption Price"); provided, however, that if the Board shall
authorize the redemption of the
-38-
Rights at a time at which there is an Acquiring Person, there must be
Disinterested Directors then in office and such authorization shall require the
concurrence of at least a majority of such Disin terested Directors.
(b) In addition to the right of redemption reserved in the first
sentence of subsection (a) of this Section 23, if there shall be Disinterested
Directors then in office, the Board may redeem, with the concurrence of at least
a majority of the Disinterested Directors, all, but not less than all, of the
then outstanding Rights at the Redemption Price after the Share Acquisition
Date, but prior to the occurrence of any Section 13 Event, if either (i) the
Person who is an Acquiring Person shall have transferred or otherwise disposed
of (either alone or together with its Affiliates and Associates) such number of
shares of Common Stock of the Company, in one or a series of related
transactions not directly or indirectly involving the Company or any of its
Subsidiaries or the occurrence of any Section 13 Event, as shall result in such
Person thereafter being a Beneficial Owner of less than 10% of the then
outstanding shares of Common Stock of the Company, and after such transfer or
other disposition there is no other Acquiring Person, or (ii) in connection with
any Section 13 Event which shall not involve an Interested Stockholder and in
which all holders of the Common Stock of the Company are treated the same.
(c) Notwithstanding any other provision of this Agreement, the Rights
shall not be exercisable after the first occurrence of any Section 11(a)(ii)
Event until such time as the Company's right of redemption under this Section 23
shall have expired.
(d) In considering whether to redeem the Rights, the Board and the
Disinterested Directors may consider the best long-term and short-term interests
of the Company and its stockholders, including, without limitation, the effects
of the redemption of the Rights upon employees, creditors, suppliers and
customers of the Company or of its Subsidiaries and upon the communities in
which offices or other establishments of the Company and such Subsidiaries are
located and all other pertinent factors. The redemption of the Rights by the
Board may be made effective at such time, on such basis and with such conditions
as the Board, in its sole discretion, may establish.
(e) Immediately after action by the Board directing the redemption of
the Rights pursuant to subsection (a) or (b) of this Section 23, and without any
further action and without any notice, the right to exercise the Rights shall
terminate, and thereafter each registered holder of the Rights shall only be
entitled to receive the Redemption Price therefor. The Company shall give
-39-
prompt written notice to the Rights Agent and prompt public notice to the
holders of the Rights of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after action by the Board directing the
redemption of the Rights, the Company shall mail (or cause the Rights Agent to
mail) a notice of redemption to each registered holder of the then outstanding
Rights, at its last address appearing on the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Stock of the Company. Any notice which is mailed in the manner
provided in this subsection (e) shall be deemed given, whether or not received
by the registered holder to whom sent. Each notice of redemption shall state the
method by which payment of the Redemption Price is to be made. Neither the
Company nor any of its Affiliates or Associates may at any time redeem, acquire
or purchase for value any Rights other than in the manner set forth in this
Section 23 and Section 24 or in connection with any purchase of outstanding
shares of its Common Stock prior to the Distribution Date.
(f) The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on its Fair Market Value (determined as provided
in Section 11(d)) as of the date of redemption) or any other form of
consideration deemed appropriate by the Board.
(g) In the event that the Company shall at any time after the date of
this Agreement (i) declare a dividend on its outstanding shares of Common Stock
payable in shares of Common Stock or (ii) effect a subdivision, combination or
consolidation of its outstanding shares of Common Stock (by reclassification or
otherwise than by payment of dividends in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then, in each such case, the
Redemption Price after such event shall equal the Redemption Price in effect
immediately prior to such event multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event; provided, however, that such
adjustment shall be made only if the amount of the Redemption Price would be
reduced or increased by at least $.001 per Right.
Section 24. Exchange.
(a) The Board may, at its option, at any time on or after the
occurrence of any Section 11(a)(ii) Event, exchange all or any part of the then
outstanding and exercisable Rights (which shall not include any Rights which
have become void pursuant to Section 7(d)) for shares of Common Stock of the
Company at an
-40-
exchange rate of one share of Common Stock per Right, appropriately adjusted to
reflect any event specified in clauses (A) through (D), inclusive, of the first
sentence of Section 11(a)(i) or in Section 11(n) occurring after the date hereof
(such exchange rate being hereinafter called the "Exchange Rate"); provided,
however, that the Board shall not be authorized to effect such an exchange at
any time after any Person (other than an Exempt Person), together with the
Affiliates and Associates of such Person, shall have become the Beneficial Owner
of 50% or more of the then outstanding shares of Common Stock of the Company.
(b) Immediately after action by the Board directing the exchange of
any Rights pursuant to subsection (a) of this Section 24, and without any
further action and without any notice, the right to exercise such Rights shall
terminate, and thereafter each registered holder of such Rights shall only be
entitled to receive the number of shares of Common Stock of the Company which
shall equal the number of such Rights held by such registered holder multiplied
by the Exchange Rate then in effect. The Company shall give prompt written
notice to the Rights Agent and prompt public notice to the holders of the Rights
of any such exchange; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such exchange. Within 10
days after action by the Board directing the exchange of any Rights, the Company
shall mail (or cause the Rights Agent to mail) a notice of exchange to each
registered holder of such Rights, at its last address appearing on the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock of the Company. Any notice
which is mailed in the manner provided in this subsection (b) shall be deemed
given, whether or not received by the registered holder to whom sent. Each
notice of exchange shall state the method by which the exchange of shares of
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata among the registered holders of the Rights based upon
the number of Rights held (excluding Rights which shall have become void
pursuant to Section 7(d)); and, in such case, a new Rights Certificate
evidencing the Rights not being exchanged shall be prepared and executed by the
Company and countersigned and delivered by the Rights Agent to the registered
holder of such Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or Equivalent Preferred Shares) for
shares of Common Stock in effecting an exchange for Rights, at the initial rate
of one one-hundredth of a Preferred Share (or Equivalent Preferred Share) for
each share of Common Stock, appropriately adjusted to reflect any adjustments in
the voting rights of the Preferred Shares pursuant
-41-
to the Certificate of Designations attached hereto as Exhibit A, so that the
fractional Preferred Share delivered in lieu of each share of Common Stock shall
have the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient authorized and
unissued or treasury shares of Common Stock or Preferred Shares (or Equivalent
Preferred Shares) to permit the exchange of Rights directed by the Board, the
Company shall take all necessary action to authorize and reserve for issuance
such number of additional shares of Common Stock or Preferred Shares (or
Equivalent Preferred Shares) as may be required for issuance upon such exchange
and, if necessary, shall use its best efforts to obtain stockholder approval
thereof.
