EXHIBIT INDEX
Exhibit Number Description Page
4 Rights Agreement, dated as of
November 10, 1995, between
Recoton Corporation and Chemical
Mellon Shareholder Services, L.L.C.,
as Rights Agent
20 Letter to the holders of Recoton
Corporation Common Shares, dated
November 10, 1995 (including
Summary of Rights)
99 Press Release, dated October 27, 1995
Exhibit 4
RECOTON CORPORATION
and
CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
Rights Agreement
Dated as of October 27, 1995
Table of Contents
Section Page
1 Certain Definitions . . . . . . . . . . . . . . . 1
2 Appointment of Rights Agent . . . . . . . . . . . 4
3 Issue of Rights Certificates. . . . . . . . . . . 4
4 Form of Rights Certificates . . . . . . . . . . . 6
5 Countersignature and Registration . . . . . . . . 7
6 Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or
Stolen Rights Certificates. . . . . . . . . . . 8
7 Exercise of Rights; Purchase
Price; Expiration Date of Rights. . . . . . . . 9
8 Cancellation and Destruction of
Rights Certificates . . . . . . . . . . . . . . 11
9 Reservation and Availability of
Capital Shares. . . . . . . . . . . . . . . . . 12
10 Preferred Shares Record Date. . . . . . . . . . . 14
11 Adjustment of Purchase Price,
Number and Kind of Shares or
Number of Rights. . . . . . . . . . . . . . . . 14
12 Certificate of Adjusted Purchase
Price or Number of Shares . . . . . . . . . . . 23
13 Consolidation, Merger or Sale
or Transfer of Assets, Cash Flow
or Earning Power. . . . . . . . . . . . . . . . 24
14 Fractional Rights and Fractional
Shares. . . . . . . . . . . . . . . . . . . . . 27
15 Rights of Action. . . . . . . . . . . . . . . . . 28
16 Agreement of Rights Holders . . . . . . . . . . . 28
17 Rights Certificate Holder Not Deemed
a Shareholder . . . . . . . . . . . . . . . . . 29
18 Concerning the Rights Agent . . . . . . . . . . . 30
19 Merger or Consolidation or Change of
Name of Rights Agent. . . . . . . . . . . . . . 30
20 Duties of Rights Agent. . . . . . . . . . . . . . 31
21 Change of Rights Agent. . . . . . . . . . . . . . 33
22 Issuance of New Rights Certificates . . . . . . . 34
23 Redemption and Termination. . . . . . . . . . . . 35
24 Notice of Certain Events. . . . . . . . . . . . . 36
25 Notices . . . . . . . . . . . . . . . . . . . . . 37
26 Supplements and Amendments. . . . . . . . . . . . 38
27 Successors. . . . . . . . . . . . . . . . . . . . 39
28 Determinations and Actions
by the Board of Directors, etc. . . . . . . . . 39
29 Benefits of this Agreement. . . . . . . . . . . . 39
30 Severability. . . . . . . . . . . . . . . . . . . 39
31 Governing Law . . . . . . . . . . . . . . . . . . 40
32 Counterparts. . . . . . . . . . . . . . . . . . . 40
33 Descriptive Headings. . . . . . . . . . . . . . . 40
Exhibit A -- Certificate of Amendment of Restated Certificate of
Incorporation of Recoton Corporation
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 27, 1995 (the
"Agreement"), between Recoton Corporation, a New York
corporation (the "Company"), and Chemical Mellon Shareholder
Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent").
W I T N E S S E T H
WHEREAS, on October 27, 1995 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for
each common share, par value $.20 per share, of the Company (the
"Common Shares") outstanding at the close of business on
November 10, 1995 (the "Record Date"), and has authorized the
issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) for
each common share of the Company issued between the Record Date
(whether originally issued or delivered from the Company's
treasury) and the Distribution Date, each Right initially
representing the right to purchase one one-hundredth of a Series
A Junior Participating Preferred Share of the Company having the
rights, powers and preferences set forth in the form of
Certificate of Designation, Preferences and Rights attached
hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 20% or more of the
Common Shares then outstanding, but shall not include 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. For
purposes of the foregoing and all other provisions of this
Agreement, in computing the percentage of the Common Shares
outstanding at any time which are beneficially owned by a Person
and its Affiliates and Associates, the Common Shares then
outstanding shall be deemed to include all Common Shares
beneficially owned by such Person and its Affiliates and
Associates but not actually then outstanding, including the
Common Shares, if any, then issuable to such Person and its
Affiliates and Associates upon the exercise of conversion
rights, exchange rights, rights, warrants or options.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement
(the "Exchange Act").
(c) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has
the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, or
(B) securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence
of a Triggering Event which Rights were acquired by such Person
or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22
hereof (the "Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to any
Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (A) arises solely
from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (ii)
of this paragraph (c)) or disposing of any voting securities of
the Company; provided, however, that nothing in this paragraph
(c) shall cause a person engaged in business as an underwriter
of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such
person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date
of such acquisition.
Notwithstanding anything contained in subparagraphs
(ii) and (iii) of this paragraph (c), no natural person who has
the right to vote any securities pursuant to an agreement
approved by the Board of Directors of which a majority are
Continuing Directors shall be a "Beneficial Owner" of, or to
"beneficially own," any of such securities.
(d) "Business Day" shall mean any day other than
a Saturday, Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or
executive order to close.
(e) "Close of business" on any given date shall
mean 5:00 P.M., New York City time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 P.M., New York City time, on the next succeeding Business
Day.
(f) "Common Shares" shall mean the common shares,
par value $.20 per share, of the Company, except that "Common
Shares" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of
such Person.
(g) "Continuing Director" shall mean (i) any
member of the Board of Directors of the Company, while such
Person is a member of the Board, who is not an Acquiring Person,
or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or any such Affiliate or
Associate, and was a member of the Board prior to the date of
this Agreement, or (ii) any Person who subsequently becomes a
member of the Board, while such Person is a member of the Board,
who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a representative of an Acquiring Person
or any such Affiliate or Associate, if such Person's nomination
for election or election to the Board is recommended or approved
by a majority of the Continuing Directors.
(h) "Person" shall mean any individual, firm
corporation, partnership or other entity.
(i) "Preferred Shares" shall mean Series A Junior
Participating Preferred Shares, par value $1.00 per share, of
the Company, and, to the extent that there are not a sufficient
number of Series A Junior Participating Preferred Shares
authorized to permit the full exercise of the Rights, any other
series of Preferred Shares, par value $1.00 per share, of the
Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior
Participating Preferred Shares.
(j) "Section 11(a)(ii) Event" shall mean
the event described in Section 11(a)(ii) hereof.
(k) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a) hereof.
(l) "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) under the Exchange Act) by the Company
or an Acquiring Person that an Acquiring Person has become such.
(m) "Subsidiary" shall mean, with reference to
any Person, any corporation of which an amount of voting
securities sufficient to elect at least a majority of the
directors of such corporation is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such
Person.
(n) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date (as defined below)
also be the holders of the Common Shares) 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.
Section 3. Issue of Rights Certificates. (a) Until
the earliest of (i) the close of business on the tenth day after
the Shares Acquisition Date (or, if the tenth day after the
Shares Acquisition Date occurs before the Record Date, the close
of business on the Record Date), and (ii) the close of business
on the tenth Business Day (or such later date as the Board shall
determine) 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 upon consummation thereof, such
Person would be the Beneficial Owner of 20% or more of the
Common Shares then outstanding (the earliest of (i) and (ii)
being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for the Common Shares
registered in the names of the holders of the Common Shares
(which certificates for Common Shares shall be deemed also to be
certificates for Rights) and not by separate certificates, and
(y) the Rights will be transferable only in connection with the
transfer of the underlying Common Shares (including a transfer
to the Company). As soon as practicable after the Distribution
Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of the 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, one
or more right certificates, in substantially the form of Exhibit
B hereto (the "Rights Certificates"), 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(p) hereof,
at the time of distribution of the Right 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. As of and after the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the
Record Date, the Company will send a copy of a Summary of
Rights, in substantially the form attached hereto as Exhibit C
(the "Summary of Rights"), by first-class, postage prepaid mail,
to each record holder of the 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. With respect to certificates for
the Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such
certificates for the Common Shares and the registered holders of
the Common Shares shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date
or the Expiration Date (as such term is defined in Section 7
hereof), the transfer of any certificates representing Common
Shares in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with such
Common Shares.
(c) Rights shall be issued in respect of all
Common Shares which are issued (whether originally issued or
from the Company's treasury) after the Record Date but prior to
the earlier of the Distribution Date or the Expiration Date.
