INTERNAP NETWORK SERVICES CORPORATION and AMERICAN STOCK TRANSFER AND TRUST COMPANY, as Rights Agent PREFERRED STOCK RIGHTS AGREEMENT Dated as of April 11, 2007
and
AMERICAN
STOCK TRANSFER AND TRUST COMPANY,
as
Rights Agent
Dated
as of April 11, 2007
EXHIBITS
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Exhibit
A
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Form
of Certificate of Designation
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Exhibit
B
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Form
of Rights Certificate
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Exhibit
C
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Summary
of Rights
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i
This
Preferred Stock Rights Agreement is dated as of April 11, 2007 (this
“Agreement”),
between Internap Network Services Corporation, a Delaware corporation (the
“Company”),
and
American Stock Transfer and Trust Company, as Rights Agent (the “Rights
Agent”).
On
March
15, 2007 (the “Rights
Dividend Declaration Date”),
the
Board of Directors of the Company authorized and declared a dividend of one
Preferred Share Purchase Right (a“Right”)
for
each Common Share (as hereinafter defined) of the Company outstanding as of
the
Close of Business (as hereinafter defined) on March 23, 2007 (the “Record
Date”),
each
Right representing the right to purchase one one-thousandth (0.001) of a share
of Series B Preferred Stock (as such number may be adjusted pursuant to the
provisions of this Agreement), having the rights, preferences and privileges
set
forth in the form of Certificate of Designation of Rights, Preferences and
Privileges of Series B Preferred Stock attached hereto as Exhibit
A,
upon
the terms and subject to the conditions herein set forth, and further authorized
and directed the issuance of one Right (as such number may be adjusted pursuant
to the provisions of this Agreement) with respect to each Common Share that
shall become outstanding between the Record Date and the earlier of the
Distribution Date and the Expiration Date (as such terms are hereinafter
defined), and in certain circumstances after the Distribution Date.
NOW,
THEREFORE, in consideration of the promises and the mutual agreements herein
set
forth, the parties hereby agree as follows:
Section
1. Certain
Definitions. For
purposes of this Agreement, the following terms have the meanings
indicated:
(a) “Acquiring
Person”
shall
mean any Person, who or which, together with all Affiliates and Associates
of
such Person, shall be the Beneficial Owner of 15% or more of the Common Shares
then outstanding, but shall not include the Company, any Subsidiary of the
Company or any employee benefit plan of the Company or of any Subsidiary of
the
Company, or any entity holding Common Shares for or pursuant to the terms of
any
such plan. Notwithstanding the foregoing, no Person shall be deemed to be an
Acquiring Person as the result of an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of the Common
Shares of the Company then outstanding; provided,
however,
that if
a Person shall become the Beneficial Owner of 15% or more of the Common Shares
of the Company then outstanding by reason of share purchases by the Company
and
shall, after such share purchases by the Company, become the Beneficial Owner
of
any additional Common Shares of the Company (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding Common Shares
in
Common Shares or pursuant to a split or subdivision of the outstanding Common
Shares), then such Person shall be deemed to be an Acquiring Person unless
upon
becoming the Beneficial Owner of such additional Common Shares of the Company
such Person does not beneficially own 15% or more of the Common Shares of the
Company then outstanding. Notwithstanding the foregoing, if the Company’s Board
of Directors determines in good faith that a Person who would otherwise be
an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently (including, without limitation,
because (A) such Person was unaware that it beneficially owned a percentage
of
the Common Shares that would otherwise cause such Person to be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this paragraph (a),
or (B) such Person was aware of the extent of the Common Shares it beneficially
owned but had no actual knowledge of the consequences of such beneficial
ownership under this Agreement) and without any intention of changing or
influencing control of the Company, and if such Person divested or divests
as
promptly as practicable a sufficient number of Common Shares 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
or
to have become an “Acquiring Person” for any purposes of this Agreement
including, without limitation Section 1(ii) hereof.
1
(b) “Adjustment
Fraction”
shall
have the meaning set forth in Section 11(a)(i) hereof.
(c) “Affiliate”
and
“Associate”
shall
have the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement.
(d) A
Person shall be deemed the “Beneficial
Owner”
of and
shall be deemed to “beneficially
own”
any
securities:
(i) which
such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly, for purposes of Section 13(d) of the Exchange Act and
Rule 13d-3 thereunder (or any comparable or successor law or
regulation);
(ii) which
such Person or any of such Person’s Affiliates or Associates has (A) the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding,
whether or not in writing, (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights), warrants or options, or otherwise;
provided,
however,
that a
Person shall not be deemed pursuant to this Section 1(d)(ii)(A) to be the
Beneficial Owner of, or to beneficially own, (1) 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 (2) securities which a Person or any of such
Person’s Affiliates or Associates may be deemed to have the right to acquire
pursuant to any merger or other acquisition agreement between the Company and
such Person (or one or more of its Affiliates or Associates) if such agreement
has been approved by the Board of Directors of the Company prior to there being
an Acquiring Person; or (B) the right to vote pursuant to any agreement,
arrangement or understanding, whether or not in writing; provided,
however,
that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any
security under this Section 1(d)(ii)(B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy
or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules
and
regulations of the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report);
or
(iii) which
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding,
whether or not in writing (other than customary agreements with and between
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 Section 1(d)(ii)(B)) or disposing
of
any securities of the Company; provided,
however,
that in
no case shall an officer or director of the Company be deemed (x) the Beneficial
Owner of any securities beneficially owned by another officer or director of
the
Company solely by reason of actions undertaken by such persons in their capacity
as officers or directors of the Company or (y) the Beneficial Owner of
securities held of record by the trustee of any employee benefit plan of the
Company or any Subsidiary of the Company for the benefit of any employee of
the
Company or any Subsidiary of the Company, other than the officer or director,
by
reason of any influence that such officer or director may have over the voting
of the securities held in the plan.
2
(e) “Business
Day”
shall
mean any day other than a Saturday, Sunday or a day on which banking
institutions in New York are authorized or obligated by law or executive order
to close.
(f) “Close
of Business”
on any
given date shall mean 5:00 P.M., New York time, on such date; provided,
however,
that if
such date is not a Business Day it shall mean 5:00 P.M., New York time, on
the
next succeeding Business Day.
(g) “Common
Stock Equivalents”
shall
have the meaning set forth in Section 11(a)(iii) hereof.
(h) “Common
Shares”
when
used with reference to the Company shall mean the shares of Common Stock of
the
Company, par value at $0.001 per share. Common Shares when used with reference
to any Person other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(i) “Company”
shall
mean Internap Network Services Corporation, a Delaware corporation, subject
to
the terms of Section 13(a)(iii)(C) hereof.
(j) “Current
Per Share Market Price”
of any
security (a “Security” for purposes of this definition), for all computations
other than those made pursuant to Section 11(a)(iii) hereof, shall mean the
average of the daily closing prices per share of such Security for the thirty
(30) consecutive Trading Days immediately prior to such date, and for purposes
of computations made pursuant to Section 11(a)(iii) hereof, the Current Per
Share Market Price of any Security on any date shall be deemed to be the average
of the daily closing prices per share of such Security for the ten (10)
consecutive Trading Days immediately prior to such date; provided,
however,
that in
the event that the Current Per Share Market Price of the Security is determined
during a period following the announcement by the issuer of such Security of
(i)
a dividend or distribution on such Security payable in shares of such Security
or securities convertible into such shares or (ii) any subdivision, combination
or reclassification of such Security, and prior to the expiration of the
applicable thirty (30) Trading Day or ten (10) Trading Day period, after the
ex-dividend date for such dividend or distribution, or the record date for
such
subdivision, combination or reclassification, then, and in each such case,
the
Current Per Share Market Price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in case no such
sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to
trading on the New York Stock Exchange or Nasdaq or, if the Security is not
listed or admitted to trading on the New York Stock Exchange or Nasdaq, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which
the
Security is listed or admitted to trading or, if the Security is not listed
or
admitted to trading on any national securities exchange, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Security selected by the Board of Directors of the Company.
If
on any such date no market maker is making a market in the Security, the fair
value of such shares on such date as determined in good faith by the Board
of
Directors of the Company shall be used, whose determination shall be conclusive
for all purposes. If the Preferred Shares are not publicly traded, the Current
Per Share Market Price of the Preferred Shares shall be conclusively deemed
to
be (x) the Current Per Share Market Price of the Common Shares as determined
pursuant to this Section 1(j), as appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof,
multiplied by (y) 1,000. If the Security is not publicly held or so listed
or
traded, Current Per Share Market Price shall mean the fair value per share
as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent
and
shall be conclusive for all purposes.
3
(k) “Current
Value”
shall
have the meaning set forth in Section 11(a)(iii) hereof.
(l) “Distribution
Date”
shall
mean the earlier of (i) the Close of Business on the tenth (10th) day (or such
later date as may be determined by action of the Company’s Board of Directors)
after the Shares Acquisition Date (or, if the tenth (10th) day after the Shares
Acquisition Date occurs before the Record Date, the Close of Business on the
Record Date) or (ii) the Close of Business on the tenth (10th) Business Day
(or
such later date as may be determined by action of the Company’s Board of
Directors) after the date that a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan
of
the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within the meaning of
Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act, if,
assuming the successful consummation thereof, such Person would be an Acquiring
Person.
(m) “Equivalent
Shares”
shall
mean Preferred Shares and any other class or series of capital stock of the
Company which is entitled to the same rights, privileges and preferences as
the
Preferred Shares.
(n) “Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended.
(o) “Exchange
Ratio”
shall
have the meaning set forth in Section 24(a) hereof.
(p) “Exercise
Price”
shall
have the meaning set forth in Section 4(a) hereof.
(q) “Expiration
Date”
shall
mean the earliest to occur of: (i) the Close of Business on the Final Expiration
Date, (ii) the Redemption Date, or (iii) the time at which the Company’s Board
of Directors orders the exchange of the Rights as provided in Section 24
hereof.
(r) “Final
Expiration Date”
shall
mean the Close of Business on March 23, 2017.
(s) “Nasdaq”
shall
mean The Nasdaq Stock Market, Inc.
(t) “Person”
shall
mean any individual, firm, corporation, limited liability company, partnership,
trust, association, company or any other entity, and shall include any successor
(by merger or otherwise) of such entity.
(u) “Post-Event
Transferee”
shall
have the meaning set forth in Section 7(e) hereof.
(v) “Preferred
Shares”
shall
mean shares of Series B Preferred Stock, par value $0.001 per share, of the
Company.
(w) “Pre-Event
Transferee”
shall
have the meaning set forth in Section 7(e) hereof.