(e) The Company shall not be required to issue fractional shares of
Common Stock in exchange for Rights or to distribute stock certificates which
evidence fractional shares of Common Stock. If the Company shall determine not
to issue fractional shares of Common Stock, the Company shall pay to the
registered holders of the Rights with respect to which such fractional shares
would otherwise be issuable an amount in cash equal to the same fraction of the
Fair Market Value (determined as provided in Section 11(d) for the Trading Day
immediately prior to the date of such exchange) of one share of Common Stock.
Section 25. Notice to Holders of Rights Certificates of Certain
Events.
(a) In the event that at any time after the Distribution Date, the
Company shall propose: (i) to pay any dividend payable in shares of capital
stock of any class of the Company to the holders of Preferred Shares or to make
any other cash distribution to the holders of Preferred Shares (other than a
regular quarterly cash dividend); (ii) to effect any reclassification of the
Preferred Shares (other than a reclassification involving only the subdivision
of the outstanding Preferred Shares); (iii) to make any distribution to the
holders of Preferred Shares described in subsection (b) or (c) of Section 11;
(iv) to effect any Section 13 Event; (v) to pay any dividend on its shares of
Common Stock payable in shares of Common Stock or to effect a subdivision,
combination or consolidation of its outstanding shares of Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock); or (vi) to effect the liquidation, dissolution or winding up of the
Company; then, in each such case, the Company shall give to the Rights Agent and
each registered holder of the Rights, in the manner provided in Section 26,
written notice of such proposed action, which shall specify the record date for
such stock dividend or distribution or the date on which such reclassification,
Section 13 Event,
-42-
liquidation, dissolution or winding up is expected to occur (and the date for
participation therein by the holders of the Common Stock and/or Preferred Shares
if any such date is to be fixed). Such notice shall be given, in the case of any
action described in clause (i) or (iii) of the preceding sentence, at least 10
days prior to the record date and, in the case of any other such action, at
least 20 days prior to the date of taking of such proposed action or the date
for participation therein by the holders of Preferred Shares, whichever shall be
the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, the Company
shall, as soon as practicable thereafter, give to the Rights Agent and each
registered holder of the Rights, in the manner provided in Section 26, written
notice of the occurrence thereof, which notice shall describe such occurrence
and its consequences in reasonable detail.
Section 26. Other Notices. Except as otherwise provided herein,
notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the registered holder of any Rights, Rights Certificate or
stock certificate for shares of Common Stock of the Company to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address shall be filed in writing with the
Rights Agent) as follows:
Peapod, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Except as otherwise provided herein, notices or demands authorized by
this Agreement to be given or made by the Company or by the registered holder of
any Rights, Rights Certificate or stock certificate for shares of Common Stock
of the Company to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
shall be filed in writing with the Company) as follows:
______________________
______________________
______________________
Attention: ______________________
Except as otherwise provided herein, notices or demands authorized by
this Agreement to be given or made by the Company or the Rights Agent to the
registered holder of any Rights, Rights Certificate or stock certificate for
shares of Common Stock of the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such holder at its last
address
-43-
appearing on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution
Date, but subject to the last sentence of this Section 27, the Company and the
Rights Agent, if so directed in writing by the Company, shall supplement or
amend any term, provision or condition of this Agreement, without the approval
of the registered holders of the stock certificates representing the Common
Stock, and the Rights. From and after the Distribution Date, but subject to the
last sentence of this Section 27, the Company and the Rights Agent, if so
directed in writing by the Company, shall supplement or amend this Agreement,
without the approval of the registered holders of the Rights (however
represented), in order: (a) to cure any ambiguity, (b) to correct or supplement
any term, provision or condition of this Agreement which may be defective or
inconsistent with any other term, provision or condition hereof, (c) to shorten
or lengthen any time period specified herein (except that if any such shortening
or lengthening is authorized by the Board at a time at which there is an
Acquiring Person, there must be Disinterested Directors then in office and any
such shortening or lengthening shall require the concurrence of at least a
majority of such Disinterested Directors) or (d) to change or supplement one or
more of the terms, provisions or conditions hereof in any manner which the
Company may deem necessary or desirable and which shall not adversely affect, as
determined by the Board (with the concurrence of at least a majority of the
Disinterested Directors), the interests of the holders (other than any
Restricted Person or the transferees therefrom specified in Section 7(d) of the
Rights (however represented); provided, however, that this Agreement may not be
supplemented or amended pursuant to clause (c) of this sentence (i) to lengthen
any time period (except as permitted by Section 3(a)(ii)) unless (A) approved by
at least a majority of the Disinterested Directors and (B) such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders (other than any Restricted Person or the transferees
therefrom specified in Section 7(d)) of the Rights or (ii) to lengthen any time
period relating to when the Rights may be redeemed if at such time the Rights
are not then redeemable. Upon the delivery of a certificate from an appropriate
officer of the Company stating that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment; provided, however, that the Rights Agent shall not
be required to execute any supplement or amendment which affects any of the
Rights Agent's rights, powers, obligations, duties or immunities under this
Agreement without its consent. On and after the Distribution Date, no supplement
or amendment shall be made which changes the Exercise Price, the number of one
one-hundredths of a Preferred Share for which a Right
-44-
is exercisable, the Redemption Price or the Final Expiration Date. Prior to the
Distribution Date, the interests of the holders of the Rights shall be deemed
coincident with the interests of the holders of the Common Stock of the Company.