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 the
Rights Agreement between Recoton Corporation (the
"Company") and Chemical Mellon Shareholder Services,
L.L.C. dated as of October 27, 1995 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at
the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate
a copy of the Rights Agreement, as in effect on the date
of mailing, without charge promptly 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 (i) the Distribution Date or
(ii) the Expiration Date (as defined below), the Rights
associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Shares shall also be the registered
holders of the associated Rights, and the transfer of any of
such certificates shall also constitute the transfer of the
Rights associated with the Common Shares represented by such
certificates.
Section 4. Form of Rights Certificates. (a) The
Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each
be substantially in the form set forth in 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 as are not inconsistent with
the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and
on their face shall entitle the holders thereof to purchase such
number of one one-hundredths of a Preferred Share as shall be
set forth therein at the price set forth therein (such exercise
price per one one-hundredth of a share, the "Purchase Price"),
but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to
Section 3(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 transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether
or not for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any Person
with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or
(B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following
legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and
void in the circumstances specified in Section 7(e) of
such Agreement.
Section 5. Countersignature and Registration. (a)
The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery
by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any person who, at the actual
date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement
any such person was not such an officer.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at its principal office or
offices designated as the appropriate place for surrender of
Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates
and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates. (a) Subject to the provisions of
Section 4(b), Section 7(e) and Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any
Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a Preferred Share (or, following
a Triggering Event, Common Shares, other securities, cash or
other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any
Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up,
combined or exchanged at the principal office or offices of the
Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered
Rights Certificate 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 Section 4(b),
Section 7(e) and Section 14 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 of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and,
in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company
will execute and deliver a new Rights Certificate of like tenor
to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Subject to Section 7(e) hereof,
the registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and
Section 23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with
the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of one one-hundredths of
a share (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the close of
business on November 10, 2005 (the "Final Expiration Date"), or
(ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the earlier of (i) and (ii) being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth
of a Preferred Share pursuant to the exercise of a Right shall
initially be $100.00, and shall be subject to adjustment from
time to time as provided in Sections 11 and 13(a) hereof and
shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to
purchase and the certificate duly executed, accompanied by
payment, with respect to each Right so exercised, of the
Purchase Price per one one-hundredth of a Preferred Share (or
other shares, securities, cash or other assets, as the case may
be) to be purchased as set forth below and an amount equal to
any applicable transfer tax, 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 such
shares) certificates for the total number of one one-hundredths
of a Preferred Share 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 Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred
Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited
by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request,
(ii) requisition from the Company the amount of cash, if any, to
be paid in lieu of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof)
shall be made in cash, or by certified check or official bank
check payable to the order of the Company. In the event that
the Company is obligated to issue other securities (including
Common Shares) of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the
Rights Agent, if and when appropriate. The Company reserves the
right to require prior to the occurrence of a Triggering Event
that, upon any exercise of Rights, a number of Rights be
exercised so that only whole Preferred Shares would be issued.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to
the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person
has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company 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), shall
become null and void without any further action and no holder of
such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set
forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
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 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 other Rights Certificate
purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled
Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital
Shares. (a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized
and unissued Preferred Shares (and, following the occurrence of
a Triggering Event, out of its authorized and unissued Common
Shares and/or other securities or out of its authorized and
issued shares held in its treasury), the number of Preferred
Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) that, as provided in this
Agreement including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares
and/or other securities) issuable and deliverable upon the
exercise of the Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to
(i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on which
the consideration to be delivered by the Company upon exercise
of the Rights has been determined in accordance with Section
11(a)(iii) hereof, a registration statement under the Securities
Act of 1933 (the "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 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 the expiration of the
Rights. 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. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of
the Rights until such time as a registration statement has been
declared effective. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof
shall not be permitted under applicable law or a registration
statement shall not have been declared effective.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all one
one-hundredths of a Preferred Share (and, following the
occurrence of a Triggering Event, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that
it will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of
the issuance or delivery of the Rights Certificates and of any
certificates for a number of one one-hundredths of a Preferred
Share (or Common Shares and/or other securities, as the case may
be) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax 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 a number of one one-hundredths of a Preferred Share (or
Common Shares and/or other securities, as the case may be) in
respect of a name other than that of, the registered holder of
the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of
one one-hundredths of a Preferred Share (or Common Shares and/or
other securities, as the case may be) in a name other than that
of the registered holder upon the exercise of any Rights until
such tax shall have been paid (any such tax 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 is due.
Section 10. Preferred Shares Record Date. Each person
in whose name any certificate for a number of one one-hundredths
of a Preferred Share (or Common Shares and/or other securities,
as the case may be) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record
of such fractional shares of Preferred Shares (or Common Shares
and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the
Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Shares
(or Common Shares and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred
Shares (or Common Shares and/or other securities, as the case
may be) transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a shareholder
of the Company with respect to shares for which the Rights shall
be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares covered by each Right and the number
of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.
(a) (i) In the event the Company shall at any
time after the date of this Agreement (A) declare a dividend on
the Preferred Shares payable in shares of Preferred Shares,
(B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of shares, or
(D) issue any of its capital shares 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), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
Preferred Shares or capital shares, as the case may be, issuable
on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled
to receive, upon payment of the Purchase Price then in effect,
the aggregate number and kind of Preferred Shares or capital
shares, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event 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), alone or
together with its Affiliates and Associates, shall, at any time
after the Rights Dividend Declaration Date, become the
Beneficial Owner of 20% or more of the Common Shares then
outstanding, unless the event causing the 20% threshold to be
crossed is a transaction set forth in Section 13(a) hereof, or
is an acquisition of Common Shares pursuant to a tender offer or
an exchange offer for all outstanding Common Shares at a price
and on terms determined by at least a majority of the members of
the Board of Directors who are not officers of the Company and
who are not representatives, nominees, Affiliates or Associates
of the Person making such tender or exchange offer, after
receiving advice from one or more investment banking firms, to
be (a) at a price which is fair to shareholders (taking into
account all factors which such members of the Board deem
relevant including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold on
an orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
shareholders, then, promptly following the occurrence of such
event, proper provision shall be made so that each holder of a
Right (except as provided below and in Section 7(e) hereof)
shall thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with
the terms of this Agreement, in lieu of a number of one
one-hundredths of a Preferred Share, such number of Common
Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number
of one one-hundredths of a share of Preferred Shares for which a
Right was exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) Event, and (y) dividing that product
(which, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d) hereof) per common shares
on the date of such first occurrence (such number of shares, the
"Adjustment Shares").
(iii) 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 is not
sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall (A) determine the value of the
Adjustment Shares issuable upon the exercise of a Right (the
"Current Value"), and (B) with respect to each Right (subject to
Section 7(e) hereof), make adequate provision to substitute for
the Adjustment Shares, upon the exercise of a Right and payment
of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) Common Shares or other equity securities
of the Company (including, without limitation, shares, or units
of shares, of preferred shares, such as the Preferred Shares,
which the Board has deemed to have essentially the same value or
economic rights as Common Shares (such shares of preferred
shares being referred to as "Common Shares Equivalents")), (4)
debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to
the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined
by the Board based upon the advice of a nationally recognized
investment banking firm selected by the Board; 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 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 Purchase Price, Common
Shares (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the
Spread. For purposes of the preceding sentence, the term
"Spread" shall mean the excess of (i) the Current Value over
(ii) the Purchase Price. If the Board determines in good faith
that it is likely that sufficient additional Common Shares could
be authorized for issuance upon exercise in full of the Rights,
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 shareholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be
extended, is herein called the "Substitution Period"). To the
extent that action is to be taken pursuant to the first and/or
third sentences of this Section 11(a)(iii), the Company (1)
shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (2) may
suspend the exercisability of the Rights until the expiration of
the Substitution Period in order to seek such shareholder
approval for such authorization of additional shares 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 issue a
public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of
each Adjustment Share shall be the Current Market Price per
share of the Common Shares on the Section 11(a)(ii) Trigger Date
and the per share or per unit value of any Common Shares
Equivalent shall be deemed to equal the Current Market Price per
share of the Common Shares on such date.