(x) “Principal
Party”
shall
have the meaning set forth in Section 13(b) hereof.
(y) “Record
Date”
shall
have the meaning set forth in the recitals at the beginning of this
Agreement.
4
(z) “Redemption
Date”
shall
have the meaning set forth in Section 23(a) hereof.
(aa) “Redemption
Price”
shall
have the meaning set forth in Section 23(a) hereof.
(bb) “Rights
Agent”
shall
mean (i) American Stock Transfer and Trust Company, (ii) its successor or
replacement as provided in Sections 19 and 21 hereof, and (iii) any co-Rights
Agent appointed pursuant to Section 2 hereof.
(cc) “Rights
Certificate”
shall
mean a certificate substantially in the form attached hereto as Exhibit
B.
(dd) “Rights
Dividend Declaration Date”
shall
have the meaning set forth in the recitals at the beginning of this
Agreement.
(ee) “Section
11(a)(ii) Event”
shall
mean any event described in Section 11(a)(ii) hereof.
(ff) “Section
11(a)(ii) Trigger Date”
shall
have the meaning set forth in Section 11(a)(iii) hereof.
(gg) “Section
13 Event”
shall
mean any event described in clause (i), (ii) or (iii) of Section 13(a)
hereof.
(hh) “Securities
Act”
shall
mean the Securities Act of 1933, as amended.
(ii) “Shares
Acquisition Date”
shall
mean the first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that
an
Acquiring Person has become such; provided
that,
if such
Person is determined not to have become an Acquiring Person pursuant to Section
1(a) hereof, then no Shares Acquisition Date shall be deemed to have occurred
by
virtue of such event and no Distribution Date shall be deemed to have occurred
by virtue of such event.
(jj) “Spread”
shall
have the meaning set forth in Section 11(a)(iii) hereof.
(kk) “Subsidiary”
of any
Person shall mean any corporation or other entity of which an amount of voting
securities sufficient to elect a majority of the directors or Persons having
similar authority of such corporation or other entity is beneficially owned,
directly or indirectly, by such Person, or any corporation or other entity
otherwise controlled by such Person.
(ll) “Substitution
Period”
shall
have the meaning set forth in Section 11(a)(iii) hereof.
(mm) “Summary
of Rights”
shall
mean a summary of this Agreement substantially in the form attached hereto
as
Exhibit
C.
(nn) “Total
Exercise Price”
shall
have the meaning set forth in Section 4(a) hereof.
(oo) “Trading
Day”
shall
mean a day on which the principal national securities exchange on which a
referenced security is listed or admitted to trading is open for the transaction
of business or, if a referenced security is not listed or admitted to trading
on
any national securities exchange, a Business Day.
5
(pp) “Triggering
Event”
shall
mean any Section 11(a)(ii) Event or any Section 13 Event.
Section
2. Appointment
of Rights Agent. The
Company hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable, upon ten (10) days’
prior written notice to the Rights Agent.
Section
3. Issuance
of Rights Certificates.
(a) Until
the Distribution Date, (i) the Rights will be evidenced (subject to the
provisions of Sections 3(b) and 3(c) hereof) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates shall
also be deemed to be Rights Certificates) and not by separate Rights
Certificates and (ii) the right to receive Rights Certificates will be
transferable only in connection with the transfer of Common Shares. Until the
earlier of the Distribution Date or the Expiration Date, the surrender for
transfer of certificates for Common Shares shall also constitute the surrender
for transfer of the Rights associated with the Common Shares represented
thereby. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, postage-prepaid mail, to each record holder of Common Shares as
of
the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Rights Certificate evidencing one Right
for each Common Share so held, subject to adjustment as provided herein. In
the
event that an adjustment in the number of Rights per Common Share has been
made
pursuant to Section 11 hereof, then at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and
cash
is paid in lieu of any fractional Rights (in accordance with Section 14(a)
hereof). As of the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates and may be transferred by the transfer of the Rights
Certificates as permitted hereby, separately and apart from any transfer of
Common Shares, and the holders of such Rights Certificates as listed in the
records of the Company or any transfer agent or registrar for the Rights shall
be the record holders thereof.
(b) On
the Record Date or as soon as practicable thereafter, the Company will send
a
copy of the Summary of Rights by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on the Record Date,
at the address of such holder shown on the records of the Company’s transfer
agent and registrar. With respect to certificates for Common Shares outstanding
as of the Record Date, until the Distribution Date, the Rights will be evidenced
by such certificates registered in the names of the holders thereof together
with the Summary of Rights.
(c) Unless
the Company’s Board of Directors by resolution adopted at or before the time of
the issuance of any Common Shares after the Record Date but prior to the earlier
of the Distribution Date or the Expiration Date (or, in certain circumstances
provided in Section 22 hereof, after the Distribution Date) specifies to the
contrary, Rights shall be issued in respect of all Common Shares that are so
issued, and Certificates representing such Common Shares shall also be deemed
to
be certificates for Rights, and shall bear the following legend:
THIS
CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS
AS
SET FORTH IN A PREFERRED STOCK RIGHTS AGREEMENT BETWEEN INTERNAP NETWORK
SERVICES CORPORATION AND AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS THE
RIGHTS AGENT, DATED AS OF APRIL 11, 2007 (THE “RIGHTS AGREEMENT”), THE TERMS OF
WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON
FILE
AT THE PRINCIPAL EXECUTIVE OFFICES OF INTERNAP NETWORK SERVICES CORPORATION
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
6
RIGHTS
AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL
NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER
OF
THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT
OF
A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES
AN
ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF
SUCH
PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
With
respect to such certificates containing the foregoing legend, until the earlier
of the Distribution Date or the Expiration Date, the Rights associated with
the
Common Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificate
shall
also constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(d) In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with
such
Common Shares shall be deemed canceled and retired so that the Company shall
not
be entitled to exercise any Rights associated with the Common Shares that are
no
longer outstanding.
Section
4. Form
of Rights Certificates.
(a) The
Rights Certificates (and the forms of election to purchase Preferred Shares
and
of assignment to be printed on the reverse thereof) shall be substantially
in
the form of Exhibit
B
hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate,
and which are not inconsistent with the provisions of this Agreement, or as
may
be required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange
or a
national market system, on which the Rights may from time to time be listed
or
included, or to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated
as of the Record Date (or in the case of Rights issued with respect to Common
Shares issued by the Company after the Record Date, as of the date of issuance
of such Common Shares) and on their face shall entitle the holders thereof
to
purchase such number of one-thousandths (0.001) of a Preferred Share as shall
be
set forth therein at the price set forth therein (such exercise price per one
one-thousandth (0.001) of a Preferred Share being hereinafter referred to as
the
“Exercise
Price”
and the
aggregate Exercise Price of all Preferred Shares issuable upon exercise of
one
Right being hereinafter referred to as the“Total
Exercise Price”),
but
the number and type of securities purchasable upon the exercise of each Right
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 hereof that
represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a Post-Event Transferee,
(iii) a Pre-Event Transferee or (iv) any subsequent transferee receiving
transferred Rights from a Post-Event Transferee or a Pre-Event Transferee,
either directly or through one or more intermediate transferees, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred
to
in this sentence, shall contain (to the extent feasible) the following
legend:
7
THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE PREFERRED STOCK RIGHTS
AGREEMENT BETWEEN INTERNAP NETWORK SERVICES CORPORATION AND AMERICAN STOCK
TRANSFER AND TRUST COMPANY, AS THE RIGHTS AGENT, DATED AS OF APRIL 11, 2007
(THE
“RIGHTS AGREEMENT”)). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.
Section
5. Countersignature
and Registration.
(a) The
Rights Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its Chief Executive Officer, its Chief Financial Officer, its
President, any Vice President or its Treasurer, either manually or by facsimile
signature, and by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature, and shall have affixed thereto the Company’s
seal (if any) or a facsimile thereof. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any
of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates on behalf of the Company had
not
ceased to be such officer of the Company; and any Rights Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.
(b) Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated for such purposes, books for registration and transfer of
the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number
of
Rights evidenced on its face by each of the Rights Certificates and the date
of
each of the Rights Certificates.
Section
6. Transfer,
Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates.
(a) Subject
to the provisions of Sections 7(e), 14 and 24 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Rights Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to purchase
a like number of one-thousandths (0.001) of a Preferred Share (or, following
a
Triggering Event, other securities, cash or other assets, as the case may be)
as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender
the
Rights Certificate or Rights Certificates to be transferred, split up, combined
or exchanged at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates,
as
the case may be, as so requested. The Company may require payment from the
registered holder 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. The Rights Agent shall have no duty or
obligation under this Section unless and until it is satisfied that all such
taxes and/or governmental charges have been paid.
8
(b) Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security
satisfactory to them, and, at the Company’s request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and
upon surrender to the Rights Agent and cancellation of the Rights Certificate
if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
holder in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section
7. Exercise
of Rights; Exercise Price; Expiration Date of Rights.
(a) 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 Close of Business on the Expiration
Date by surrender of the Rights Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at
the
office of the Rights Agent designated for such purpose, together with payment
of
the Exercise Price for each one-thousandth (0.001) of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets as the
case
may be) as to which the Rights are exercised.
(b) The
Exercise Price for each one-thousandth (0.001) of a Preferred Share issuable
pursuant to the exercise of a Right shall initially be $100, shall be subject
to
adjustment from time to time as provided in Sections 11 and 13 hereof and shall
be payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Exercise
Price for the number of one-thousandths (0.001) of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets as the
case
may be) to be purchased and an amount equal to any applicable tax or
governmental charge required to be paid by the holder of such Rights Certificate
in accordance with Section 9(e) hereof, the Rights Agent shall, subject to
Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent for the Preferred Shares) a certificate or certificates for
the
number of one-thousandths (0.001) of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may be)
to
be purchased and the Company hereby irrevocably authorizes its transfer agent
to
comply with all such requests or (B) if the Company shall have elected to
deposit the total number of one-thousandths (0.001) of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets as the
case
may be) issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depository agent depository receipts representing such
number of one-thousandths (0.001) of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may be)
as
are to be purchased (in which case certificates for the Preferred Shares (or,
following a Triggering Event, other securities, cash or other assets as the
case
may be) represented by such receipts shall be deposited by the transfer agent
with the depository agent) and the Company hereby directs the depository agent
to comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates
or
depository receipts, cause the same to be delivered to or upon the order of
the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder and (iv) when appropriate, after receipt
thereof, deliver such cash to or upon the order of the registered holder of
such
Rights Certificate. The payment of the Exercise Price (as such amount may be
reduced (including to zero) pursuant to Section 11(a)(iii) hereof) and an amount
equal to any applicable transfer tax required to be paid by the holder of such
Rights Certificate in accordance with Section 9(e) hereof, may be made in cash
or by certified bank check, cashier’s check or bank draft payable to the order
of the Company. In the event that the Company is obligated to issue securities
of the Company other than Preferred Shares, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when necessary to
comply with this Agreement.