Section 28. Successors. All of the terms, provisions and conditions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns.
Section 29. Certain Determinations and Actions by the Board. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including the determination of the
percentage of such outstanding shares of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-
3(d)(1)(i), as in effect on the date hereof, under the Exchange Act. The Board
(or, as and when set forth herein, the Disinterested Directors) shall have the
exclusive power and authority to interpret this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to make all determinations deemed
necessary or advisable for such administration, including, without limitation, a
determination to redeem or not to redeem the Rights, to exchange or not to
exchange the Rights or to supplement or amend this Agreement. All such
calculations, determinations, interpretations and exercises (including, for
purposes of clause (b) below, all omissions with respect to the foregoing) which
are done or made by the Board (or the Disinterested Directors) in good faith
shall (a) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other Persons and (b) not subject any director
(including any Disinterested Director) to any liability to the holders of the
Rights or to any other Person.
Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the stock certificates for the
Common Stock of the Company) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
stock certificates for the Common Stock of the Company).
Section 31. Severability. If any term, provision or condition of this
Agreement shall be held by a court of competent
-45-
jurisdiction or other lawful authority to be invalid, void or unenforceable, the
remaining terms, provisions, and conditions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that if any such term, provision or condition is held by such
court or authority to be invalid, void or unenforceable and the Board (with the
concurrence of at least a majority of the Disinterested Directors then in
office) shall determine in good faith that severing the same from this Agreement
would adversely affect the purposes or effect of this Agreement, the right of
redemption set forth in Section 23 shall be reinstated and shall not expire
until the Close of Business on the 10th day following the date of such
determination by the Board.
Section 32. Governing Law. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts made and to be
performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall for all purposes be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
-46-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PEAPOD, INC.
By: ______________________________
(Corporate Seal) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chairman, President and
Chief Executive
Attest:
By: _________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: ______________________________
(Corporate Seal) Name:
Title:
Attest:
By: _________________________
Name:
Title:
-47-
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
PEAPOD, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
-------------------------
Peapod, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify that, pursuant to authority conferred upon its Board of Directors by its
Restated Certificate of Incorporation, and by the provisions of Section 151 of
the General Corporation Law of the State of Delaware, the following resolution
was adopted by its Board of Directors at a meeting duly called and held on
May 29, 1997:
RESOLVED, that, pursuant to the authority conferred upon the Board of
Directors of the Corporation (the "Board") by the provisions of the Restated
Certificate of Incorporation of the Corporation and by the provisions of Section
151 of the General Corporation Law of the State of Delaware, there is hereby
created a series of Preferred Stock of the Corporation, which series shall have
the following powers, designations, preferences and relative, participating,
optional and other special rights, and the qualifications, limitations or
restrictions thereof, in addition to those set forth in the Restated Certificate
of Incorporation of the Corporation:
Section 1. Designation of Series; Number of Shares. The series of
Preferred Stock established hereby shall be designated the "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock") and the
authorized number of shares constituting the Series A Preferred Stock shall be
500,000. Such number of authorized shares may be increased or decreased, from
time to time, by resolution of the Board; provided, however, that no such
decrease shall reduce the number of authorized shares of the Series A Preferred
Stock to a number less than the number of shares of the Series A Preferred Stock
then outstanding, plus the number of shares of the Series A Preferred Stock then
reserved for issuance upon the exercise of any outstanding options, warrants or
rights or the exercise of any conversion or exchange privilege contained in any
outstanding security issued by the Corporation.
A-1
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of shares of any other series
of the Preferred Stock (or shares of any other class of capital stock of the
Corporation) ranking senior to the Series A Preferred Stock with respect to
dividends, the holders of shares of the Series A Preferred Stock, in preference
to the holders of shares of Common Stock and of any other class of capital stock
of the Corporation ranking junior to the Series A Preferred Stock with respect
to dividends, shall be entitled to receive, when, as and if declared by the
Board out of funds legally available therefor, quarterly dividends payable in
cash on the first day of March, June, September, and December in each year (each
such date being a "Dividend Payment Date"), commencing on the first Dividend
Payment Date after the initial issuance of a share or fractional share of the
Series A Preferred Stock, in an amount per share (rounded to the nearest whole
cent) equal to 100 times the aggregate per share amount of all cash dividends,
plus 100 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions (other than a dividend payable in shares of
Common Stock or a distribution in connection with the subdivision of the
outstanding shares of Common Stock, by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Dividend Payment Date or,
with respect to the first Dividend Payment Date, since the initial issuance of a
share or fractional share of the Series A Preferred Stock. The multiple of 100
(the "Dividend Multiple") set forth in the preceding sentence shall be adjusted
from time to time as hereinafter provided in this paragraph (a). In the event
that the Corporation shall at any time after the effective date of this
Certificate of Designations (i) declare or pay any dividend on the Common Stock
payable in shares of Common Stock or (ii) effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then, in each such case, the
Dividend Multiple thereafter applicable to the determination of the amount of
dividends per share which the holders of shares of the Series A Preferred Stock
shall be entitled to receive shall be the Dividend Multiple in effect
immediately prior to such event multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately after such
event and the denominator of which shall be the number of shares of Common Stock
that were outstanding immediately prior to such event.