(b) In case the Company shall fix a record date
for the issuance of rights, options or warrants to all holders
of Preferred Shares entitling them to subscribe for or purchase
(for a period expiring within forty-five (45) calendar days
after such record date) Preferred Shares (or shares having the
same rights, privileges and preferences as the shares of
Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares
at a price per share of Preferred Shares or per share of
equivalent preferred shares (or having a conversion price per
share, if a security convertible into Preferred Shares or
equivalent preferred shares) less than the Current Market Price
(as determined pursuant to Section 11(d) hereof) per share of
Preferred Shares on such record date, the Purchase Price to be
in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the number of shares of Preferred Shares outstanding on such
record date, plus the number of shares of Preferred Shares which
the aggregate offering price of the total number of shares of
Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
Current Market Price, and the denominator of which shall be the
number of shares of Preferred Shares outstanding on such record
date, plus the number of additional shares of Preferred Shares
and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration
part or all of which may be in a form other than cash, the value
of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the
Rights. Shares of Preferred 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 or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date
for a distribution to all holders of Preferred Shares (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a cash dividend out
of the earnings or retained earnings of the Company not in
excess of 200% of the regular quarterly cash dividend), assets
(other than a dividend payable in Preferred Shares, but
including any dividend payable in shares other than Preferred
Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the Current Market Price (as determined pursuant to Section
11(d) hereof) per share of Preferred Shares on such record date,
less the fair market value (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) of the
portion of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants
applicable to a share of Preferred Shares and the denominator of
which shall be such current market price (as determined pursuant
to Section 11(d) hereof) per share of Preferred Shares. 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 Purchase Price shall be adjusted to be the Purchase
Price which would have been in effect if such record date had
not been fixed.
(d) (i) For the purpose of any computation
hereunder, other than computations made pursuant to Section
11(a)(iii) hereof, the "Current Market Price" per common share
on any date shall be deemed to be the average of the daily
closing prices per share of such Common Shares 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 Market Price" per common share
on any date shall be deemed to be the average of the daily
closing prices per share of such Common Shares for the ten (10)
consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market
Price per Common Share is determined during a period following
the announcement by the issuer of such Common Shares of (A) a
dividend or distribution on such Common Shares payable in shares
of such Common Shares or securities convertible into shares of
such Common Shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common
Shares, and the ex-dividend date for such dividend or distribu-
tion, or the record date for such subdivision, combination or
reclassification shall not have occurred prior to the commence-
ment of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, then, and in each such
case, the Current Market Price shall be properly adjusted to
take into account ex-dividend trading. The closing price for
each day shall be the last sale price or, in case no such sale
takes place on such day, the average of the closing high bid and
low asked prices, in either case as reported on the Nasdaq
National Market or, if the Common Shares are not quoted on the
Nasdaq National Market, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Common Shares are listed or admitted to trading or,
if the Common Shares are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") or such other system then in use, or, if on
any such date the Common Shares are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Common Shares selected by the Board. If on any such date no
market maker is making a market in the Common Shares, the fair
value of such shares on such date as determined in good faith by
the Board shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which
the Common Shares are listed or admitted to trading is open for
the transaction of business or, if the Common Shares are not
listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Shares is not publicly
held or not so listed or traded, Current Market Price per share
shall mean the fair value per share as determined in good faith
by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive
for all purposes.
(ii) For the purpose of any computation
hereunder, the "Current Market Price" of Preferred Shares shall
be determined in the same manner as set forth above for the
Common Shares in clause (i) of this Section 11(d) (other than
the last sentence thereof). If the Current Market Price of
Preferred Shares cannot be determined in the manner provided
above or if the Preferred Shares is not publicly held or listed
or traded in a manner described in clause (i) of this Section
11(d), the Current Market Price of Preferred Shares shall be
conclusively deemed to be an amount equal to 100 (as such number
may be appropriately adjusted for such events as shares splits,
shares dividends and recapitalizations with respect to the
Common Shares occurring after the date of this Agreement)
multiplied by the Current Market Price per Common Share. If
neither the Common Shares nor the Preferred Shares is publicly
held or so listed or traded, Current Market Price of the
Preferred Shares shall mean the fair value per share as
determined in good faith by the Board, whose determination shall
be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) Anything herein to the contrary notwith-
standing, no adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of
at least one percent (1%) in the Purchase Price; provided,
however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a common share or other
share or one-millionth of a Preferred Share, as the case may be.
Notwithstanding the first sentence of this Section 11(e), 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 mandates such adjustment, or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant
to Section 11(a)(ii) or Section 13(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any
shares of capital shares other than Preferred Shares, thereafter
the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Sections 11(a), (b), (c), (e),
(g), (h), (i), (j), (k) and (m), and the provisions of Sections
7, 9, 10, 13 and 14 hereof with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one-hundredths of a share of
Preferred Shares purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number
of one one-hundredths of a Preferred Share (calculated to the
nearest one-millionth) obtained by (i) multiplying (x) the
number of one one-hundredths of a share covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price
in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of one
one-hundredths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the
number of one one-hundredths 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-ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates
have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly
as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in
the Purchase Price or the number of one one-hundredths of a
Preferred Share issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of
a share and the number of one one-hundredth of a share which
were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated
value, if any, of the number of one one-hundredths 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 fully paid and nonassessable such
number of one one-hundredths of a Preferred Share at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record
date the number of one one-hundredths of a Preferred Share and
other capital shares or securities of the Company, if any,
issuable upon such exercise over and above the number of one
one-hundredths of a Preferred Share and other capital shares or
securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to
such holder a due ββββ or other appropriate instrument
evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that in their good faith judgment the Board of Directors
of the Company shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any shares of Preferred Shares at
less than the Current Market Price, (iii) issuance wholly for
cash of shares of Preferred Shares or securities which by their
terms are convertible into or exchangeable for shares of
Preferred Shares, (iv) shares 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 Shares
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it
shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series
of related transactions, assets, cash flow or earning power
aggregating more than 50% of the assets, cash flow or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company and/or any
of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the
shareholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after
the Distribution Date, it will not, except as permitted by
Section 23 or Section 26 hereof, take (or permit any Subsidiary
to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time
after the Rights Dividend Declaration Date and prior to the
Distribution Date (i) declare a dividend on the outstanding
Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, or (iii) combine the outstanding
Common Shares into a smaller number of shares, the number of
Rights associated with each common shares then outstanding, or
issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each common shares following
any such event shall equal the result obtained by multiplying
the number of Rights associated with each common shares
immediately prior to such event by a fraction the numerator
which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Section 11 and Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Shares and the Common Shares, a copy of
such certificate, and (c) mail a brief summary thereof to each
holder of a Rights Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing Common
Shares) in accordance with Section 25 hereof. The Rights Agent
shall be fully protected in relying on any such certificate and
on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets, Cash Flow or Earning Power. (a) In the event that,
following the Shares Acquisition Date, directly or indirectly,
(x) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of
such consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the
outstanding Common Shares shall be changed into or exchanged for
shares or other securities of any other Person or cash or any
other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related
transactions, assets, cash flow or earning power aggregating
more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one
or more transactions each of which complies with Section 11(o)
hereof), then, and in each such case (except as may be
contemplated by Section 13(d) hereof), proper provision shall be
made so that: (i) 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 the then current Purchase Price in
accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, non-assessable and
freely tradeable Common Shares of the Principal Party (as such
term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims,
as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number
of such one one-hundredths of a share for which a Right was
exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that
product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (2) 50% of the
Current Market Price (determined pursuant to Section 11(d)(i)
hereof) per share of the Common Shares of such Principal Party
on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13
Event; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient
number of shares of its Common Shares) in connection with the
consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13
Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in clause (x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which Common
Shares of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described
in clause (z) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets,
cash flow or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the Common
Shares of such Person is not at such time and has not been
continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common
Shares of which is and has been so registered, "Principal Party"
shall refer to such other Person; and (2) in case such Person is
a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Shares having the greatest
aggregate market value.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of authorized shares of its
Common Shares which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger or sale of assets,
cash flow or earnings power mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a registration
statement under the Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act)
until the Expiration Date; and
(ii) will deliver to holders of the Rights
historical financial statements for the Principal Party and each
of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall occur at
any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section
13(a).
(d) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to a
transaction described in subparagraphs (x) and (y) of Section
13(a) if (i) such transaction is consummated with a Person or
Persons who acquired Common Shares pursuant to a tender offer or
exchange offer for all outstanding Common Shares which complies
with the provisions of Section 11(a)(ii) hereof (or a wholly
owned subsidiary of any such Person or Persons), (ii) the price
per common share offered in such transaction is not less than
the price per common share paid to all holders of Common Shares
whose shares were purchased pursuant to such tender offer or
exchange offer and (iii) the form of consideration being offered
to the remaining holders of Common Shares pursuant to such
transaction is the same as the form of consideration paid
pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this
Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in
Section 11(p) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale
price or, in case no such sale takes place on such day, the
average of the closing high bid and low asked prices, in either
case as quoted on the Nasdaq National Market or, if the Rights
are not quoted on the Nasdaq National Market, as reported in the
principal consolidated transaction reporting system with respect
to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading,
or if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is
making a market in the Rights the fair value of the Rights on
such date as determined in good faith by the Board of Directors
of the Company shall be used.