9
(d) In
case the registered holder of any Rights Certificate shall exercise less than
all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Rights Certificate or to his or her
duly
authorized assigns, subject to the provisions of Section 6 and Section 14
hereof.
(e) Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee
of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such (a“Post-Event
Transferee”),
(iii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or
not
for consideration) from the Acquiring Person to holders of equity interests
in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Company’s Board of Directors has determined
is part of a plan, arrangement or understanding which has as a primary purpose
or effect the avoidance of this Section 7(e) (a“Pre-Event
Transferee”)
or (iv)
any subsequent transferee receiving transferred Rights from a Post-Event
Transferee or a Pre-Event Transferee, either directly or through one or more
intermediate transferees, shall become null and void without any further action
and no holder of such Rights shall have any rights whatsoever with respect
to
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall notify the Rights Agent when this Section 7(e) and Section 4(b)
applies and shall use all reasonable efforts to ensure that the provisions
of
this Section 7(e) and Section 4(b) hereof are complied with, but neither the
Rights Agent nor the Company shall have any liability to any holder of Rights
Certificates or to any other Person as a result of the Company’s failure to make
any determinations with respect to an Acquiring Person or any of such Acquiring
Person’s Affiliates, Associates or transferees hereunder.
(f) Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in Section
7
unless such registered holder shall, in addition to having complied with the
requirements of subsection 7(a), have (i) properly completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
and
the Rights Agent shall reasonably request.
Section
8. Cancellation
and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted
by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel
and
retire, any Rights Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all canceled
Rights Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate evidencing the destruction thereof to the
Company.
10
Section
9. Reservation
and Availability of Preferred Shares.
(a) The
Company covenants and agrees that it will use its best efforts to cause to
be
reserved and kept available out of its authorized and unissued Preferred Shares
not reserved for another purpose (and, following the occurrence of a Section
11(a)(ii) Event, out of its authorized and unissued Common Shares and/or other
securities), the number of Preferred Shares (and, following the occurrence
of
the Section 11(a)(ii) Event, Common Shares and/or other securities) that will
be
sufficient to permit the exercise in full of all outstanding Rights in
accordance with this Agreement.
(b) If
the Company shall hereafter list any of its Preferred Shares on a national
securities exchange, then so long as the Preferred Shares (and, following the
occurrence of a Section 11(a)(ii) Event, Common Shares and/or other securities)
issuable and deliverable upon exercise of the Rights may be listed on such
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable (but only to the extent that the Company’s
Board of Directors determines that it is reasonably likely that the Rights
will
be exercised), all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The
Company shall use its best efforts to (i) file, as soon as practicable following
the earliest date after the first occurrence of a Section 11(a)(ii) Event in
which the consideration to be delivered by the Company upon exercise of the
Rights is described in Section 11(a)(ii) or Section 11(a)(iii) hereof, or as
soon as is required by law following the Distribution Date, as the case may
be,
a registration statement under the Securities Act with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such
registration statement to become effective as soon as practicable after such
filing and (iii) cause such registration statement to remain effective (with
a
prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable
for
such securities and (B) the date of expiration of the Rights. The Company may
temporarily suspend, for a period not to exceed ninety (90) days after the
date
set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating, and notify the Rights Agent,
that the exercisability of the Rights has been temporarily suspended, as well
as
a public announcement and notification to the Rights Agent at such time as
the
suspension is no longer in effect. The Company will also take such action as
may
be appropriate under, or to ensure compliance with, the securities or “blue sky”
laws of the various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite qualification
in such jurisdiction shall have been obtained, or an exemption therefrom shall
be available, and until a registration statement has been declared and remains
effective.
(d) The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares (or other securities of the
Company) delivered upon exercise of Rights shall, at the time of delivery of
the
certificates for such securities (subject to payment of the Exercise Price),
be
duly and validly authorized and issued and fully paid and
nonassessable.
(e) The
Company further covenants and agrees that it will pay when due and payable
any
and all taxes and charges which may be payable in respect of the original
issuance or delivery of the Rights Certificates or of any Preferred Shares
(or
other securities of the Company) upon the exercise of Rights. The Company shall
not, however, be required to pay any tax or charge which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of certificates or depository receipts for
the
Preferred Shares (or other securities of the Company) in a name other than
that
of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depository receipts for Preferred Shares (or other securities of the Company)
upon the exercise of any Rights until any such tax and charge shall have been
paid (any such tax and charge being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company’s satisfaction that no such tax or charge is due.
11
Section
10. Record
Date. Each
Person in whose name any certificate for a number of one-thousandths (0.001)
of
a Preferred Share (or other securities of the Company) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of
record of Preferred Shares (or other securities of the Company) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Total
Exercise Price with respect to which the Rights have been exercised (and any
applicable transfer taxes and charges) was made; provided,
however,
that if
the date of such surrender and payment is a date upon which the transfer books
of the Company are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a holder of Preferred Shares
(or other securities of the Company) for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to
receive any notice of any proceedings of the Company, except as provided
herein.
Section
11. Adjustment
of Exercise Price, Number of Shares or Number of Rights. The
Exercise Price, the number and kind of shares or other property covered by
each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In
the event 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, (C) combine the outstanding
Preferred Shares (by reverse stock split or otherwise) into a smaller number
of
Preferred Shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification
in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11 and Section 7(e) hereof: (1) the Exercise Price
in
effect at the time of the record date for such dividend or of the effective
date
of such subdivision, combination or reclassification shall be adjusted so that
the Exercise Price thereafter shall equal the result obtained by dividing the
Exercise Price in effect immediately prior to such time by a fraction (the
“Adjustment
Fraction”),
the
numerator of which shall be the total number of Preferred Shares (or shares
of
capital stock issued in such reclassification of the Preferred Shares)
outstanding immediately following such time and the denominator of which shall
be the total number of Preferred Shares outstanding immediately prior to such
time; provided,
however,
that in
no event shall the consideration to be paid upon the exercise of one Right
be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of such Right; and (2) the number of one-thousandths
(0.001) of a Preferred Share (or share of such other capital stock) issuable
upon the exercise of each Right shall equal the number of one-thousandths
(0.001) of a Preferred Share (or share of such other capital stock) as was
issuable upon exercise of a Right immediately prior to the occurrence of the
event described in clauses (A)-(D) of this Section 11(a)(i), multiplied by
the
Adjustment Fraction; provided,
however,
that,
no such adjustment shall be made pursuant to this Section 11(a)(i) to the extent
that there shall have simultaneously occurred an event described in clause
(A),
(B), (C) or (D) of Section 11(n) with a proportionate adjustment being made
thereunder. Each Common Share that shall become outstanding after an adjustment
has been made pursuant to this Section 11(a)(i) shall have associated with
it
the number of Rights, exercisable at the Exercise Price and for the number
of
one-thousandths (0.001) of a Preferred Share (or shares of such other capital
stock) as one Common Share has associated with it immediately following the
adjustment made pursuant to this Section 11(a)(i).
12
(ii) Subject
to Section 24 of this Agreement, in the event that any Person becomes an
Acquiring Person, then promptly following such event each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the right
to
receive for each Right, upon exercise thereof in accordance with the terms
of
this Agreement and payment of the Exercise Price in effect immediately prior
to
the occurrence of such event, in lieu of a number of one-thousandths (0.001)
of
a Preferred Share, such number of Common Shares of the Company as shall equal
the quotient obtained by dividing (A) the product obtained by multiplying (1)
the Exercise Price in effect immediately prior to the occurrence of such event
by (2) the number of one-thousandths (0.001) of a Preferred Share for which
a
Right was exercisable (or would have been exercisable if the Distribution Date
had occurred) immediately prior to the first occurrence of such event, by (B)
fifty percent (50%) of the Current Per Share Market Price for Common Shares
on
the date of occurrence of the Triggering Event; provided,
however,
that
the Exercise Price and the number of Common Shares of the Company so receivable
upon exercise of a Right shall be subject to further adjustment as appropriate
in accordance with Section 11(e) hereof to reflect any events occurring in
respect of the Common Shares of the Company after the occurrence of such
event.
(iii) In
lieu of issuing Common Shares in accordance with Section 11(a)(ii) hereof,
the
Company may, if the Company’s Board of Directors determines that such action is
necessary or appropriate and not contrary to the interest of holders of Rights
and, in the event that the number of Common Shares which are authorized by
the
Company’s Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit the exercise in full of the Rights, or if any necessary regulatory
approval for such issuance has not been obtained by the Company, the Company
shall: (A) determine the excess of (1) the value of the Common Shares issuable
upon the exercise of a Right (the“Current
Value”)
over
(2) the Exercise Price (such excess, the“Spread”)
and (B)
with respect to each Right, make adequate provision to substitute for such
Common Shares, upon exercise of the Rights, (1) cash, (2) a reduction in the
Exercise Price, (3) other equity securities of the Company (including, without
limitation, shares or units of shares of any series of preferred stock which
the
Company’s Board of Directors has deemed to have the same value as Common Shares
(such shares or units of shares of preferred stock are herein called“Common
Stock Equivalents”)),
except to the extent that the Company has not obtained any necessary stockholder
or regulatory approval for such issuance, (4) debt securities of the Company,
except to the extent that the Company has not obtained any necessary stockholder
or regulatory approval for such issuance, (5) other assets or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Company’s Board of
Directors based upon the advice of a nationally recognized investment banking
firm selected by the Company’s Board of Directors; provided,
however,
that if
the Company shall not have made adequate provision to deliver value pursuant
to
clause (B) above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s
right of redemption pursuant to
13
Section
23(a) expires (the later of (x) and (y) being referred to herein as the
“Section
11(a)(ii) Trigger
Date”),
then
the Company shall be obligated to deliver, upon the surrender for exercise
of a
Right and without requiring payment of the Exercise Price, Common Shares (to
the
extent available), except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to
the
Spread. If the Company’s Board of Directors shall determine in good faith that
it is likely that sufficient additional Common Shares could be authorized for
issuance upon exercise in full of the Rights or that any necessary regulatory
approval for such issuance will be obtained, the thirty (30) day period set
forth above may be extended to the extent necessary, but not more than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such additional shares
or
take action to obtain such regulatory approval (such period, as it may be
extended, the “Substitution
Period”).