(b) The Board shall declare, out of funds legally available therefor,
a dividend or distribution on the Series A Preferred Stock, as provided in
paragraph (a) of this Section 2, immediately after it has declared a dividend or
distribution on the
A-2
Common Stock (other than a dividend payable in shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on the
outstanding shares of the Series A Preferred Stock from the Dividend Payment
Date next preceding the date of issuance of such shares, unless such date of
issuance shall be prior to the record date for the first Dividend Payment Date,
in which case dividends on such shares shall begin to accrue and be cumulative
from the date of issuance of such shares, or unless such date of issuance shall
be after the close of business on the record date with respect to any Dividend
Payment Date and on or prior to such Dividend Payment Date, in which case
dividends on such shares shall begin to accrue and be cumulative from such
Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on shares of the Series A Preferred Stock in an amount less than
the total amount of dividends then accrued shall be allocated pro rata among
such shares. The Board may fix a record date for the determination of the
holders of shares of the Series A Preferred Stock entitled to receive payment of
any dividend or distribution declared thereon, which record date shall be not
more than the number of days prior to the date fixed for such payment permitted
by applicable law.
Section 3. Voting Rights. In addition to any other voting rights
required by applicable law, the holders of shares of the Series A Preferred
Stock shall have the following voting rights:
(d) Each share of the Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. The multiple of 100 (the "Voting Multiple")
set forth in the preceding sentence shall be adjusted from time to time as
hereinafter provided in this paragraph (a). In the event that the Corporation
shall at any time after the effective date of this Certificate of Designations
(i) declare or pay any dividend on the Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then, in each such case, the Voting Multiple
thereafter applicable to the determination of the number of votes per share to
which the holders of shares of the Series A Preferred Stock shall be entitled
shall be the Voting Multiple in effect immediately prior to such event
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
A-3
(e) Except as otherwise provided in this Certificate of Designations,
in any other Certificate of Designations establishing another series of the
Preferred Stock (or any series of any other class of capital stock of the
Corporation) or by applicable law, the holders of the Series A Preferred Stock,
the holders of the Common Stock and the holders of any other class of capital
stock of the Corporation having general voting rights shall vote together as a
single class on all matters submitted to a vote of the stockholders of the
Corporation.
(f) Except as otherwise provided in this Certificate of Designations
or by applicable law, the holders of the Series A Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent provided in paragraph (b) of this Section 3) for the taking of any
corporate action.
Section 4. Certain Restrictions.
(g) Whenever dividends or other distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
outstanding shares of the Series A Preferred Stock shall have been paid in full,
the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of any class of capital stock of the Corporation ranking junior
(either as to dividends or upon liquidation, dissolution or winding up of
the Corporation) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of any class of capital stock of the Corporation ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up of
the Corporation) with the Series A Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and all such parity stock on which
dividends are accrued and unpaid in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for consideration any
shares of any class of capital stock of the Corporation ranking junior
(either as to dividends or upon liquidation, dissolution or winding up of
the Corporation) to the Series A Preferred Stock, except that the
Corporation may at any time redeem, purchase or otherwise acquire any
shares of such junior stock in exchange for other shares of any class of
capital stock of the Corporation ranking junior (both as to
A-4
dividends and upon dissolution, liquidation or winding up of the
Corporation) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of the
Series A Preferred Stock or any shares of any class of capital stock of the
Corporation ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up of the Corporation) with the Series
A Preferred Stock, or redeem any shares of such parity stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board) to the holders of all such shares upon such terms
and conditions as the Board, after taking into consideration the respective
annual dividend rates and the other relative powers, preferences and rights
of the respective series and classes of such shares, shall determine in
good faith will result in fair and equitable treatment among the respective
holders of shares of all such series and classes.
(h) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of any class of
capital stock of the Corporation unless the Corporation could, under paragraph
(a) of this Section 4, purchase or otherwise acquire such shares at such time
and in such manner.
Section 5. Reacquired Shares. Any shares of the Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after such purchase or
acquisition. All such canceled shares shall thereupon become authorized and
unissued shares of Preferred Stock and may be reissued as part of any new series
of the Preferred Stock, subject to the conditions and restrictions on issuance
set forth in the Certificate of Incorporation of the Corporation, as amended
from time to time, in any other Certificate of Designations establishing another
series of the Preferred Stock (or any series of any other class of capital stock
of the Corporation) or in any applicable law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation (whether voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made (a) to the holders of shares of any
class of capital stock of the Corporation ranking junior (either as to dividends
or upon liquidation, dissolution or winding up of the Corporation) to the Series
A Preferred Stock unless, prior thereto, the holder of each outstanding share of
the Series A Preferred Stock shall have received an amount equal to the accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, plus an amount equal to an aggregate amount, subject to
A-5
adjustment as hereinafter provided in this Section 6, equal to 100 times the
aggregate per share amount to be distributed to the holders of the Common Stock
or (b) to the holders of shares of any class of capital stock of the Corporation
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up of the Corporation) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event
that the Corporation shall at any time after the effective date of this
Certificate of Designations (a) declare or pay any dividend on the Common Stock
payable in shares of Common Stock or (b) effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then, in each such case, the
aggregate amount per share which the holders of shares of the Series A Preferred
Stock shall thereafter be entitled to receive pursuant to clause (a)(ii) of the
preceding sentence shall be the aggregate amount per share in effect pursuant to
such clause immediately prior to such event multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after such event and the denominator of which shall be the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event that the
Corporation shall be a party to any consolidation, merger, combination or other
transaction in which the outstanding shares of Common Stock are converted or
changed into or exchanged for other capital stock, securities, cash or other
property, or any combination thereof, then, in each such case, each share of the
Series A Preferred Stock shall at the same time be similarly converted or
changed into or exchanged for an aggregate amount, subject to adjustment as
hereinafter provided in this Section 7, equal to 100 times the aggregate amount
of capital stock, securities, cash and/or other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is being
converted or changed or exchanged. In the event that the Corporation shall at
any time after the effective date of this Certificate of Designations (a)
declare or pay any dividend on the Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then, in each such case, the aggregate amount per
share which the holders of shares of the Series A Preferred Stock shall
thereafter be entitled to receive pursuant to the preceding sentence shall be
the aggregate amount
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per share in effect pursuant to such sentence immediately prior to such event
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. No Redemption. The shares of the Series A Preferred Stock
shall not be redeemable at any time.