(b) The Company shall not be required to issue
fractions of shares of Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred
Share) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a
Preferred Share). In lieu of fractional shares of Preferred
Shares that are not integral multiples of one one-hundredth of a
Preferred Share, the Company may pay to the registered holders
of Rights Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of
the current market value of one one-hundredth of a Preferred
Share. For purposes of this Section 14(b), the current market
value of one one-hundredth of a Preferred Share shall be one
one-hundredth of the closing price of a Preferred Share (as
determined pursuant to Section 11(d)(ii) hereof) for the Trading
Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering
Event, the Company shall not be required to issue fractions of
Common Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Common Shares. In lieu
of fractional Common Shares, the Company may pay to the
registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one common
share. For purposes of this Section 14(c), the current market
value of one common shares shall be the closing price of one
common share (as determined pursuant to Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of
the Rights expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right, except
as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective
registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of 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 own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such
Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would
not have an adequate remedy at law for any breach of this
Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder
of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
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 principal office or offices
of the Rights Agent designated for such purposes, duly endorsed
or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
subject to Section 6(a) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat the
person in whose name a 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, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to
the contrary, neither the Company nor the Rights Agent shall
have any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company
must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the number of one one-hundredths of a
share of 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
shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 24
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 disbursements and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the
premises.
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration
of this Agreement in reliance upon any Rights Certificate or
certificate for 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 corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent
or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation would
be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 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 a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have
been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name;
and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or
established by the Company prior to taking or suffering 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 the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary
or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder
only for its own 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 or be required
to verify the same (except as to its countersignature on such
Rights Certificates), but all such statements and recitals are
and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of any Common Shares or Preferred Shares to be
issued pursuant to this Agreement or any Rights Certificate or
as to whether any Common Shares or Preferred Shares will, when
so 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 the Chairman of the Board, the
President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder,
director, officer or employee of the Rights Agent may buy, sell
or deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder or in the exercise of its rights if there shall
be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Right 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 l
and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer
without first consulting with the Company.
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
Common Shares and Preferred Shares, by registered or certified
mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common
Shares and Preferred 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 Rights
Certificate for inspection by the Company), then any 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 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 New York), in good standing,
having a principal office in the State of New York, which is
authorized under such laws to exercise corporate trust 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 $100,000,000.
After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common
Shares and the Preferred 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 Purchase 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 redemption or expiration
of the Rights, the Company (a) shall, with respect to Common
Shares so issued or sold pursuant to the exercise of shares
options or under any employee plan or arrangement, granted or
awarded as of the Distribution Date, or upon the exercise,
conversion or exchange of securities issued by the Company prior
to the Distribution Date, and (b) may, in any other case, if
deemed necessary or 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
material adverse tax consequences to the Company or the Person
to whom such Rights Certificate would be issued, and (ii) to the
extent that any adjustments in the Company's securities have
been made as a result of the issuance of Rights Certificates
(including, without limitation, adjustments to conversion ratios
or other adjustments resulting from the operation of anti-
dilution provisions in convertible securities, shares options or
similar securities), the number of Rights, or fractions thereof,
issuable shall equal, and not exceed, the number necessary to
enable the holder to receive, upon such conversion, exchange or
exercise of such security and after exercise of such Rights, the
number of Common Shares such holder would have received if it
had converted, exchanged or exercised such security immediately
prior to the Distribution Date and had subsequently exercised
the Rights issuable in respect of such shares.
Section 23. Redemption and Termination. (a) The
Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the
tenth day following the Shares Acquisition Date (or, if the
Shares Acquisition Date shall have occurred prior to the Record
Date, the close of business on the tenth day following the
Record Date), or (ii) the Final Expiration Date, redeem all but
not less than all the then outstanding Rights at a redemption
price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any shares split, shares dividend or similar
transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price");
provided, however, if the Board of Directors of the Company
authorizes redemption of the Rights in either of the
circumstances set forth in clauses (x) and (y) below, then there
must be Continuing Directors then in office and such
authorization shall require the concurrence of a majority of
such Continuing Directors: (x) such authorization occurs on or
after the time a Person becomes an Acquiring Person, or (y) such
authorization occurs on or after the date of a change (resulting
from a proxy or consent solicitation) in a majority of the
directors in office at the commencement of such solicitation if
any Person who is a participant in such solicitation has stated
(or, if upon the commencement of such solicitation, a majority
of the Board of Directors of the Company has determined in good
faith) that such Person (or any of its Affiliates or Associates)
intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which
would cause the occurrence of a Triggering Event unless,
concurrent with such solicitation, such Person (or one or more
of its Affiliates or Associates) is making a cash tender offer
pursuant to a Schedule 14D-1 (or any successor form) filed with
the Securities and Exchange Commission for all outstanding
Common Shares not beneficially owned by such Person (or by its
Affiliates or Associates). Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based on the "current
market price", as defined in Section 11(d)(i) hereof, of the
Common Shares at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(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 for each Right so held. Promptly after the
action of the 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 each holder's last
address as it appears 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 which
is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made.
Section 24. Notice of Certain Events. (a) In case
the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in shares of any class to
the holders of Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a
regular quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of
Preferred Shares rights or warrants to subscribe for or to
purchase any additional shares of Preferred Shares or shares of
shares of any class or any other securities, rights or options,
or (iii) to effect any reclassification of its Preferred Shares
(other than a reclassification involving only the subdivision of
outstanding shares of Preferred Shares), or (iv) to effect any
consolidation or merger into or with any other Person (other
than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), 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 transaction or a series of
related transactions, of more than 50% of the assets, cash flow
or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company
and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(o) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance
with Section 25 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such shares
dividend, distribution of rights or warrants, or the date on
which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of
the shares of Preferred 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 twenty (20) days
prior to the record date for determining holders of the shares
of Preferred Shares for purposes of such action, and in the case
of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred
Shares whichever shall be the earlier.
(b) In case the event set forth in Section
11(a)(ii) hereof shall occur, then, in such case, (i) the
Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to
Preferred Shares shall be deemed thereafter to refer to Common
Shares and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Recoton Corporation
βββ ββββ ββββ ββββββ
βββ ββββ, βββ ββββ βββββ
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
Chemical Mellon Shareholder Services, L.L.C.
ββ ββββββββββ ββββ
ββββββββββ ββββ, ββ βββββ
Attention: General Counsel's Office
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Distribution Date, to
the holder of certificates representing Common Shares) 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 26. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of
this Section 26, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates
representing Common Shares. From and after the Distribution
Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval
of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period
hereunder (which lengthening or shortening, following the first
occurrence of an event set forth in clauses (x) and (y) of the
first proviso to Section 23(a) hereof, shall be effective only
if there are Continuing Directors and shall require the
concurrence of a majority of such Continuing Directors), or (iv)
to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an
Affiliate or Associate of such 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. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement
or amendment is in compliance with the terms of this Section 26,
the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes
the Redemption Price, the Final Expiration Date, the Purchase
Price or the number of one one-hundredths of a share of
Preferred Shares for which a Right is exercisable. Prior to the
Distribution Date, the interests of the holders of Rights shall
be deemed coincident with the interests of the holders of Common
Shares.
Section 27. 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 28. Determinations and Actions by the Board of
Directors, etc. 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)(l)(i) of the General
Rules and Regulations under the Exchange Act. The Board of
Directors of the Company (with, where specifically provided for
herein, the concurrence of the Continuing Directors) shall have
the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to
the Board (with, where specifically provided for herein, the
concurrence of the Continuing Directors) or to the Company, or
as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the
administration of this Agreement (including 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 Board
(with, where specifically provided for herein, the concurrence
of the Continuing Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject
the Board or the Continuing Directors to any liability to the
holders of the Rights.
Section 29. 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,
registered holders of the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered
holders of the Common Shares).
Section 30. 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 Board of Directors.
Section 31. Governing Law. This Agreement,
each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of
New York and for all purposes shall be governed by and construed
in accordance with the laws of such State without reference to
choice of law rules.