To the
extent that the Company determines that some action need be taken pursuant
to
the first and/or second sentences of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the exercisability
of
the Rights until the expiration of the Substitution Period in order to seek
any
authorization of additional shares, to take any action to obtain any required
regulatory approval and/or to decide the appropriate form of distribution to
be
made pursuant to such first sentence and to determine the value thereof. In
the
event of any such suspension, the Company shall promptly notify the Rights
Agent
thereof and shall issue a public announcement (with prompt notice thereof to
the
Rights Agent) stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement (with prompt notice thereof to
the
Rights Agent) at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Shares shall be
the
Current Per Share Market Price of the Common Shares on the Section 11(a)(ii)
Trigger Date and the value of any Common Stock Equivalent shall be deemed to
have the same value as the Common Shares on such date.
(b) In
case the Company shall, at any time after the date of this Agreement, fix a
record date for the issuance of rights, options or warrants to all holders
of
Preferred Shares entitling such holders (for a period expiring within forty-five
(45) calendar days after such record date) to subscribe for or purchase
Preferred Shares or Equivalent Shares or securities convertible into Preferred
Shares or Equivalent Shares at a price per share (or having a conversion price
per share, if a security convertible into Preferred Shares or Equivalent Shares)
less than the then Current Per Share Market Price of the Preferred Shares or
Equivalent Shares on such record date, then, in each such case, 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 and
Equivalent Shares (if any) outstanding on such record date, plus the number
of
Preferred Shares or Equivalent Shares, as the case may be, which the aggregate
offering price of the total number of Preferred Shares or Equivalent Shares,
as
the case may be, to be offered or issued (and/or the aggregate initial
conversion price of the convertible securities to be offered or issued) would
purchase at such current market price, and the denominator of which shall be
the
number of Preferred Shares and Equivalent Shares (if any) outstanding on such
record date, plus the number of additional Preferred Shares or Equivalent
Shares, as the case may be, to be offered for subscription or purchase (or
into
which the convertible securities so to be offered are initially convertible);
provided,
however,
that in
no event shall the consideration to be paid upon the exercise of one Right
be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be
paid
in a consideration part or all of which shall be in a form other than cash,
the
value of such consideration shall be as determined in good faith by the
Company’s Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive and binding on
the
Rights Agent and the holders of the Rights for all purposes. Preferred Shares
and Equivalent Shares owned by or held for the account of the Company shall
not
be deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in the
event that such rights, options or warrants are not so issued, the Exercise
Price shall be adjusted to be the Exercise Price which would then be in effect
if such record date had not been fixed.
14
(c) In
case the Company shall, at any time after the date of this Agreement, fix a
record date for the making of a distribution to all holders of the Preferred
Shares or of any class or series of Equivalent Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving Person) of evidences of indebtedness
or
assets (other than a regular quarterly cash dividend, if any, or a dividend
payable in Preferred Shares) or subscription rights, options or warrants
(excluding those referred to in Section 11(b)), then, in each such case, 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 Current Per Share Market
Price of a Preferred Share or an Equivalent Share on such record date, less
the
fair market value per Preferred Share or Equivalent Share (as determined in
good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for
all purposes) of the portion of the cash, assets or evidences of indebtedness
so
to be distributed or of such subscription rights or warrants applicable to
a
Preferred Share or Equivalent Share, as the case may be, and the denominator
of
which shall be such Current Per Share Market Price of a Preferred Share or
Equivalent Share on such record date; provided,
however,
that in
no event shall the consideration to be paid upon the exercise of one Right
be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. Such adjustments 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 be the Exercise Price
which
would have been in effect if such record date had not been fixed.
(d) Anything
herein to the contrary notwithstanding, no adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) of the Exercise Price; provided,
however,
that
any adjustments which by reason of this Section 11(d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth (0.0001) of a Common Share or other share
or one hundred-thousandth (0.00001) of a Preferred Share, as the case may be.
Notwithstanding the first sentence of this Section 11(d), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three
(3) years from the date of the transaction which requires such adjustment or
(ii) the Expiration Date.
(e) If
as a result of an adjustment made pursuant to Section 11(a) or Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled
to
receive any shares of capital stock other than Preferred Shares, thereafter
the
number of such other shares so receivable upon exercise of any Right and, if
required, the Exercise Price thereof, shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in Sections 11(a),
11(b), 11(c), 11(d), 11(g), 11(h), 11(j) and 11(l), 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.
(f) 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-thousandths (0.001) of a Preferred Share
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(g) Unless
the Company shall have exercised its election as provided in Section 11(h),
upon
each adjustment of the Exercise Price as a result of the calculations made
in
Sections 11(b) and (c), each Right outstanding immediately prior to the making
of such adjustment shall thereafter evidence the right to purchase, at the
adjusted Exercise Price, that number of Preferred Shares (calculated to the
nearest one hundred-thousandth (0.00001) of a share) obtained by (i) multiplying
(x) the number of Preferred Shares covered by a Right immediately prior to
this
adjustment, by (y) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price, and (ii) dividing the product so obtained
by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
15
(h) The
Company may elect on or after the date of any adjustment of the Exercise Price
to adjust the number of Rights, in substitution for any adjustment in the number
of Preferred Shares purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one-thousandths (0.001) of a Preferred Share for which a
Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one hundred-thousandth (0.00001)) obtained
by
dividing the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after adjustment
of
the Exercise Price. The Company shall make a public announcement and promptly
notify the Rights Agent of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Exercise Price is adjusted or any day thereafter, but, if any Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(h), the
Company shall, as promptly as practicable, cause to be distributed to holders
of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Exercise
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public
announcement.
(i) Irrespective
of any adjustment or change in the Exercise Price or the number of Preferred
Shares issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Exercise Price
per
one one-thousandth (0.001) of a Preferred Share and the number of
one-thousandths (0.001) of a Preferred Share which were expressed in the initial
Rights Certificates issued hereunder.
(j) Before
taking any action that would cause an adjustment reducing the Exercise Price
below the par or stated value, if any, of the number of one-thousandths (0.001)
of a Preferred Share issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue as fully paid and
nonassessable shares such number of one-thousandths (0.001) of a Preferred
Share
at such adjusted Exercise Price.
(k) In
any case in which this Section 11 shall require that an adjustment in the
Exercise Price be made effective as of a record date for a specified event,
the
Company may elect to defer (with prompt written notice thereof to the Rights
Agent) until the occurrence of such event the issuing to the holder of any
Right
exercised after such record date of the number of one-thousandths (0.001) of
a
Preferred Share and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of one-thousandths (0.001)
of a Preferred Share and other capital stock or securities of the Company,
if
any, issuable upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment; provided,
however,
that
the Company shall deliver to such holder a due ▇▇▇▇ or other appropriate
instrument evidencing such holder’s right to receive such additional shares
(fractional or otherwise) upon the occurrence of the event requiring such
adjustment.
16
(l) Anything
in this Section 11 to the contrary notwithstanding, prior to the Distribution
Date, the Company shall be entitled to make such adjustments in the Exercise
Price, in addition to those adjustments expressly required by this Section
11,
as and to the extent that it in its sole discretion shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
or
Common Shares, (ii) issuance wholly for cash of any Preferred or Common Shares
at less than the current market price, (iii) issuance wholly for cash of
Preferred or Common Shares or securities which by their terms are convertible
into or exchangeable for Preferred or Common Shares, (iv) stock dividends or
(v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred or Common Shares
shall
not be taxable to such stockholders.
(m) The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Sections 23, 24 or 27 hereof, take (or permit to be
taken) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
(n) In
the event that the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Common Shares payable in Common Shares, (B)
subdivide the outstanding Common Shares, (C) combine the outstanding Common
Shares (by reverse stock split or otherwise) into a smaller number of Common
Shares, or (D) issue any shares of its capital stock in a reclassification
of
the Common Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
Person), then, in each such event, except as otherwise provided in this Section
11(a) and Section 7(e) hereof: (1) each Common Share (or shares of capital
stock
issued in such reclassification of the Common Shares) outstanding immediately
following such time shall have associated with it the number of Rights as were
associated with one Common Share immediately prior to the occurrence of the
event described in clauses (A)-(D) above; (2) the Exercise Price in effect
at
the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that the
Exercise Price thereafter shall equal the result obtained by multiplying the
Exercise Price in effect immediately prior to such time by a fraction, the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the event described in clauses (A)-(D) above, and the
denominator of which shall be the total number of Common Shares outstanding
immediately after such event; provided,
however,
that in
no event shall the consideration to be paid upon the exercise of one Right
be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of such Right; and (3) the number of one-thousandths
(0.001) of a Preferred Share (or shares of such other capital stock) issuable
upon the exercise of each Right outstanding after such event shall equal the
number of one-thousandths (0.001) of a Preferred Share (or shares of such other
capital stock) as were issuable with respect to one Right immediately prior
to
such event. Each Common Share that shall become outstanding after an adjustment
has been made pursuant to this Section 11(n) shall have associated with it
the
number of Rights, exercisable at the Exercise Price and for the number of
one-thousandths (0.001) of a Preferred Share (or shares of such other capital
stock) as one Common Share has associated with it immediately following the
adjustment made pursuant to this Section 11(n). If an event occurs which would
require an adjustment under both this Section 11(n) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(n) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
Section
12. Certificate
of Adjusted Exercise Price or Number of Shares. Whenever
an adjustment is made as provided in Sections 11 or 13 hereof, the Company
shall
promptly (a) prepare a certificate setting forth such adjustment and a brief
statement of the facts and computations accounting for such adjustment, (b)
file
with the Rights Agent and with each transfer agent for the Preferred Shares
a
copy of such certificate and (c) mail a brief summary thereof to each holder
of
a Rights Certificate in accordance with Section 26 hereof. Notwithstanding
the
foregoing sentence, the failure of the Company to make such certification or
give such notice shall not affect the validity of such adjustment or the force
or effect of the requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment or
statement therein contained and shall have no duty or liability with respect
to,
and shall not be deemed to have knowledge of, any adjustment or any such event
unless and until it shall have received such a certificate.
17
Section
13. Consolidation,
Merger or Sale or Transfer of Assets or Earning Power.