Section 9. Rank. Unless otherwise provided in the Certificate of
Designations establishing another series of the Preferred Stock after the
effective date of this Certificate of Designations, the Series A Preferred Stock
shall rank, as to the payment of dividends and the making of any other
distribution of assets of the Corporation, senior to the Common Stock, but
junior to all other series of the Preferred Stock.
Section 10. Amendments. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences and rights of the Series A Preferred Stock so as
to adversely affect any thereof without the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the Series A Preferred Stock,
voting separately as a single class.
Section 11. Fractional Shares. Fractional shares of the Series A
Preferred Stock may be issued, but, unless the Board shall otherwise determine,
only in multiples of one one-hundredth of a share. The holder of any fractional
share of the Series A Preferred Stock shall be entitled to receive dividends,
participate in distributions, exercise voting rights and have the benefit of all
other powers, preferences and rights relating to the Series A Preferred Stock in
the same proportion as such fractional share bears to a whole share.
A-7
IN WITNESS WHEREOF, PEAPOD, INC. has caused this Certificate to be
signed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its Executive Vice President, Content and
Consumer Product Development this ___day of____________, 1997.
PEAPOD, INC.
By: _____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President,
Content and Consumer Product
Development
A-8
Exhibit B
---------
FORM
of
RIGHTS CERTIFICATE
Certificate No. R- _________ Rights
_______ Aggregate Number of
Shares of Series A Junior
Participated Preferred Stock
Initially Purchasable
NOT EXERCISABLE AFTER _______________, 2007 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF PEAPOD, INC., AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS
SET FORTH IN THE STOCKHOLDERS RIGHTS AGREEMENT HEREINAFTER MENTIONED.
UNDER CERTAIN CIRCUMSTANCES DESCRIBED IN SUCH AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY A RESTRICTED PERSON (AS SUCH TERM IS DEFINED IN
SUCH AGREEMENT), OR BY SPECIFIED TRANSFEREES FROM A RESTRICTED PERSON,
SHALL BE OR BECOME VOID.
B-1
RIGHTS CERTIFICATE
PEAPOD, 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, subject to the terms, provisions and conditions of
the Stockholders Rights Agreement dated as of ____________, 1997 (the "Rights
Agreement") between Peapod, Inc., a Delaware corporation (the "Company"), and
_______________ (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date and prior to the Close of Business on ___________,
2007, at the principal office of the Rights Agent or its successor as Rights
Agent, one one-hundredth of a fully paid and nonassessable share of Series A
Junior Participating Preferred Stock, $.01 par value (the "Preferred Shares"),
of the Company at a price (the "Exercise Price") of $___ per one one-hundredth
of a Preferred Share, upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and the related Form of Certification of
Status duly executed, together with such signature guarantees and other
documentation as the Rights Agent may reasonably request. The number of Rights
evidenced by this Rights Certificate (as well as the number of one one-
hundredths of a Preferred Share which may be purchased upon the exercise of each
Right) set forth above, and the Exercise Price set forth above, are the numbers
and the Exercise Price as of ________________, based on the Preferred Shares as
constituted on such date. As provided in the Rights Agreement, such number of
Rights (and/or such number of one one-hundredths of a Preferred Share) and such
Exercise Price are subject to change and adjustment upon the happening of
certain events specified in the Rights Agreement. Capitalized terms not defined
herein have the respective meanings specified in the Rights Agreement.
From and after the first occurrence of any Section 11(a)(ii) Event, if
the Rights evidenced by this Rights Certificate are Beneficially Owned by (i) a
Restricted Person, (ii) a transferee from a Restricted Person who becomes a
transferee after the Acquiring Person becomes such or (iii) under certain
circumstances specified in the Rights Agreement, a transferee from a Restricted
Person who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such, such Rights shall be or become void, and no holder hereof
shall have any rights whatsoever with respect to such Rights.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and
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made a part hereof, to which Rights Agreement reference is hereby made for a
full description of the rights, powers, obligations, duties and immunities
hereunder of the Company, the Rights Agent and the holders of the Rights
Certificates. Under the circumstances set forth in the Rights Agreement, the
exercisability of the Rights represented hereby may be temporarily suspended.
The Rights Agreement is on file at the principal office of the Company and at
the principal office of the Rights Agent, and a copy will be provided upon
written request to the Secretary of the Company.
Upon surrender at the principal office of the Rights Agent, this
Rights Certificate, with or without other Rights Certificates, may be exchanged
for one or more Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase the same aggregate number of one one-hundredths
of a Preferred Share as the Rights evidenced by the Rights Certificates so
surrendered. If this Rights Certificate shall be exercised in part, the holder
hereof shall be entitled to receive, upon surrender hereof, one or more 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 (i) may be redeemed, at the direction of
the Board, at a redemption price (subject to adjustment) of $.01 per Right
(payable in cash, shares of Common Stock of the Company or any other form of
consideration deemed appropriate by the Board) or (ii) under certain
circumstances, may be exchanged, in whole or in part, at the direction of the
Board, for shares of Common Stock of the Company or Preferred Shares at an
exchange rate (subject to adjustment) of one share of Common Stock or one one-
hundredth of a Preferred Share per Right.