Section 32. 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 33. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
Attest: RECOTON CORPORATION
By /s/ Stuart Mont By ββββββ β. βββββββββ
Name: Stuart Mont Name: ββββββ β. βββββββββ
Title: Secretary Title: President
Attest: CHEMICAL MELLON SHAREHOLDER
SERVICES, L.L.C.
By ββββ β. ββββββ By ββββββ βββββ
Name: ββββ β. ββββββ Name: ββββββ βββββ
Title: Vice President Title: Assistant Manager
Exhibit A
CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
of
RECOTON CORPORATION
Under Section 805 of the Business Corporation Law
of the State of New York
We, the undersigned, ββββββ β. βββββββββ, President,
and Stuart Mont, Secretary of Recoton Corporation, a corporation
organized and existing under the laws of the State of New York,
in accordance with the provisions of Section 104 of the Business
Corporation Law of the State of New York, DO HEREBY CERTIFY:
1. The name of the corporation is Recoton Corporation
(hereinafter called the "Corporation").
2. The Certificate of Incorporation was filed in the
office of the Secretary of State on the 30th day of December,
1936, under the name RECOTONE CO. INC.
3. The Certificate of Incorporation of the Company, as
amended heretofore, is further amended by the addition of the
following provisions stating the number, designation, relative
rights, preferences and limitations of a series of Preferred
Shares of the Company designated as "Series A Junior
Participating Preferred Shares."
4. To accomplish the foregoing amendment, a new
Article 11 is added to the Certificate of Incorporation, which
Article 11 reads in its entirety as follows:
Section 1. Designation, Number of Shares. The shares
of such series shall be designated as "Series A Junior
Participating Preferred Shares" ("Series A Junior Participating
Preferred Shares"). The number of shares constituting the
Series A Junior Participating Preferred Shares shall be 250,000.
Section 2. Dividends or Distributions. (a) Subject
to the prior and superior rights of the holders of shares of any
other class of capital shares not by its terms ranking on a
parity with, or junior to, the Series A Junior Participating
Preferred Shares with respect to dividends, the holders of
Series A Junior Participating Preferred Shares shall be entitled
to receive, when and as declared by the Board of Directors, out
of the assets of the Corporation legally available therefor,
quarterly dividends payable in cash in an amount per whole share
of Series A Junior Participating Preferred Shares equal to the
greater of (1) 10% of the Purchase Price (the "Purchase Price"),
as adjusted, per unit of one one-hundredth of a share of
Series A Junior Participating Preferred Shares set forth in the
Rights Agreement (the "Rights Agreement") between the
Corporation and Chemical Bank, N.A., as Rights Agent, dated as
of October 27, 1995 (so that if the Purchase Price, as adjusted,
were $100.00, the quarterly dividend amount per whole share of
Series A Junior Participating Preferred Shares would be $10.00),
and (2) dividends payable in cash on the payment date for each
cash dividend (if any) declared on the Common Shares in an
amount per whole share (rounded to the nearest cent) equal to
the Formula Number then in effect times the cash dividends then
to be paid on each outstanding Common Share, payable on the date
declared by the Board of Directors for the payment of quarterly
dividends on the outstanding Common Shares, par value $.20 per
share, of the Corporation (the "Common Shares") but in no event
later than the fifteenth 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 a fraction of a share of Series A Junior Participating
Preferred Shares, 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 A Junior Participating Preferred
Shares. In addition, if the Corporation shall pay any dividend
or make any distribution on the Common Shares payable in assets,
securities or other forms of noncash consideration (other than
dividends or distributions solely in shares of Common Shares),
then, in each such case, the Corporation shall simultaneously
pay or make on each outstanding share of Series A Junior
Participating Preferred Shares a dividend or distribution in
like kind, of the Formula Number then in effect times such
dividend or distribution on each share of Common Shares. As
used herein, the "Formula Number" shall be 100; provided,
however, that if at any time after October 27, 1995, the
Corporation shall (i) declare or pay any dividend on the Common
Shares payable in shares of Common Shares or make any
distribution on the Common Shares in shares of Common Shares,
(ii) subdivide (by a shares split or otherwise) the outstanding
shares of Common Shares into a larger number of shares of Common
Shares or (iii) combine (by a reverse shares split or otherwise)
the outstanding shares of Common Shares into a smaller number of
shares of Common Shares, then in each such event the Formula
Number shall be adjusted to a number determined by multiplying
the Formula Number in effect immediately prior to such event by
a fraction, the numerator of which is the number of shares of
Common Shares that are outstanding immediately after such event
and the denominator of which is the number of shares that are
outstanding immediately prior to such event (and rounding the
result to the nearest whole number); and provided further that
if at any time after October 27, 1995, the Corporation shall
issue any shares of its capital shares in a reclassification or
change of the outstanding shares of Common Shares (including any
such reclassification or change in connection with a merger in
which the Corporation is the surviving corporation), then in
such event the Formula Number shall be appropriately adjusted to
reflect such reclassification or change.
(b) The Board of Directors shall declare a dividend or
distribution on the Series A Junior Participating Preferred
Shares as provided in paragraph 2(a) immediately prior to or at
the same time it declares a dividend or distribution on the
Common Shares (other than a dividend or distribution solely in
shares of Common Shares). The Board of Directors may fix a
record date for the determination of holders of Series A Junior
Participating Preferred Shares entitled to receive a dividend or
distribution declared thereon, which record date shall be the
same as the record date for any corresponding dividend or
distribution on the Common Shares.
(c) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Junior Participating Preferred
Shares from and after the Quarterly Dividend Payment Date next
preceding the date of original issue of such Series A Junior
Participating Preferred Shares; provided, however, that
dividends on such shares which are originally issued after the
record date for the determination of holders of Series A Junior
Participating Preferred Shares entitled to receive a quarterly
dividend and on or prior to the next succeeding Quarterly
Dividend Payment Date shall begin to accrue and be cumulative
from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series A
Junior Participating Preferred Shares which are originally
issued prior to the record date for the first Quarterly Dividend
Payment, shall be calculated as if cumulative from and after the
date (if any) declared by the Board of Directors for the payment
of the quarterly dividend on the outstanding shares of Common
Shares but in no event later than the fifteenth day of March,
June, September and December, as the case may be, next preceding
the date of original issuance of such shares. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the
Series A Junior Participating Preferred Shares 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.
(d) So long as any shares of Series A Junior
Participating Preferred Shares are outstanding, no dividends or
other distributions shall be declared, paid or distributed, or
set aside for payment or distribution, on the Common Shares
unless, in each case, the dividend required by this Section 2 to
be declared on the shares of Series A Junior Participating
Preferred Shares shall have been declared, paid or distributed.
(e) The holders of shares of Series A Junior
Participating Preferred Shares shall not be entitled to receive
any dividends or other distributions except as provided herein.
Section 3. Voting Rights. The holders of shares of
Series A Junior Participating Preferred Shares shall have the
following voting rights:
(a) Each holder of shares of Series A Junior
Participating Preferred Shares shall be entitled to a number of
votes equal to the Formula Number then in effect for each share
of Series A Junior Participating Preferred Shares held of record
on all matters on which holders of the Common Shares or
shareholders generally are entitled to vote.
(b) Except as otherwise provided herein or by
applicable law, the holders of shares of Series A Junior
Participating Preferred Shares and the holders of shares of
Common Shares and any other class or series of voting shares
shall vote together as one class for the election of directors
of the Corporation and on all other matters submitted to a vote
of shareholders of the Corporation.
(c) Except as provided herein, in Section 10 hereof or
by applicable law, holders of shares of Series A Junior
Participating Preferred Shares shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of shares of
Common Shares and any other class or series of voting shares as
set forth herein) for authorizing or taking any corporate
action.
Section 4. Certain Restrictions. (a) Whenever
quarterly dividends or other dividends or distributions payable
on the Series A Junior Participating Preferred Shares as
provided in Section 2 hereof are in arrears, thereafter and
until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Junior
Participating Preferred Shares outstanding shall have been paid
in full, the Corporation shall not:
(1) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise
acquire for consideration any shares ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior
Participating Preferred Shares;
(2) declare or pay dividends on or make any other
distributions on any shares ranking on a parity (either
as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating
Preferred Shares, except dividends paid ratably on the
Series A Junior Participating Preferred Shares and all
such parity shares 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;
(3) redeem or purchase or otherwise acquire for
consideration any shares ranking on a parity (either as
to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating
Preferred Shares, provided that the Corporation may at
any time redeem, purchase or otherwise acquire any of
such parity shares in exchange for any shares of the
Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the
Series A Junior Participating Preferred Shares; or
(4) purchase or otherwise acquire for
consideration any Series A Junior Participating
Preferred Shares, or any shares ranking on a parity
with the Series A Junior Participating Preferred
Shares, except in accordance with a purchase offer made
in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after
consideration of the respective annual dividend rates
and other relative rights and preferences of the
respective series and classes, shall determine in good
faith will result in fair and equitable treatment among
the respective series or classes.