(a) In
the event that, following a Person becoming an Acquiring Person, directly or
indirectly:
(i) the
Company shall consolidate with, or merge with and into, any other Person (other
than a wholly-owned Subsidiary of the Company in a transaction the principal
purpose of which is to change the state of incorporation of the Company and
which complies with Section 11(m) hereof);
(ii) any
Person shall consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving Person of such
consolidation or merger and, in connection with such merger, all or part of
the
Common Shares shall be changed into or exchanged for stock or other securities
of any other Person (or the Company); or
(iii) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions, assets or
earning power aggregating fifty percent (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 individually (and
together) complies with Section 11(m) hereof),
then,
concurrent with and in each such case,
(A) each
holder of a Right (except as provided in Section 7(e) hereof) shall thereafter
have the right to receive, upon the exercise thereof at a price equal to the
Total Exercise Price applicable immediately prior to the occurrence of the
Section 13 Event in accordance with the terms of this Agreement, such number
of
validly authorized and issued, fully paid, nonassessable and freely tradeable
Common Shares of the Principal Party (as hereinafter defined), free of any
liens, encumbrances, rights of first refusal or other adverse claims, as shall
be equal to the result obtained by dividing such Total Exercise Price by an
amount equal to fifty percent (50%) of the Current Per Share Market Price of
the
Common Shares of such Principal Party on the date of consummation of such
Section 13 Event, provided,
however,
that
the Exercise Price and the number of Common Shares of such Principal Party
so
receivable upon exercise of a Right shall be subject to further adjustment
as
appropriate in accordance with Section 11(e) hereof;
(B) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of
such Section 13 Event, all the obligations and duties of the Company pursuant
to
this Agreement;
(C) the
term “Company” shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 hereof shall
apply
only to such Principal Party following the first occurrence of a Section 13
Event;
18
(D) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares) in connection with
the
consummation of any such transaction as may be necessary to ensure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its Common Shares thereafter deliverable upon the exercise
of
the Rights; and
(E) upon
the subsequent occurrence of any consolidation, merger, sale or transfer of
assets or other extraordinary transaction in respect of such Principal Party,
each holder of a Right shall thereupon be entitled to receive, upon exercise
of
a Right and payment of the Total Exercise Price as provided in this Section
13(a), such cash, shares, rights, warrants and other property which such holder
would have been entitled to receive had such holder, at the time of such
transaction, owned the Common Shares of the Principal Party receivable upon
the
exercise of such Right pursuant to this Section 13(a), and such Principal Party
shall take such steps (including, but not limited to, reservation of shares
of
stock) as may be necessary to permit the subsequent exercise of the Rights
in
accordance with the terms hereof for such cash, shares, rights, warrants and
other property.
(F) For
purposes hereof, the “earning power” of the Company and its Subsidiaries shall
be determined in good faith by the Company’s Board of Directors on the basis of
the operating income of each business operated by the Company and its
Subsidiaries during the three fiscal years preceding the date of such
determination (or, in the case of any business not operated by the Company
or
any Subsidiary during three full fiscal years preceding such date, during the
period such business was operated by the Company or any
Subsidiary).
(b) For
purposes of this Agreement, the term “Principal
Party”
shall
mean:
(i) in
the case of any transaction described in clause (i) or (ii) of Section 13(a)
hereof: (A) the Person that is the issuer of the securities into which the
Common Shares are converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer the Common Shares of which have the
greatest aggregate market value of shares outstanding, or (B) if no securities
are so issued, (x) the Person that is the other party to the merger, if such
Person survives said merger, or, if there is more than one such Person, the
Person the Common Shares of which have the greatest aggregate market value
of
shares outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the consolidation;
and
(ii) in
the case of any transaction described in clause (iii) of Section 13(a) hereof,
the Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions, or,
if
more than one Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power so transferred and
each
such portion would, were it not for the other equal portions, constitute the
greatest portion of the assets or earning power so transferred, or if the Person
receiving the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons is the issuer of Common
Shares
19
having
the greatest aggregate market value of shares outstanding; provided that in
any
such case described in the foregoing clause (b)(i) or (b)(ii), if the Common
Shares of such Person are not at such time or have not been continuously over
the preceding 12-month period registered under Section 12 of the Exchange Act,
then (1) if such Person is a direct or indirect Subsidiary of another Person
the
Common Shares of which are and have been so registered, the term “Principal
Party” shall refer to such other Person, or (2) if such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Shares of which
are
and have been so registered, the term “Principal Party” shall refer to whichever
of such Persons is the issuer of Common Shares having the greatest aggregate
market value of shares outstanding, or (3) if such Person is owned, directly
or
indirectly, by a joint venture formed by two or more Persons that are not owned,
directly or indirectly by the same Person, the rules set forth in clauses (1)
and (2) above shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a Subsidiary of both
or
all of such joint venturers, and the Principal Party in each such case shall
bear the obligations set forth in this Section 13 in the same ration as its
interest in such Person bears to the total of such interests.
(c) The
Company shall not consummate any Section 13 Event unless the Principal Party
shall have a sufficient number of authorized Common Shares that have not been
issued or reserved for issuance to permit the exercise in full of the Rights
in
accordance with this Section 13 and unless prior thereto the Company and such
issuer shall have executed and delivered to the Rights Agent a supplemental
agreement confirming that such Principal Party shall, upon consummation of
such
Section 13 Event, assume this Agreement in accordance with Sections 13(a) and
13(b) hereof, that all rights of first refusal or preemptive rights in respect
of the issuance of Common Shares of such Principal Party upon exercise of
outstanding Rights have been waived, that there are no rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights and
that such transaction shall not result in a default by such Principal Party
under this Agreement, and further providing that, as soon as practicable after
the date of such Section 13 Event, such Principal Party will:
(i) prepare
and file a registration statement under the Securities Act with respect to
the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such registration statement
to
become effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date, and similarly comply with applicable state securities
laws;
(ii) use
its best efforts to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on a national securities
exchange; and
(iii) deliver
to holders of the Rights historical financial statements for such Principal
Party that comply in all respects with the requirements for registration on
Form
10 (or any successor form) under the Exchange Act.
In
the
event that a Section 13 Event shall occur at any time after the occurrence
of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a)
(without taking into account any prior adjustment required by
Section 11(a)(ii)).
(d) The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section
14. Fractional
Rights and Fractional Shares.
(a)
The Company shall not be required to issue fractions of Rights or to distribute
Rights Certificates that evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a
whole
Right. For the purposes of this Section 14(a), the current market value of
a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable, as determined pursuant to the second sentence of Section
1(j) hereof.
20
(b) The
Company shall not be required to issue fractions of Preferred Shares (other
than
fractions that are integral multiples of one one-thousandth (0.001) of a
Preferred Share) upon exercise of the Rights or to distribute certificates
which
evidence fractional Preferred Shares (other than fractions that are integral
multiples of one one-thousandth (0.001) of a Preferred Share). Interests in
fractions of Preferred Shares in integral multiples of one one-thousandth
(0.001) of a Preferred Share may, at the election of the Company, be evidenced
by depository receipts, pursuant to an appropriate agreement between the Company
and a depository selected by it; provided,
that
such agreement shall provide that the holders of such depository receipts shall
have all the rights, privileges and preferences to which they are entitled
as
beneficial owners of the Preferred Shares represented by such depository
receipts. In lieu of fractional Preferred Shares that are not integral multiples
of one one-thousandth (0.001) of a Preferred Share, the Company shall pay to
the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a Preferred Share. For purposes of this Section 14(b), the
current market value of a Preferred Share shall be (x) one thousand multiplied
by (y) the closing price of a Common Share (as determined pursuant to the second
sentence of Section 1(j) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates that evidence fractional Common Shares upon the exercise
or exchange of Rights. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a Common Share. For purposes of this
Section 14(c), the current market value of a Common Share shall be the closing
price of a Common Share (as determined pursuant to the second sentence of
Section 1(j) hereof) for the Trading Day immediately prior to the date of such
exercise.
(d) The
holder of a Right by the acceptance of the Right expressly waives his or her
right to receive any fractional Rights or any fractional shares (other than
fractions that are integral multiples of one one-thousandth (0.001) of a
Preferred Share) upon exercise of a Right.
Section
15. Rights
of Action. All
rights of action in respect of this Agreement, excepting the rights of action
given to the Rights Agent hereunder, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Shares), may,
in
his or her own behalf and for his or her own benefit, enforce, and may institute
and maintain any suit, action or proceeding against the Company to enforce,
or
otherwise act in respect of, his or her right to exercise the Rights evidenced
by such Rights Certificate in the manner provided in such Rights Certificate
and
in this Agreement. Without limiting the foregoing or any remedies available
to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations
of
any Person subject to this Agreement.
Section
16. Agreement
of Rights Holders. Every
holder of a Right, by accepting the same, consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:
21
(a) prior
to the Distribution Date, the Rights will be transferable only in connection
with the transfer of the Common Shares;
(b) after
the Distribution Date, the Rights Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the office or offices
of
the Rights Agent designated for such purposes, duly endorsed or accompanied
by a
proper instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject
to Sections 6(a) and 7(f) hereof, the Company and the Rights Agent may deem
and
treat the Person in whose name the Rights Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is registered
as
the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Rights Certificates or the
associated Common Shares 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) notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as
a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, judgment,
decree or ruling (whether interlocutory or final) issued by a court or by a
governmental, regulatory, self-regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated
or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided,
however,
that
the Company must use all reasonable efforts to have any such injunction, order,
judgment, decree or ruling lifted or otherwise overturned as soon as
possible.
Section
17. Rights
Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose to be the holder of the Preferred Shares
or any other securities of the Company which may at any time be issuable on
the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as specifically provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section
18. Concerning
the Rights Agent.
(a) The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
damage, judgment, fine, penalty, claim, demand, settlement, cost or expense
(including, without limitation, the reasonable fees and expenses of legal
counsel), incurred without gross negligence, bad faith or willful misconduct
on
the part of the Rights Agent, for any action taken, suffered or omitted by
the
Rights Agent in connection with the acceptance, administration, exercise and
performance of its duties under this Agreement, including the costs and expenses
incurred in defending against any claim of liability.
22
(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 acceptance
and administration of this Agreement and the exercise and performance of its
duties hereunder, in reliance upon any Rights Certificate or certificate for
the
Preferred Shares or Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or
Persons.
Section
19. Merger
or Consolidation or Change of Name of Rights Agent.
(a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger
or
consolidation to which the Rights Agent or any successor Rights Agent shall
be a
party, or any Person succeeding to the corporate trust, stock transfer or other
shareholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided,
however,
that
such Person would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent
and
deliver such Rights Certificates so countersigned; and in case at that time
any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of
the
predecessor Rights Agent or in the name of the successor Rights Agent; and
in
all such cases such Rights Certificates shall have the full force provided
in
the Rights Certificates and in this Agreement.
(b) In
case at any time the name of the Rights Agent shall be changed and at such
time
any of the Rights Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and
in
all such cases such Rights Certificates shall have the full force provided
in
the Rights Certificates and in this Agreement.
Section
20. Duties
of Rights Agent. The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company or an employee of the Rights Agent), and the opinion of such 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 advice or opinion.