No fractional Preferred Share will be issued upon the exercise of any
Rights represented hereby (other than fractions which are a multiple of one one-
hundredth of a Preferred Share), but in lieu thereof a cash payment will be made
as provided in the Rights Agreement.
No holder, as such, of this Rights Certificate shall be entitled to
vote, to receive dividends or other distributions on or to exercise any
preemptive rights with respect to, or shall be deemed for any other purpose to
be the holder of, the Preferred Shares or other shares of capital stock of any
class of the Company which may at any time be issuable upon exercise hereof; nor
shall anything contained herein or in the Rights Agreement 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
other matter submitted to stockholders at any meeting thereof, to give or
withhold consent to any corporate action, to receive notice of meetings or other
actions affecting
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stockholders (except as provided in the Rights Agreement) or to receive
dividends, subscription rights or other distributions, until the Rights
evidenced by this Rights Certificate shall have been exercised, in whole or in
part, in accordance with the provisions of 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.
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IN WITNESS WHEREOF, this Rights Certificate has been executed by the
Company by the duly authorized facsimile signature of a proper officer of the
Company and a facsimile of its corporate seal has been imprinted hereon and duly
attested by the duly authorized facsimile signature of a proper officer of the
Company.
Dated as of _______________, 1997.
PEAPOD, INC.
(Corporate Seal) By: ______________________________
Name:
Title:
ATTEST:
______________________________
Name:
Title:
Countersigned:
_______________________________________,
as Rights Agent
By____________________________
Authorized Signature
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[Reverse Side of Rights Certificate]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by this Rights Certificate)
To Peapod, Inc.:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Rights Certificate to purchase the Preferred Shares
(or other securities, cash or property) issuable upon the exercise of such
Rights and requests that certificates for such Preferred Shares be issued in the
name of:
Please insert social security
or other identifying number: ____________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights represented by this Rights
Certificate, a new Rights Certificate for the remaining unexercised Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number: ____________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _______________, 19__
_______________________________________
Signature
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Signature Guaranteed: ________________________________
Signatures must be guaranteed by a participant in a recognized
Signature Guaranty Medallion Program.
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate
[_] is
[_] is not
being exercised by or on behalf of a Person who is or was a Restricted Person
(as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[_] did
[_] did not
acquire, directly or indirectly, the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
_______________________________________
Signature
Date: _______________, 19__
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NOTICE
------
The signature(s) on the foregoing Form of Election to Purchase and
Certification of Status must correspond to the name written upon the face of
this Rights Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the Certification of Status set forth above is not
completed, the Company will deem the Beneficial Owner of the Rights represented
by this Rights Certificate to be a Restricted Person (as such term is defined in
the Rights Agreement), will not honor the Election to Purchase and will affix a
legend to such effect on this Rights Certificate and on any Rights Certificates
issued in exchange for this Rights Certificate.
B-8
[Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer this 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: _______________, 19__
_______________________________________
Signature
Signature Guaranteed: ________________________________
Signatures must be guaranteed by a participant in a recognized
Signature Guaranty Medallion Program.
B-9
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate
[_] is
[_] is not
being sold, assigned or transferred by or on behalf of a Person who is or was a
Restricted Person (as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it
[_] did
[_] did not
acquire, directly or indirectly the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
_______________________________________
Signature
Date: _______________, 19__
B-10
NOTICE
------
The signature(s) on the foregoing Form of Assignment and Certification
of Status must correspond to the name written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the Certification of Status set forth above is not
completed, the Company will deem the Beneficial Owner of the Rights represented
by this Rights Certificate to be a Restricted Person (as such term is defined in
the Rights Agreement), will not honor the Assignment and will affix a legend to
such effect on this Rights Certificate and any Rights Certificates issued in
exchange for this Rights Certificate.
B-11
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On May 29, 1997, the Board of Directors (the "Board") of Peapod, Inc.,
a Delaware corporation (the "Corporation"), declared a dividend of one preferred
stock purchase right (a "Right") for each outstanding share of Common Stock,
$.01 par value (the "Common Stock"), of the Corporation. The dividend is
payable on the effective date of the Corporation's initial public offering
registration statement, file no. 333-24341 (the "Record Date") to the holders of
record of the Common Stock at the Close of Business on such date. Each Right
entitles the holder thereof (except as described below) to purchase from the
Corporation one one-hundredth of a share of the Series A Junior Participating
Preferred Stock, $.01 par value (the "Preferred Shares"), of the Corporation at
a price (the "Exercise Price") of $98.00 per one one-hundredth of a Preferred
Share, subject to adjustment. The terms of the Rights are set forth in the
Stockholders Rights Agreement dated as of June 9, 1997 (the "Rights Agreement")
between the Corporation and First Chicago Trust Company of New York, as Rights
Agent (the "Rights Agent"). Capitalized terms not defined herein have the
respective meanings specified in the Rights Agreement.
Distribution Date; Transfer of Rights
Initially, the Rights associated with the Common Stock outstanding as
of the Record Date will be evidenced solely by the stock certificates for such
Common Stock. The Rights will separate from the Common Stock upon the earliest
to occur of (i) 10 Business Days after the first public announcement that any
Person (other than an Exempt Person (as hereinafter defined)) has become an
Acquiring Person (as hereinafter defined) and (ii) 10 Business Days (or such
other Business Day as may be determined by action of the Board prior to the time
that any Person shall become an Acquiring Person (as hereinafter defined) after
the commencement by any Person (other than an Exempt Person) of, or the first
public announcement of its intention to commence, a tender or exchange offer if,
upon the consummation thereof, such Person would be the Beneficial Owner of 15%
or more of the outstanding shares of Common Stock (the earliest of the dates
specified in clauses (i) and (ii) being hereinafter called the "Distribution
Date"). After the Distribution Date, the Rights will be evidenced solely by
separate certificates and will trade independently from the Common Stock.