(b) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of the Corporation unless the
Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Liquidation Rights. Upon the liquidation,
dissolution or winding up of the Corporation, whether voluntary
or involuntary, no distribution shall be made (a) to the holders
of shares ranking junior (either as to dividends or upon
liquidation, dissolution, or winding up) to the Series A Junior
Participating Preferred Shares unless, prior thereto, the
holders of shares of Series A Junior Participating Preferred
Shares shall have received an amount equal to the accrued and
unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, plus an amount equal to
the greater of (1) 50% of the Purchase Price per unit of one
one-hundredth of a share of Series A Junior Participating
Preferred Shares (so that if the Purchase Price is $100.00, the
liquidation amount would be $50.00 per whole share), or (2) an
aggregate amount per share equal to the Formula Number then in
effect times the aggregate amount to be distributed per share to
holders of shares of Common Shares, or (b) to the holders of
shares ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Shares, except distributions made
ratably on the Series A Junior Participating Preferred Shares
and all other such parity shares in proportion to the total
amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up.
Section 6. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combin-
ation or other transaction in which the shares of Common Shares
are exchanged for or changed into other shares or securities,
cash or any other property, then in any such case the then
outstanding shares of Series A Junior Participating Preferred
Shares shall at the same time be similarly exchanged or changed
in an amount per share equal to the Formula Number then in
effect times the aggregate amount of shares, securities, cash or
any other property (payable in kind), as the case may be, into
which or for which each share of Common Shares is exchanged or
changed.
Section 7. No Redemption; No Sinking Fund. (a) The
shares of Series A Junior Participating Preferred Shares shall
not be subject to redemption by the Corporation or at the option
of any holder of Series A Junior Participating Preferred Shares;
provided, however, that the Corporation may purchase or
otherwise acquire outstanding shares of Series A Junior
Participating Preferred Shares in the open market or by offer to
any holder or holders of shares of Series A Junior Participating
Preferred Shares.
(b) The Series A Junior Participating Preferred Shares
shall not be subject to or entitled to the operation of a
retirement or sinking fund.
Section 8. Fractional Shares. The Series A Junior
Participating Preferred Shares shall be issuable upon exercise
of the Rights issued pursuant to the Rights Agreement in whole
shares or in any fraction of a share that is one-hundredth
(1/100th) of a share or any integral multiple of such fraction.
At the election of the Corporation prior to the first issuance
of a share or a fraction of a share of Series A Junior Partici-
pating Preferred Shares, either (1) certificates may be issued
to evidence any such authorized fraction of a share of Series A
Junior Participating Preferred Shares, or (2) any such
authorized fraction of a share of Series A Junior Participating
Preferred Shares may be evidenced by depositary receipts
pursuant to an appropriate agreement between the Corporation and
a depositary selected by the Corporation provided that such
agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of shares of
Series A Junior Participating Preferred Shares.
Section 9. Reacquired Shares. Any shares of Series A
Junior Participating Preferred Shares 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 Shares, without designation as
to series until such shares are once more designated as part of
a particular series by the Board of Directors pursuant to the
provisions of the Certificate of Incorporation.
Section 10. Amendment. None of the relative rights,
preferences and limitations of the Series A Junior Participating
Preferred Shares as provided herein or elsewhere in the
Certificate of Incorporation shall be amended in any manner
which would alter or change the relative rights, preferences and
limitations of the holders of shares of Series A Junior
Participating Preferred Shares so as to affect them adversely
without the affirmative vote of the holders of at least 66-2/3%
of the outstanding shares of Series A Junior Participating
Preferred Shares, voting as though such series was a separate
class.
5. The manner in which the foregoing amendment of the
Certificate of Incorporation was authorized is as follows: The
Board of Directors of the Corporation authorized the amendment
under the authority vested in said Board under the provisions of
the Certificate of Incorporation and of Section 502 of the
Business Corporation Law.
IN WITNESS WHEREOF, we have subscribed this document on
the date set opposite each of our names below and do hereby
affirm, under the penalties of perjury, that the statements
contained therein have been examined by us and are true and
correct.
Date: October __, 1995
______________________________
Name: ββββββ β. βββββββββ
Title: President
______________________________
Name: Stuart Mont
Title: Secretary
Exhibit B
[Form of Rights Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER NOVEMBER 10,
2005 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 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 THEREOF (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 AGREEMENT].
Rights Certificate
RECOTON 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
Rights Agreement, dated as of October 27, 1995 (the "Rights
Agreement"), between Recoton Corporation, a New York corporation
(the "Company"), and Chemical Mellon Shareholder Services,
L.L.P. (the "Rights Agent"), to purchase from the Company at any
_________________
[FN] The portion of the legend in brackets shall be inserted
only if applicable and shall replace the preceding
sentence.
time prior to 5:00 P.M. (New York City time) on November 10,
2005 at the office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-
hundredth of a fully paid, non-assessable share of Series A
Junior Participating Preferred Shares (the "Preferred Shares")
of the Company, at a purchase price (the "Purchase Price") of
$100.00 per unit of one one-hundredth of a share, 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 Preferred Shares which may be
purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and
Purchase Price as of November 10, 1995, based on the Preferred
Shares as constituted at such date. The Company reserves the
right to require prior to the occurrence of a Triggering Event
(as such term is defined in the Rights Agreement) that a number
of Rights be exercised so that only whole Preferred Shares will
be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as
such term is defined in the Rights Agreement), if the Rights
evidenced by this Rights Certificate are beneficially owned by
(i) an Acquiring Person or an Affiliate or Associate of any such
Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, after such
transfer, became an Acquiring Person or an Affiliate or
Associate of any such Person, such Rights shall become null and
void and no holder hereof shall have any right with respect to
such Rights from and after the occurrence of such Section
11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price
and the number and kind of Preferred Shares or other securities
which may be purchased upon the exercise of the Rights evidenced
by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of
the Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the
Company and are also available upon written request to the
Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the shareholder services office
or offices 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 number of one one-
hundredths of a Preferred Share as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have
entitled such holder to purchase. If this Rights Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption price of $.01 per Right at
any time prior to the earlier of the close of business on (a)
the tenth day following the Shares Acquisition Date (as such
time period may be extended pursuant to the Rights Agreement),
and (b) the Final Expiration Date. Under certain circumstances
set forth in the Rights Agreement, the decision to redeem shall
require the concurrence of a majority of the Continuing
Directors (as such term is defined in the Rights Agreement).
No fractional Preferred Shares will be issued upon the
exercise of any right or rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the
holder of 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 shareholder of the Company or any right
to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or, to receive notice
of meetings or other actions affecting shareholders (except as
provided in 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 ___________ __, ____
ATTEST: RECOTON CORPORATION
By:
Secretary Title:
Countersigned:
By:
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
______________________________________________
hereby sells, assigns and transfers unto
________________________
________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint _________________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________, 19__
______________________________
Signature
Signature Guaranteed:
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
such Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate of such Person.
Dated: ____________ __, 19__ ______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certi-
ficate must correspond to the name as written upon the face of
this Rights Certificate in every particular, without alteration
or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: RECOTON CORPORATION
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to
purchase the shares of Preferred Shares issuable upon the
exercise of the Rights (or such other securities of the Company
or of any other person which may be issuable upon the exercise
of the Rights) and requests that certificates for such shares be
issued in the name of and delivered to:
Please 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 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: _______________, 19__
______________________________
Signature
Signature Guaranteed:
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 such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or became an Acquiring Person or an Affiliate or Associate of
such Person.
Dated: ___________, 19__ ______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On October 27, 1995, the Board of Directors of Recoton
Corporation (the "Company") declared a dividend of one Right for
each outstanding Common Share of the Company, par value $.20 per
share (the "Common Shares"), to shareholders of record at the
close of business on November 10, 1995. Each Right entitles the
registered holder to purchase from the Company a unit consisting
of one one-hundredth of a share of Series A Junior Participating
Preferred Share, par value $1.00 per share (the "Preferred
Shares"), at a Purchase Price of $100.00 per unit of one one-
hundredth of a share, subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Chemical Mellon
Shareholder Services, L.L.C., as Rights Agent.