(b) Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including without
limitation, the identity of an Acquiring Person and the determination of Current
Per Share Market Price of any security) be proved or established by the Company
prior to taking, suffering or omitting to take any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full and complete
authorization to the Rights Agent for any action taken, suffered or omitted
in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
23
(c) The
Rights Agent shall be liable hereunder to the Company and any other Person
only
for its own gross negligence, bad faith or willful misconduct.
(d) The
Rights Agent shall not be liable for or by reason of any of the statements
of
fact or recitals contained in this Agreement or in the Rights Certificates
(except its countersignature thereof) or be required to verify the same, but
all
such statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The
Rights Agent shall not be under any responsibility in respect of the validity
of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be liable or
responsible for any change in the exercisability of the Rights or any adjustment
in the terms of the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except
with
respect to the exercise of Rights evidenced by Rights Certificates after receipt
by the Rights Agent of a certificate furnished pursuant to Section 12 describing
such change or adjustment, upon which certificate the Rights Agent may rely);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to
be
issued pursuant to this Agreement or any Rights Certificate or as to whether
any
Preferred Shares will, when issued, be validly authorized and issued, fully
paid
and nonassessable.
(f) The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and
other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.
(g) The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer, the Secretary or any Assistant
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any
action taken, suffered or omitted by it in good faith in accordance with
instruction of any such officer or for any delay in acting while waiting for
those instructions.
(h) The
Rights Agent and any stockholder, director, officer or employee of the Rights
Agent may, to the extent not otherwise prohibited by applicable law, buy, sell
or deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act
as
fully and freely as though the Rights Agent were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent or any such
stockholder, director, officer or employee from acting in any other capacity
for
the Company or for any other Person.
(i) The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself (through its directors,
officers and employees) or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, omission, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company or any other Person resulting from any such act, omission, default,
neglect or misconduct; provided,
however,
that
reasonable care was exercised in the selection and continued employment
thereof.
24
(j) No
provision of this Agreement shall require the Rights Agent to expend or risk
its
own funds or otherwise incur any financial liability in the performance of
any
of its duties hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to
it.
(k) If,
with respect to any Rights Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the form of assignment or
form
of election to purchase, as the case may be, has either not been completed
or
indicates an affirmative response to clause 1 and/or 2 thereof, the Rights
Agent
shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Company.
Section
21. Change
of Rights Agent. The
Rights Agent or any successor Rights Agent may resign and be discharged from
its
duties under this Agreement upon thirty (30) days’ notice in writing mailed to
the Company and to each transfer agent of the Preferred Shares and the Common
Shares by registered or certified mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days’ notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Preferred Shares and the Common Shares by registered
or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after it has been notified
in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his or her Rights Certificate for inspection by the Company),
then the registered holder of any Rights Certificate may apply to any court
of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the State of State of New York (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the State of State of New York), in good standing, having an
office in the State of State of New York, which is authorized under such laws
to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time
held
by it hereunder, and execute and deliver any further assurance, conveyance,
act
or deed necessary for the purpose. Not later than the effective date of any
such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Preferred Shares and
the
Common Shares, and mail a notice thereof in writing to the registered holders
of
the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section
22. Issuance
of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Exercise Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made
in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date
and
prior to the earlier of the redemption or expiration of the Rights, the Company
(a) shall, with respect to Common Shares so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, granted
or
awarded prior to the Distribution Date, or upon the exercise, conversion or
exchange of other securities of the Company issued by the Company prior to
the
Distribution Date and (b) may, in any other case, if deemed necessary or
25
appropriate
by the Board of Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided,
however,
that
(i) no such Rights Certificate shall be issued if, and to the extent that,
the
company shall be advised by counsel that such issuance would create a
significant risk of or result in material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued or would
create a significant risk of or result in such options’ or employee plans’ or
arrangements’ failing to qualify for otherwise available special tax treatment
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section
23. Redemption.
(a) The
Board of Directors may, at its option, at any time prior to the Close of
Business on the earlier of (i) the tenth day following the Shares Acquisition
Date (or such later date as may be determined by action of the Company’s Board
of Directors and publicly announced by the Company) and (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights
at
a redemption price of $0.001 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being herein referred to as the“Redemption
Price”)
and the
Company may, at its option, pay the Redemption Price either in Common Shares
(based on the Current Per Share Market Price thereof at the time of redemption)
or cash. Such redemption of the Rights by the Company may be made effective
at
such time, on such basis and with such conditions as the Company’s Board of
Directors in its sole discretion may establish. The date on which the Company’s
Board of Directors elects to make the redemption effective shall be referred
to
as the “Redemption
Date.”
(b) Immediately
upon the action of the Board of Directors of the Company ordering the redemption
of the Rights, evidence of which shall have been filed with the Rights Agent,
and without any further action and without any notice, the right to exercise
the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption (with prompt notice thereof to the Rights Agent);
provided,
however,
that
the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within ten (10) days after the action of the
Company’s Board of Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the holders of
the
then outstanding Rights by mailing such notice to all such holders at their
last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice that is mailed in the manner herein provided shall
be
deemed given, whether or not the holder receives the notice. Each such notice
of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner
other
than that specifically set forth in this Section 23 or in Section 24 hereof,
and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
Section
24. Exchange.
(a) Subject
to subsection 24(c) below, the Company’s Board of Directors may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the“Exchange
Ratio”).
Notwithstanding the foregoing, the Company’s Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than
the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary, or any entity holding Common Shares for or pursuant
to
the terms of any such plan), together with all Affiliates and Associates of
such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
26
(b) Immediately
upon the action of the Company’s Board of Directors ordering the exchange of any
Rights pursuant to Section 24(a) and without any further action and without
any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of Common
Shares equal to the number of such Rights held by such holder multiplied by
the
Exchange Ratio. The Company shall give public notice (with prompt notice thereof
to the Rights Agent) of any such exchange; provided,
however,
that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company shall mail a notice of any such exchange to all
of
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights that will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become null and void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(c) In
the event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with Section 24(a), the Company shall either take
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights or alternatively, at the option of a
majority of the Company’s Board of Directors, with respect to each Right (i) pay
cash in an amount equal to the Current Value (as hereinafter defined), in lieu
of issuing Common Shares in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the Current Value,
in lieu of issuing Common Shares in exchange for each such Right, where the
value of such securities shall be determined by a nationally recognized
investment banking firm selected by majority vote of the Company’s Board of
Directors, or (iii) deliver any combination of cash, property, Common Shares
and/or other securities having a value equal to the Current Value in exchange
for each Right. For purposes of this Section 24(c) only, the Current Value
shall
mean the product of the Current Per Share Market Price of Common Shares on
the
date of the occurrence of the event described above in subsection (a),
multiplied by the number of Common Shares for which the Right otherwise would
be
exchangeable if there were sufficient shares available. To the extent that
the
Company determines that some action need be taken pursuant to clauses (i),
(ii)
or (iii) of this Section 24(c), the Company’s Board of Directors may temporarily
suspend the exercisability of the Rights for a period of up to sixty (60) days
following the date on which the event described in Section 24(a) shall have
occurred, in order to seek any authorization of additional Common Shares and/or
to decide the appropriate form of distribution to be made pursuant to the above
provision and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
(d) The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates that evidence fractional Common Shares. In lieu of
such
fractional Common Shares, there shall be paid to the registered holders of
the
Rights Certificates with regard to which such fractional Common Shares would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Common Share (as determined pursuant to the
second sentence of Section 1(j) hereof).
(e) The
Company may, at its option, by majority vote of the Company’s Board of
Directors, at any time before any Person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights of substantially
equivalent value, as determined reasonably and with good faith by the Company’s
Board of Directors based upon the advice of one or more nationally recognized
investment banking firms.
27
(f) Immediately
upon the action of the Company’s Board of Directors ordering the exchange of any
Rights pursuant to Section 24(e) and without any further action and without
any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of rights
in exchange therefor as has been determined by the Company’s Board of Directors
in accordance with subsection 24(e) above. The Company shall give public notice
(with prompt notice thereof to the Rights Agent) of any such exchange;
provided,
however,
that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company shall mail a notice of any such exchange to all
of
the holders of such Rights at their last addresses as they appear upon the
registry books of the transfer agent for the Common Shares of the Company.
Any
notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will
state the method by which the exchange of the Rights will be
effected.
Section
25. Notice
of Certain Events.
(a) In
case
the Company shall, at any time after the Distribution Date, propose (i) to
pay any dividend payable in stock of any class to the holders of the Preferred
Shares or to make any other distribution to the holders of the Preferred Shares
(other than a regular quarterly cash dividend), (ii) to offer to the
holders of the Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or
any
other securities, rights or options, (iii) to effect any reclassification
of the Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person, (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Shares
payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section
26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date
of participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given
in
the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and, in the case of any such other action, at least
10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
(b) In
case
the event set forth in Section 11(a)(ii) hereof shall occur, then the Company
shall, as soon as practicable thereafter, give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence
of
such event, which notice shall describe such event and the consequences of
such
event to holders of Rights under Section 11(a)(ii) hereof.
28
Section
26. Notices. Notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if delivered, in the case of domestic delivery,
by
first-class mail, postage prepaid or by overnight courier service, or in the
case of international delivery, by two-day courier service, to the address
as
follows:
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇, Vice President and General Counsel
with
a
copy to:
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Jr.
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Subject
to the provisions of Section 21 hereof, any notice or demand authorized by
this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
in
writing and sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Notices
or demands authorized by this Agreement to be given or made by the Company
or
the Rights Agent to the holder of any Rights Certificate shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company.
Section
27. Supplements
and Amendments. Prior
to the occurrence of a Distribution Date, the Company may supplement or amend
this Agreement in any respect without the approval of any holders of Rights
and
the Rights Agent shall, if the Company so instructs, execute such supplement
or
amendment. From and after the occurrence of a Distribution Date, the Company
and
the Rights Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Rights in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained herein which
may
be defective or inconsistent with any other provisions herein, (iii) shorten
or
lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or
desirable and that shall not adversely affect the interests of the holders
of
Rights (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided,
this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person). Upon the delivery of a certificate from an appropriate officer of
the
Company that states that the proposed supplement or amendment is in compliance
with the terms of this Section 27 and provided that such supplement or amendment
does not change or increase the Rights Agent’s rights, duties, liabilities or
obligations hereunder, the Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Shares.
29
Section
28. Successors. All
the covenants and provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section
29. Determinations
and Actions by the Company’s Board of Directors, etc.
(a) For
all purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common 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) of the General Rules and Regulations under the Exchange Act.