An "Acquiring Person" is any Person who or which, together with its
Affiliates and Associates, has acquired 15% or
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more of the shares of Common Stock then outstanding, but does not include (i)
the Corporation, (ii) any Subsidiary of the Corporation, (iii) any employee
benefit plan or other compensation program or arrangement of the Corporation or
of any such Subsidiary or (iv) any Person holding shares of Common Stock for or
pursuant to the terms of any such plan, program or arrangement (the Persons
specified in clauses (i) through (iv) being herein collectively called "Exempt
Persons"). Notwithstanding the foregoing, if the Board of Directors of the
Corporation determines in good faith that a Person who would otherwise be an
"Acquiring Person," has become so inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an "Acquiring Person," then such Person shall not
be deemed to be an "Acquiring Person."
A "Disinterested Director" is (i) any member of the Board who is not a
Restricted Person (as hereinafter defined), or a representative or nominee of a
Restricted Person, and was a member of the Board prior to the date of the Rights
Agreement and (ii) any individual who subsequently becomes a member of the Board
and is not a Restricted Person, or a representative or nominee of a Restricted
Person, and whose nomination for election to the Board is recommended or
approved by a majority of the Disinterested Directors then in office. A
"Restricted Person" is an Acquiring Person or any Affiliate or Associate
thereof.
The Rights Agreement provides that, until the Distribution Date (or
the earlier redemption or expiration of the Rights), the Rights may be
transferred only with the associated shares of Common Stock. Until the
Distribution Date (or the earlier redemption or expiration of the Rights), stock
certificates for Common Stock issued after the Record Date, either upon transfer
of outstanding shares or original issuance of additional shares of Common Stock,
will contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or the earlier redemption or expiration of the Rights), the
surrender for transfer of any stock certificate for shares of Common Stock, with
or without such legend and whether or not a copy of this Summary of Rights is
attached thereto, will also constitute the transfer of the Rights associated
with the shares of Common Stock represented by such stock certificate.
As soon as practicable after the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to the
holders of record of the Common Stock as of the Close of Business on the
Distribution Date, which thereafter will constitute the sole evidence of the
Rights. Each share of Common Stock issued by the Corporation after the Record
Date and prior to the earlier redemption or expiration of the Rights, including
any shares of Common Stock issued by reason of the exercise of any option,
warrant, right (other than the Rights) or conversion or exchange privilege
(however evidenced) issued by the
C-2
Corporation prior to the Distribution Date, will be accompanied by a Right
(unless the Board expressly provides to the contrary at the time of issuance of
any such option, warrant, right or privilege), and Rights Certificates
evidencing such Rights will be issued at the same time as the stock certificates
for the associated shares of Common Stock.
The Rights are not exercisable until the Distribution Date. Moreover,
the time when the Rights may be exercised is restricted as described in the next
paragraph. The Rights will expire on the tenth anniversary of the Record Date
(the "Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Corporation, in each
case as described below.
Exercise of Rights Under Certain Circumstances
In the event that any Person becomes an Acquiring Person, proper
provision will be made so that the registered holder of each Right (other than
Rights Beneficially Owned as described in the next sentence) will thereafter
have the right to receive, upon exercise thereof, the number of shares of Common
Stock which, at the time of the occurrence of such event, will have a market
value equal to two times the then current Exercise Price. After the first
occurrence of either of the events described in the preceding sentence, all
Rights which are, or (under certain circumstances specified in the Rights
Agreement) were, Beneficially Owned by a Restricted Person or specified
transferees therefrom will be or become void. Under no circumstances may a
Right be exercised after the occurrence of either such event unless the
Corporation's right to redeem the Rights (as described below) has expired.
If, on or after the date on which any Person has become an Acquiring
Person, any of the following transactions occur: (i) the Corporation merges
into or consolidates with an Interested Stockholder (as hereinafter defined) or,
unless all holders of the Corporation's outstanding shares of Common Stock are
treated the same, another Person (with limited designated exceptions); (ii) an
Interested Stockholder or, unless all holders of the Corporation's outstanding
shares of Common Stock are treated the same, another Person (with limited
designated exceptions) merges into the Corporation and either (A) all or part of
the outstanding shares of Common Stock of the Corporation are converted into
capital stock or other securities of any other Person (or the Corporation), cash
and/or other property or (B) such shares remain outstanding, unconverted and
unchanged; or (iii) the Corporation sells or transfers 50% or more of its
consolidated assets or earning power to an Interested Stockholder (as
hereinafter defined) or, unless all holders of the Corporation's outstanding
shares of Common Stock are treated the same, another Person (with limited
designated exceptions); proper provision will be made so that the registered
holder of each Right (other than Rights which have become void)
C-3
will thereafter have the right (the "Flip-Over Right") to receive, upon exercise
thereof, the number of common shares of the acquiror (or of another Person
affiliated therewith) which, at the time of consummation of such transaction,
will have a market value equal to two times the then current Exercise Price. An
"Interested Stockholder" is any Restricted Person or any Affiliate or Associate
of any other Person in which such Restricted Person has an interest, or any
Person acting, directly or indirectly, on behalf of or in concert with any such
Restricted Person.