Initially, the Rights will be attached to all Common
Shares certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. A
Distribution Date will occur and the Rights will separate from
the Common Shares upon the earliest of (i) ten days following a
public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 20% or
more of the Common Shares then outstanding (the "Shares
Acquisition Date"), or (ii) ten business days following the
commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 20% or more of
such outstanding Common Shares (unless such tender offer or
exchange offer is an offer for all outstanding Common Shares
which a majority of the unaffiliated Directors who are not
officers of the Company determine to be fair to and otherwise in
the best interests of the Company and its shareholders).
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Share certificates and will be
transferred with and only with such Common Share certificates,
(ii) new Common Shares certificates issued after November 10,
1995 will contain a notation incorporating the Rights Agreement
by reference, and (iii) the surrender for transfer of any
certificates for Common Shares outstanding will also constitute
the transfer of the Rights associated with the Common Shares
represented by such certificate.
_________________________
[FN] Under the Rights Agreement, for purposes of calculating
percentages of Common Shares outstanding, Common Shares
outstanding shall include all Common Shares deemed to
be beneficially owned by a person and its affiliates
and associates, even if not actually then outstanding.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on November 10,
2005, unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution
Date and, thereafter, the separate Rights Certificates alone
will represent the Rights. Except (i) with respect to certain
Common Shares issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of certain securities of the
Company, or (ii) as otherwise determined by the Board of
Directors, only Common Shares issued prior to the Distribution
Date will be issued with Rights.
_________________________
[FN] Under the Rights Agreement, for purposes of calculating
percentages of Common Shares outstanding, Common Shares
outstanding shall include all Common Shares deemed to
be beneficially owned by a person and its affiliates
and associates, even if not actually then outstanding.
In the event that a person becomes the beneficial owner
of 20% or more of the then outstanding Common Shares (except
pursuant to an offer for all outstanding Common Shares which a
majority of the Directors who are not officers of the Company
and who are not affiliates or associates of such person
determine to be fair to and otherwise in the best interests of
the Company and its shareholders) (a "Flip-in Event"), each
holder of a Right will thereafter have the right to receive,
upon payment of the Purchase Price, Common Shares (or, in
certain circumstances, cash, property or other securities of the
Company) having a value (based on a formula set forth in the
Rights Agreement) equal to two times the Purchase Price of the
Right. Notwithstanding any of the foregoing, following the
occurrence of the Flip-in Event, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were,
beneficially owned by an Acquiring Person (or by certain related
parties) will be null and void. However, Rights are not
exercisable following the occurrence of the Flip-in Event until
such time as the Rights are no longer redeemable by the Company
as set forth below.
For example, at a Purchase Price of $100.00 per Right,
each Right not owned by an Acquiring Person (or by certain
related parties) following a Flip-in Event would entitle its
holder to purchase $200.00 worth of Common Shares (or other
consideration, as noted above) determined pursuant to a formula
set forth in the Rights Agreement, for $100.00. Assuming that
the Common Shares had a per share value of $25.00 at such time
(as determined pursuant to such formula), the holder of each
valid Right would be entitled to purchase eight Common Shares
for $100.00.
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation or in which it is the surviving
corporation but its Common Shares are changed or exchanged
(other than a merger meeting certain conditions which follows an
offer for all outstanding Common Shares which a majority of the
unaffiliated Directors who are not officers of the Company
determine to be fair to and otherwise in the best interests of
the Company and its shareholders), or (ii) 50% or more of the
Company's assets, earning power or cash flow is sold or
transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter
have the right to receive, upon payment of the Purchase Price,
common shares of the acquiring company having a value equal to
two times the exercise price of the Right. The events set forth
in this paragraph and the Flip-in Event described in the second
preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of units of
one one-hundredths of a stock of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution
(i) in the event of a shares dividend on, or a subdivision,
combination or reclassification of, the Preferred Shares, (ii)
if holders of the Preferred Shares are granted certain rights or
warrants to subscribe for Preferred Shares or convertible
securities at less than the current market price of the
Preferred Shares, or (iii) upon the distribution to holders of
the Preferred Shares of evidences of indebtedness or assets
(excluding cash dividends not in excess of 200% of regular
quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at
least 1% of the Purchase Price. No fractional Preferred Shares
(other than fractions of one one-hundredth of a share, or
integral multiples thereof) will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of
the Preferred Shares on the last trading date prior to the date
of exercise.
At any time until ten days following the Shares
Acquisition Date, the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right (payable in cash,
Common Shares or other consideration deemed appropriate by the
Board of Directors). Under certain circumstances set forth in
the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors (as
defined below) who are not officers of the Company. Immediately
upon the action of the Board of Directors ordering redemption of
the Rights, with, where required, the concurrence of such
Continuing Directors, the Rights will terminate and the only
right of the holders of Rights will be to receive the $.01
redemption price.
The term "Continuing Director" means any member of the
Board of Directors of the Company who was a member of the Board
prior to the date of the Rights Agreement, and any person who is
subsequently elected to the Board if such person is recommended
or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person or an affiliate or associate of
such Person, or any representative of any of the foregoing.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in
the event that the Rights become exercisable for Common Shares
(or other consideration) of the Company or for common shares of
the acquiring company as set forth above, or are redeemed as
provided in the second preceding paragraph.
Other than certain provisions relating to the principal
economic terms of the Rights, any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the
Company prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended by
the Board (in certain circumstances, with the concurrence of the
Continuing Directors) in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders
of Rights (other than an Acquiring Person or an affiliate or
associate thereof), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment
to adjust the time period governing redemption shall be made at
such time as the Rights are not redeemable.
The Rights have certain anti-takeover effects.
Exercise of the Rights will cause substantial dilution to a
person or group that attempts to acquire the Company on terms
not approved by the Company's Board of Directors. The existence
of Rights, however, should not affect an offer at a fair price
and otherwise in the best interests of the Company and its
shareholders as determined by the Board of Directors. The
Rights should not interfere with any merger or other business
combination approved by the Board of Directors since the Board
of Directors may, at its option, at any time until ten days
following the Shares Acquisition Date redeem all but not less
than all of the then outstanding Rights at the $.01 redemption
price.
A copy of the Rights Agreement has been 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. This
summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
Exhibit 20
RECOTON CORPORATION
ββββ ββββ ββββ ββββ
ββββ ββββ, ββ βββββ
November 10, 1995
Dear Shareholder:
The Board of Directors of Recoton Corporation has announced the
adoption of a Shareholders Rights Plan. The Plan provides for a
dividend of Rights to purchase shares of a new series of
Preferred Shares (or, in certain circumstances, Common Shares or
other consideration), exercisable upon the occurrence of certain
events.
We believe that the Plan protects your interests in the event
that the Company is confronted with coercive or unfair takeover
tactics. The Plan contains provisions to protect you in the
event of an unsolicited offer to acquire the company. Although
we are not aware of any such potential offers, the Plan affords
protection from offers that do not treat all shareholders
equally, acquisitions in the open market of shares constituting
control without offering fair value to all shareholders and
other coercive or unfair takeover tactics that could impair the
Board's ability to represent your interests fully.
The Plan will not affect an offer at a fair price and otherwise
in the best interests of the Company and its shareholders as
determined by its Board of Directors. The Rights Plan will not
interfere with a merger or other business combination
transaction that the Board of Directors approves as fair and as
constituting a recognition of full value to the shareholders.
The Rights would become exercisable to purchase Preferred Shares
(or, in certain circumstances, Common Shares or other consideration)
only if (i) a person acquired 20% or more of the Company's Common
Shares, or (ii) a person commenced a tender or exchange offer for
20% or more of the Company's Common Shares. In the circumstance
described in clause (i) above, holders of Rights would be
entitled to purchase, in lieu of Preferred Shares, Common Shares
of the Company at a 50% discount from market value. Moreover,
in the event that the Company were to enter into certain merger
or asset sale transactions, after the occurrence of the
circumstance described in clause (i), holders would be entitled
to exercise the Rights for common shares of the acquiring
entity. The acquiring person described in clause (i) would not
be entitled to exercise Rights.
The issuance of Rights does not in any way weaken the financial
strength of the Company or interfere with its business plans.
The issuance of the Rights has no dilutive effect, will not
affect reported earnings per share and will not change the way
in which you can currently trade shares of the Company's Common
Shares.
A summary of the Plan is enclosed. The Plan is complex, and we
urge you to read this summary carefully. Its premise, however,
is straightforward: to serve and protect the interests of the
Company's shareholders.