The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Company’s Board of Directors, or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power (i) to interpret the provisions of
this
Agreement and (ii) to make all determinations deemed necessary or advisable
for
the administration of this Agreement (including a determination to redeem or
not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the
Company’s Board of Directors in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights Certificates
and all other parties and (y) with respect to claims specifically arising from
the Agreement, not subject the Board of Directors of the Company to any
liability to the holders of the Rights. The Rights Agent is entitled always
to
assume the Company’s Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.
(b) It
is understood that the TIDE Committee (as defined below) of the Board of
Directors of the Company shall review and evaluate this Agreement in order
to
consider whether the maintenance of this Agreement continues to be in the
interests of the Company, its stockholders and any other relevant constituencies
of the Company, within three (3) years of the date hereof and at least every
three (3) years thereafter, or sooner than that if any Person shall have made
a
proposal to the Company, or taken any such other action, that, if effective,
could cause such Person to become an Acquiring Person hereunder, if a majority
of the members of the TIDE Committee shall deem such review and evaluation
appropriate after giving due regard to all relevant circumstances. Following
each such review, the TIDE Committee will communicate its conclusions to the
full Board of Directors of the Company, including any recommendation in light
thereof as to whether this Agreement should be modified or the Rights should
be
redeemed. “TIDE
Committee”
shall
mean a committee appointed by the Board of Directors of the Company to fulfill
the foregoing duties and shall be comprised of members of the Board of Directors
who are independent under the listing standards of Nasdaq, or any other national
securities exchange on which the Common Shares is listed, and who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person, or of any such Affiliate or Associate;
provided,
however,
that
the fact that a Person is nominated for election as a director by an Acquiring
Person or any such Affiliate, Associate or representative, or the fact that
an
Acquiring Person or any such Affiliate, Associate or representative votes in
favor of the election of a Person as a director, shall not, in and of itself,
disqualify a Person from being independent provided that such Person does not
have any agreement or understanding with such Acquiring Person, Affiliate,
Associate or representative with respect to how such Person will vote on any
future transactions. The Board of Directors may designate an existing committee
of the Board of Directors to serve as the TIDE Committee provided that the
members of such committee satisfy the foregoing requirements.
30
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 Common Shares) any legal or equitable
right, remedy or claim pursuant to 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 Common Shares).
Section
31. Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided,
however,
that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated
and
shall not expire until the Close of Business on the tenth day following the
date
of such determination by the Company’s Board of Directors.
Section
32. Governing
Law. This
Agreement and each Right 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 to be made and performed entirely within such
State, except that all provisions regarding the rights, duties, obligations
and
immunities of the Rights Agent shall be governed by and construed in accordance
with the laws of the State of New York 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 and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but 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.
[remainder
of page intentionally left blank]
31
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
“COMPANY”
By:
/s/
▇▇▇▇▇
▇▇▇▇▇▇
Name:
▇▇▇▇▇
▇▇▇▇▇▇
Title:
Chief
Financial Officer
“RIGHTS
AGENT”
AMERICAN
STOCK TRANSFER AND TRUST COMPANY
By:
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇
Name:
▇▇▇▇▇▇▇
▇▇▇▇▇
Title: Vice
President
32
EXHIBIT
A
FORM
OF CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND
PRIVILEGES
OF SERIES B PREFERRED STOCK OF
The
undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇, does hereby certify:
1. That
she is the duly elected and acting Vice President and General Counsel of
Internap Network Services Corporation, a Delaware corporation (the“Corporation”).
2. That
pursuant to the authority conferred upon the Corporation’s Board of Directors by
the Amended and Restated Certificate of Incorporation of the said Corporation,
the said Board of Directors of the Corporation on March 15, 2007 adopted the
following resolutions creating a series of Preferred Stock designated as Series
B Preferred Stock:
“RESOLVED: that
pursuant to the authority vested in the Board of Directors of the Corporation
by
the Certificate of Incorporation, as amended, the Corporation’s Board of
Directors does hereby provide for the issue of a series of Preferred Stock
of
the Corporation and does hereby fix and herein state and express the
designations, powers, preferences and relative and other special rights and
the
qualifications, limitations and restrictions of such series of Preferred Stock
as follows:
Section
1. Designation
and Amount. The
shares of such series shall be designated as “Series
B Preferred Stock.”
The
Series B Preferred Stock shall have a par value of $0.001 per share, and the
number of shares constituting such series shall be 500,000.
Section
2. Proportional
Adjustment. In
the event that the Corporation shall at any time after the issuance of any
share
or shares of Series B Preferred Stock (i) declare any dividend on Common Stock
of the Corporation (“Common
Stock”)
payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares, then
in
each such case the Corporation shall simultaneously effect a proportional
adjustment to the number of outstanding shares of Series B Preferred Stock.
Section
3. Dividends
and Distributions.
(a) Subject
to the prior and superior right of the holders of any shares of any series
of
Preferred Stock ranking prior and superior to the shares of Series B Preferred
Stock with respect to dividends, the holders of shares of Series B Preferred
Stock shall be entitled to receive when, as and if declared by the Corporation’s
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of March, June, September, and
December in each year (each such date being referred to herein as a“Quarterly Dividend
Payment Date”),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series B Preferred Stock, in an amount
per
share (rounded to the nearest cent) equal to 1,000 times the aggregate per
share
amount of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than
a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series B Preferred
Stock.
1
(b) The
Corporation shall declare a dividend or distribution on the Series B Preferred
Stock as provided in paragraph (a) above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable
in
shares of Common Stock).
(c) Dividends
shall begin to accrue on outstanding shares of Series B Preferred Stock from
the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series B Preferred Stock, unless the date of issue of such shares is prior
to
the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a
date after the record date for the determination of holders of shares of Series
B Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series B
Preferred Stock in an amount less than the total amount of such dividends at
the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Corporation’s Board of Directors may fix a record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive payment of
a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
Section
4. Voting
Rights. The
holders of shares of Series B Preferred Stock shall have the following voting
rights:
(a) Each
share of Series B Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
(b) Except
as otherwise provided herein or by law, the holders of shares of Series B
Preferred Stock and the holders of shares of Common Stock shall vote together
as
one class on all matters submitted to a vote of stockholders of the Corporation.
(c) Except
as required by law, the holders of Series B Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent that they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section
5. Certain
Restrictions.
(a) The
Corporation shall not declare any dividend on, make any distribution on, or
redeem or purchase or otherwise acquire for consideration any shares of Common
Stock after the first issuance of a share or fraction of a share of Series
B
Preferred Stock unless concurrently therewith it shall declare a dividend on
the
Series B Preferred Stock as required by Section 3 hereof.
(b) Whenever
quarterly dividends or other dividends or distributions payable on the Series
B
Preferred Stock as provided in Section 3 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared,
on
shares of Series B Preferred Stock outstanding shall have been paid in full,
the
Corporation shall not:
(i) declare
or pay dividends on, make any other distributions on, or redeem or purchase
or
otherwise acquire for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series
B
Preferred Stock;
2
(ii) declare
or pay dividends on, or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or
winding up) with the Series B Preferred Stock, except dividends paid ratably
on
the Series B Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders
of
all such shares are then entitled;
(iii) redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series B Preferred Stock, provided that the Corporation may at
any
time redeem, purchase or otherwise acquire shares of any such parity stock
in
exchange for shares of any stock of the Corporation ranking junior (either
as to
dividends or upon dissolution, liquidation or winding up) to the Series B
Preferred Stock; or
(iv) purchase
or otherwise acquire for consideration any shares of Series B Preferred Stock,
or any shares of stock ranking on a parity with the Series B Preferred Stock,
except in accordance with a purchase offer made in writing or by publication
(as
determined by the Corporation’s Board of Directors) to all holders of such
shares upon such terms as the Corporation’s Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series or classes, shall determine in good
faith will result in fair and equitable treatment among the respective series
or
classes.
(c) The
Corporation shall not permit any subsidiary of the Corporation to purchase
or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (a) of this Section 5, purchase
or
otherwise acquire such shares at such time and in such manner.
Section
6. Reacquired
Shares. Any
shares of Series B Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued
as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Corporation’s Board of Directors, subject to the conditions
and restrictions on issuance set forth herein and in the Amended and Restated
Certificate of Incorporation, as then amended.
Section
7. Liquidation,
Dissolution or Winding Up. Upon
any liquidation, dissolution or winding up of the Corporation, the holders
of
shares of Series B Preferred Stock shall be entitled to receive an aggregate
amount per share equal to 1,000 times the aggregate amount to be distributed
per
share to holders of shares of Common Stock plus an amount equal to any accrued
and unpaid dividends on such shares of Series B Preferred Stock.
Section
8. Consolidation,
Merger, etc. In
case the Corporation shall enter into any consolidation, merger, combination
or
other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then
in
any such case the shares of Series B Preferred Stock shall at the same time
be
similarly exchanged or changed in an amount per share equal to 1,000 times
the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock
is changed or exchanged.
Section
9. No
Redemption. The
shares of Series B Preferred Stock shall not be redeemable.
3
Section
10. Ranking. The
Series B Preferred Stock shall rank junior to all other series of the
Corporation’s Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
Section
11. Amendment. The
Amended and Restated Certificate of Incorporation of the Corporation shall
not
be further amended in any manner which would materially alter or change the
powers, preference or special rights of the Series B Preferred Stock so as
to
affect them adversely without the affirmative vote of the holders of a majority
of the outstanding shares of Series B Preferred Stock, voting separately as
a
series.
Section
12. Fractional
Shares. Series
B Preferred Stock may be issued in fractions of a share which shall entitle
the
holder, in proportion to such holder’s fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series B Preferred Stock.
RESOLVED
FURTHER, that the Chief Executive Officer, Chief Financial Officer, President,
any Vice President, Secretary or any Assistant Secretary of this Corporation
be,
and they hereby are, authorized and directed to prepare and file a Certificate
of Designation of Rights, Preferences and Privileges of the Series B Preferred
Stock of the Corporation in accordance with the foregoing resolution and the
applicable provisions of Delaware law and to take such actions as they may
deem
necessary or appropriate to carry out the intent of the foregoing resolution.”
I
further
declare under penalty of perjury that the matters set forth in the foregoing
Certificate of Designation are true and correct of my own knowledge.
Executed
at Atlanta, Georgia on April 5, 2007.
_______________________________
▇▇▇▇▇▇▇
▇▇▇▇
Internap
Network
Services Corporation
4
EXHIBIT
B
FORM
OF RIGHTS CERTIFICATE
|
Certificate
No. R-
|
|
_________
Rights
|
NOT
EXERCISABLE AFTER THE EARLIER OF (i) ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) THE DATE TERMINATED
BY
THE COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO
THE
PREFERRED STOCK RIGHTS AGREEMENT BETWEEN INTERNAP NETWORK SERVICES CORPORATION
AND AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS THE RIGHTS AGENT, DATED AS
OF
April 11, 2007 (THE “RIGHTS AGREEMENT”). THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN
THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS AGREEMENT.]1*
__________________________
1
The
portion of the legend in brackets shall be inserted only if applicable
and shall
replace the preceding sentence.