Adjustments to Exercise Price and Stock Purchasable Upon Exercise
The Exercise Price payable, the number and kind of shares of capital
stock issuable upon exercise of the Rights and the number of Rights outstanding
are subject to adjustment from time to time to prevent dilution (i) in the event
of a dividend payable in Preferred Shares on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to the holders of
the Preferred Shares of certain options, warrants or rights to subscribe for or
purchase Preferred Shares at a price, or securities convertible into or
exchangeable for Preferred Shares with a conversion or exchange price, less than
the then Fair Market Value of the Preferred Shares or (iii) upon the
distribution to the holders of the Preferred Shares of cash, securities,
evidences of indebtedness or other property (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or options, warrants or
rights (other than those referred to in clause (ii) above).
The number of outstanding Rights and the number of one one-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a dividend on the Common Stock payable in shares of
Common Stock or a subdivision, combination or reclassification of the Common
Stock occurring, in any such case, prior to the Distribution Date.
With certain specified exceptions, no adjustment in the Exercise Price
will be made until the cumulative adjustments required equal at least 1% of the
Exercise Price. The Corporation is not required to issue fractional Preferred
Shares (other than fractions which are multiples of one one-hundredth of a
Preferred Share), but in lieu thereof the Corporation would be required to make
a cash payment based on the Fair Market Value of the Preferred Shares on the
trading day immediately preceding the date of exercise.
Terms of Preferred Shares
The Preferred Shares receivable upon exercise of the Rights will not
be redeemable. Each Preferred Share will entitle the holder thereof to receive
a preferential quarterly dividend equal to 100 times the aggregate per share
amount of all cash
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dividends, plus 100 times the aggregate per share amount (payable in kind) of
all non-cash dividends and other distributions (other than in shares of Common
Stock), declared on the Common Stock during such quarter, adjusted to give
effect to any dividend on the Common Stock payable in shares of Common Stock or
any subdivision, combination or reclassification of the Common Stock (a
"Dilution Event"). Each Preferred Share will entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Corporation,
voting together as a single class with the holders of the Common Stock and the
holders of any other class of capital stock having general voting rights,
adjusted to give effect to any Dilution Event. In the event of liquidation of
the Corporation, the holder of each Preferred Share will be entitled to receive
a preferential liquidation payment equal to 100 times the aggregate per share
amount to be distributed to the holders of the Common Stock, adjusted to give
effect to any Dilution Event, plus an amount equal to accrued and unpaid
dividends and distributions on such Preferred Share, whether or not declared, to
the date of such payment. In the event of any merger, consolidation or other
transaction in which the outstanding shares of Common Stock of the Corporation
are exchanged for or converted into other capital stock, securities, cash and/or
other property, each Preferred Share will be similarly exchanged or converted
into 100 times the per share amount applicable to the Common Stock, adjusted to
give effect to any Dilution Event.
Because of the nature of the dividend, voting, liquidation and other
rights accorded to each Preferred Share, the value of the one one-hundredth of a
Preferred Share receivable upon the exercise of each Right should approximate
the value of one share of Common Stock.
Redemption of Rights
At any time prior to the earliest of (i) 10 Business Days after the
first public announcement that any Person (other than an Exempt Person) has
become an Acquiring Person, (ii) the occurrence of any transaction which permits
the exercise of the Flip-Over Right and (iii) the Final Expiration Date, the
Board may redeem the Rights in whole, but not in part, at the redemption price
of $.01 per Right, adjusted to give effect to any Dilution Event (the
"Redemption Price"). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board, in its sole
discretion, may establish. After the redemption period has expired, the
Corporation's right of redemption may be reinstated, under the circumstances
specified in the Rights Agreement, which include the concurrence of at least a
majority of the Disinterested Directors, if either (i) the Person who became an
Acquiring Person shall reduce, in one or a series of related transactions not
involving the Corporation or any Subsidiary or the occurrence of any transaction
which permits the exercise of the Flip-Over Right, its Beneficial Ownership of
the
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outstanding shares of Common Stock to less than 10% of such outstanding shares
or (ii) in connection with any transaction which permits the exercise of the
Flip-Over Right, which does not involve an Interested Stockholder and in which
all holders of the Common Stock are treated the same. Immediately after action
by the Board directing the redemption of the Rights, the option to exercise the
Rights will terminate, and thereafter each registered holder of the Rights will
only be entitled to receive the Redemption Price therefor.
Exchange of Rights
At any time after any Person has become an Acquiring Person and prior
to the time that any Person (other than an Exempt Person), together with its
Affiliates and Associates, has become the Beneficial Owner of 50% or more of the
outstanding shares of Common Stock, the Board may direct that all or any part of
the outstanding Rights (other than Rights which have become void) be exchanged
for shares of Common Stock at the exchange rate of one share of Common Stock (or
one one-hundredth of a Preferred Share or of another share of capital stock of
the Corporation having equivalent rights, preferences and privileges) per Right,
adjusted to give effect to any Dilution Event.
Amendment of the Rights and the Rights Agreement
Prior to the Distribution Date, the terms of the Rights and the Rights
Agreement may be supplemented or amended by the Board in any manner. From and
after the Distribution Date, the Rights may be supplemented or amended by the
Board, without the approval of the holders of the Rights, in certain respects
which do not adversely affect, as determined by the Board (with the concurrence
of at least a majority of the Disinterested Directors), the interests of such
holders; provided, however, that the Rights Agreement cannot be amended to
lengthen (i) any time period unless (A) such lengthening is approved by at least
a majority of the Disinterested Directors and (B) such lengthening is for the
benefit of the holders of the Rights or (ii) any time period relating to when
the Rights may be redeemed if at such time the Rights are not then redeemable.
Miscellaneous
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends.
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A copy of the Rights Agreement is available free of charge from the
Corporation. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
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