1
RIGHTS
CERTIFICATE
INTERNAP
NETWORK SERVICES CORPORATION
This
certifies that
,
or
registered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Preferred Stock Rights Agreement dated as
of
April 11, 2007, (the “Rights
Agreement”),
between Internap Network Services Corporation, a Delaware corporation (the
“Company”),
and
American Stock Transfer And Trust Company , as Rights Agent (the “Rights
Agent”),
to
purchase from the Company at any time after the Distribution Date (as such
term
is defined in the Rights Agreement) and prior to 5:00 P.M., New York time,
on
March 23, 2017 at the office of the Rights Agent designated for such purpose,
or
at the office of its successor as Rights Agent, one one-thousandth (0.001)
of a
fully paid and non-assessable share of Series B Preferred Stock, par value
$0.001 per share (the “Preferred
Shares”),
of the
Company, at an Exercise Price of $100 per one-thousandth (0.001) of a Preferred
Share (the “Exercise
Price”),
upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of one-thousandths (0.001)
of a Preferred Share which may be purchased upon exercise hereof) set forth
above are the number and Exercise Price as of April 11, 2007 based on the
Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Exercise Price and the number and kind of Preferred Shares or
other securities that may be purchased upon the exercise of the Rights evidenced
by this Rights Certificate are subject to modification and adjustment upon
the
happening of certain events.
This
Rights Certificate is subject to all of the terms, provisions and conditions
of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability
of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices
of
the Company and the above-mentioned office of the Rights Agent.
Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate (i) may be redeemed by the Company, at its option, at a redemption
price of $0.001 per Right or (ii) may be exchanged by the Company in whole
or in
part for Common Shares, substantially equivalent rights or other consideration
as determined by the Company.
This
Rights Certificate, with or without other Rights Certificates, upon surrender
at
the office of the Rights Agent designated for such purpose, may be exchanged
for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate amount
of
securities as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled
to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
No
fractional portion of less than one one-thousandth (0.001) of a Preferred Share
will be issued upon the exercise of any Right or Rights evidenced hereby but
in
lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
2
No
holder
of this Rights Certificate, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of
a
stockholder of the Company or any right to vote for the election of directors
or
upon any matter submitted to stockholders at any meeting thereof, or to give
or
withhold consent to any corporate action, or to receive notice of meetings
or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal. Dated as of ,
.
INTERNAP
NETWORK SERVICES CORPORATION
By:
__________________________________
Its:
__________________________________
ATTEST
By:
__________________________________
Its:
Secretary
Countersigned:
AMERICAN
STOCK TRANSFER AND TRUST COMPANY,
as
Rights Agent
By:
____________________________
Its:
____________________________
3
Form
of Reverse Side of Rights Certificate
FORM
OF ASSIGNMENT
(To
be
executed by the registered holder if such holder desires to transfer the Rights
Certificate)
FOR
VALUE
RECEIVED
hereby
sells, assigns and transfers unto
(Please
print name and address of transferee)
this
Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
,
Signature
Signature
Guaranteed:
Signatures
must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the
Securities Exchange Act of 1934, as amended.
4
CERTIFICATE
The
undersigned hereby certifies by checking the appropriate boxes that:
(1) this
Rights Certificate ¨
is
¨
is not
being sold, assigned and transferred by or on behalf of a Person who is or
was
an Acquiring Person, or an Affiliate or Associate of any such Person (as such
terms are defined in the Rights Agreement);
(2) after
due inquiry and to the best knowledge of the undersigned, it ¨
did
¨
did not
acquire the Rights evidenced by this Rights Certificate from any Person who
is,
was or subsequently became an Acquiring Person or an Affiliate or Associate
of
any such Person.
Dated:
,
Signature
Signature
Guaranteed:
Signatures
must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the
Securities Exchange Act of 1934, as amended.
5
Form
of Reverse Side of Rights Certificate - continued
FORM
OF ELECTION TO PURCHASE
(To
be
executed if holder desires to exercise rights represented by the Rights
Certificate)
To:
The
undersigned hereby irrevocably elects to exercise
Rights
represented by this Rights Certificate to purchase the number of one-thousandths
(0.001) of a Preferred Share issuable upon the exercise of such Rights and
requests that certificates for such number of one-thousandths (0.001) of a
Preferred Share 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 evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such 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:
,
Signature
Signature
Guaranteed:
Signatures
must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the
Securities Exchange Act of 1934, as amended.
6
CERTIFICATE
The
undersigned hereby certifies by checking the appropriate boxes that:
(1) the
Rights evidenced by this Rights Certificate ¨
are
¨
are not
being exercised by or on behalf of a Person who is or was an Acquiring Person
or
an Affiliate or Associate of any such Person (as such terms are defined in
the
Rights Agreement);
(2) after
due inquiry and to the best knowledge of the undersigned, it ¨
did
¨
did not
acquire the Rights evidenced by this Rights Certificate from any Person who
is,
was or subsequently became an Acquiring Person or an Affiliate or Associate
of
any such Person.
Dated:
,
Signature
Signature
Guaranteed:
Signatures
must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the
Securities Exchange Act of 1934, as amended.
7
Form
of Reverse Side of Rights Certificate—continued
NOTICE
The
signature in the foregoing Forms of Assignment and Election must conform to
the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
8
EXHIBIT
C
STOCKHOLDER
RIGHTS PLAN
INTERNAP
NETWORK SERVICES CORPORATION
Summary
of Rights
|
Distribution
and
Transfer
of
Rights;
Rights
Certificate:
|
|
The
Board of Directors of the Company has declared a dividend of one
Right for
each share of Common Stock of Internap Network Services Corporation
(the
“Company”)
outstanding. Prior to the Distribution Date referred to below, the
Rights
will be evidenced by and trade with the certificates for the Common
Stock.
After the Distribution Date, the Company will mail Rights certificates
to
the Company’s stockholders and the Rights will become transferable apart
from the Common Stock.
|
|
Distribution
Date:
|
|
Rights
will separate from the Common Stock and become exercisable following
(a)
the tenth day (or such later date as may be determined by the Company’s
Board of Directors) after a person or group acquires beneficial ownership
of 15% or more of the Company’s Common Stock or (b) the tenth business day
(or such later date as may be determined by the Company’s Board of
Directors) after a person or group announces a tender or exchange
offer,
the consummation of which would result in ownership by a person or
group
of 15% or more of the Company’s Common Stock.
|
|
Preferred
Stock
Purchasable
Upon
Exercise of
Rights:
|
|
After
the Distribution Date, each Right will entitle the holder to purchase
for
$100 (the “Exercise
Price”),
a fraction of a share of the Company’s Preferred Stock with economic terms
similar to that of one share of the Company’s Common
Stock.
|
|
Flip-In:
|
|
If
an acquirer (an “Acquiring
Person”)
obtains 15% or more of the Company’s Common Stock, then each Right (other
than Rights owned by an Acquiring Person or its affiliates) will
entitle
the holder thereof to purchase, for the Exercise Price, a number
of shares
of the Company’s Common Stock having a then-current market value of twice
the Exercise Price.
|
|
Flip-Over:
|
|
If,
after an Acquiring Person obtains 15% or more of the Company’s Common
Stock, (a) the Company merges into another entity, (b) an acquiring
entity
merges into the Company or (c) the Company sells more than 50% of
the
Company’s assets or earning power, then each Right (other than Rights
owned by an Acquiring Person or its affiliates) will entitle the
holder
thereof to purchase, for the Exercise Price, a number of shares of
Common
Stock of the person engaging in the transaction having a then current
market value of twice the Exercise Price.
|
|
Exchange
Provision:
|
|
At
any time after the date on which an Acquiring Person obtains 15%
or more
of the Company’s Common Stock and prior to the acquisition by the
Acquiring Person of 50% of the outstanding Common Stock, the Board
of
Directors of the Company may exchange the Rights (other than Rights
owned
by the Acquiring Person or its affiliates), in whole or in part,
for
shares of Common Stock of the Company at an exchange ratio of one
share of
Common Stock per Right (subject to
adjustment).
|
1
|
Redemption
of
the
Rights:
|
|
Rights
will be redeemable at the Company’s option for $0.001 per Right at any
time on or prior to the tenth day (or such later date as may be determined
by the Company’s Board of Directors) after public announcement that a
Person has acquired beneficial ownership of 15% or more of the Company’s
Common Stock (the “Shares
Acquisition Date”).
|
|
Expiration
of the
Rights:
|
|
The
Rights expire on the earliest of (a) March 23, 2017 or (b) exchange
or
redemption of the Rights as described above.
|
|
Review
of Rights
Agreement:
|
A
committee of the Board composed of independent directors will review
the
Rights Agreement periodically (at least every three years) in order
to
consider whether the maintenance of the Rights Agreement continues
to be
in the best interests of the Company, its stockholders and any other
relevant constituencies. This committee will communicate its conclusions
to the full Board after each review, including any recommendation
as to
whether the Rights Agreement should be modified or the Rights should
be
redeemed.
|
|
|
Amendment
of
Terms
of Rights:
|
|
The
terms of the Rights and the Rights Agreement may be amended in any
respect
without the consent of the Rights holders on or prior to the Distribution
Date; thereafter, the terms of the Rights and the Rights Agreement
may be
amended without the consent of the Rights holders in order to cure
any
ambiguities or to make changes which do not adversely affect the
interests
of Rights holders (other than the Acquiring Person).
|
|
Voting
Rights:
|
|
Rights
will not have any voting rights.
|
|
Anti-Dilution
Provisions:
|
|
Rights
will have the benefit of certain customary anti-dilution
provisions.
|
|
Taxes:
|
|
The
Rights distribution should not be taxable for federal income tax
purposes.
However, following an event that renders the Rights exercisable or
upon
redemption of the Rights, stockholders may recognize taxable
income.
|
The
foregoing is a summary of certain principal terms of the Stockholder Rights
Plan
only and is qualified in its entirety by reference to the Preferred Stock Rights
Agreement dated as of April 11, 2007 between the Company and American Stock
Transfer And Trust Company as Rights Agent (the “Rights
Agreement”).
The
Rights Agreement may be amended from time to time. A copy of the Rights
Agreement was filed with the Securities and Exchange Commission as an exhibit
to
a Registration Statement on Form 8-A. A copy of the Rights Agreement is
available free of charge from the Company.
2