Sincerely,
ββββββ β. βββββββββ
Co-Chairman, Co- Chief Executive
Officer and President
RECOTON CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On October 27, 1995, the Board of Directors of Recoton
Corporation (the "Company") declared a dividend of one Right for
each outstanding Common Share of the Company, par value $.20 per
share (the "Common Shares"), to shareholders of record at the
close of business on November 10, 1995. Each Right entitles the
registered holder to purchase from the Company a unit consisting
of one one-hundredth of a Series A Junior Participating Preferred
Share, par value $1.00 per share (the "Preferred Shares"), at a
Purchase Price of $100.00 per unit of one one-hundredth of a
share, subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and Chemical Mellon Shareholder
Services, L.L.C., as Rights Agent.
Initially, the Rights will be attached to all Common Share
certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. A Distribution
Date will occur and the Rights will separate from the Common
Shares upon the earliest of (i) ten days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 20% or more of the
Common Shares then outstanding (the "Shares Acquisition Date"),
or (ii) ten business days following the commencement of a tender
offer or exchange offer that would result in a person or group
beneficially owning 20% or more of such outstanding Common Shares
(unless such tender offer or exchange offer is an offer for all
outstanding Common Shares which a majority of the unaffiliated
Directors who are not officers of the Company determine to be
fair to and otherwise in the best interests of the Company and
its shareholders).
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Share certificates and will be
transferred with and only with such Common Share certificates,
(ii) new Common Share certificates issued after November 10, 1995
will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any
certificates for Common Shares outstanding will also constitute
the transfer of the Rights associated with the Common Shares
represented by such certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on November 10, 2005,
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent
the Rights. Except (i) with respect to certain Common Shares
issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise,
conversion or exchange of certain securities of the Company, or
(ii) as otherwise determined by the Board of Directors, only
Common Shares issued prior to the Distribution Date will be
issued with Rights.
In the event that a person becomes the beneficial owner of
20% or more of the then outstanding Common Shares (except
pursuant to an offer for all outstanding Common Shares which a
majority of the Directors who are not officers of the Company and
who are not affiliates or associates of such person determine to
be fair to and otherwise in the best interests of the Company and
its shareholders) (a "Flip-in Event"), each holder of a Right
will thereafter have the right to receive, upon payment of the
Purchase Price, Common Shares (or, in certain circumstances,
cash, property or other securities of the Company) having a value
(based on a formula set forth in the Rights Agreement) equal to
two times the Purchase Price of the Right. Notwithstanding any
of the foregoing, following the occurrence of the Flip-in Event,
all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by an Acquiring
Person (or by certain related parties) will be null and void.
However, Rights are not exercisable following the occurrence of
the Flip-in Event until such time as the Rights are no longer
redeemable by the Company as set forth below.
For example, at a Purchase Price of $100.00 per Right, each
Right not owned by an Acquiring Person (or by certain related
parties) following a Flip-in Event would entitle its holder to
purchase $200.00 worth of Common Shares (or other consideration,
as noted above) determined pursuant to a formula set forth in the
Rights Agreement, for $100.00. Assuming that the Common Shares
had a per share value of $25.00 at such time (as determined
pursuant to such formula), the holder of each valid Right would
be entitled to purchase eight Common Shares for $100.00.
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation or in which it is the surviving
corporation but its Common Shares are changed or exchanged (other
than a merger meeting certain conditions which follows an offer
for all outstanding Common Shares which a majority of the
unaffiliated Directors who are not officers of the Company
determine to be fair to and otherwise in the best interests of
the Company and its shareholders), or (ii) 50% or more of the
Company's assets, earning power or cash flow is sold or
transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter
have the right to receive, upon payment of the Purchase Price,
common shares of the acquiring company having a value equal to
two times the exercise price of the Right. The events set forth
in this paragraph and the Flip-in Event described in the second
preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of units of one
one-hundredths of a stock of Preferred Shares or other securities
or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event
of a shares dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) if holders of the
Preferred Shares are granted certain rights or warrants to
subscribe for Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares, or (iii)
upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding cash dividends not
in excess of 200% of regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least
1% of the Purchase Price. No fractional Preferred Shares (other
than fractions of one one-hundredth of a share, or integral
multiples thereof) will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading date prior to the date of
exercise.
At any time until ten days following the Shares Acquisition
Date, the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (payable in cash, Common
Shares or other consideration deemed appropriate by the Board of
Directors). Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence
of a majority of the Continuing Directors (as defined below) who
are not officers of the Company. Immediately upon the action of
the Board of Directors ordering redemption of the Rights, with,
where required, the concurrence of such Continuing Directors, the
Rights will terminate and the only right of the holders of Rights
will be to receive the $.01 redemption price.
The term "Continuing Director" means any member of the Board
of Directors of the Company who was a member of the Board prior
to the date of the Rights Agreement, and any person who is
subsequently elected to the Board if such person is recommended
or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person or an affiliate or associate of
such Person, or any representative of any of the foregoing.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Shares (or other
consideration) of the Company or for common shares of the
acquiring company as set forth above, or are redeemed as provided
in the second preceding paragraph.
Other than certain provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board
(in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights (other
than an Acquiring Person or an affiliate or associate thereof),
or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the
time period governing redemption shall be made at such time as
the Rights are not redeemable.
The Rights have certain anti-takeover effects. Exercise of
the Rights will cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by the
Company's Board of Directors. The existence of Rights, however,
should not affect an offer at a fair price and otherwise in the
best interests of the Company and its shareholders as determined
by the Board of Directors. The Rights should not interfere with
any merger or other business combination approved by the Board of
Directors since the Board of Directors may, at its option, at any
time until ten days following the Shares Acquisition Date redeem
all but not less than all of the then outstanding Rights at the
$.01 redemption price.
A copy of the Rights Agreement has been 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. This
summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
NEWS FROM RECOTONR
CORPORATE OFFICE: βββ ββββ ββββ ββββββ, βββ ββββ, ββ ββββββββ: βββ-βββ-ββββ
βββ-βββ-ββββ Fax: βββ-βββ-ββββ
Executive Office: ββββ ββββ ββββ ββββ, ββββ ββββ, ββ ββββββββ: βββ-βββ-ββββ
βββ-βββ-ββββ Fax: βββ-βββ-ββββ
Contacts: RCOT: Investor Relations Counsel: THE EQUITY GROUP, INC.RECOTON:
ββββββ β. βββββββββ, President
ββββββ βββββ (βββ) βββ-ββββ βββββ β. βββββ, Vice President,
Corporate Comm.
FOR IMMEDIATE RELEASE
RECOTON CORPORATION ADOPTS SHAREHOLDERS RIGHTS PLAN
Lake Mary, Florida -- October 27, 1995 - - Recoton Corporation
(Nasdaq National Market: RCOT), the leading North American
supplier of consumer electronic accesories, announced today that
its Board of Directors has adopted a Shareholders Rights Plan
designed to deter coercive or unfair takeover tactics and to
prevent an acquiror from gaining control of the corporation
without offering a fair price to all shareholders.
According to Co-Chairman and Chief Executive Officer ββββββ β.
βββββββββ, the action is being taken in accordance with Recoton
Corporation's goal of building long-term value for its public
shareholders. Recoton Corporation is not aware of any effort
being contemplated to acquire control of the corporation.
Details of the Shareholders Rights Plan are outlined in a letter
which will be mailed to all Recoton Corporation shareholders.
Under the Plan, Preferred Share Purchase Rights will be
distributed as a dividend at the rate of one right for each
Common Share held as of the close of business on November 10,
1995. Right will expire at the close of business on November 10,
2005.
Each right will entitle the holder to buy one one-hundredth of a
newly-issued Recoton Corporation Series A Junior Participating
Preferred Share at an exercise price of $100.00.
The rights will detach from the Common Shares and will initially
become exercisable for such Preferred Shares if a person or group
acquires beneficial ownership of, or commences a tender or
exchange offer which would result in such person or group
beneficially owning, 20 percent or more of Recoton Corporation's
Common Shares, except through a tender or exchange offer for all
shares which the Board determines to be fair and otherwise in the
best interest of Recoton Corporation and its shareholders.
If any person becomes the beneficial owner of 20 percent or more
of Recoton Corporation's Common Shares (except through such an
offer which the Board determines to be fair) and the Board of
Directors does not within 10 days thereafter redeem the rights,
each Right not owned by such person or related parties will then
enable its holder to purchase, at the right's then-current
exercise price, Recoton Corporation Common Shares (or, in certain
circumstances as determined by the Board, a combination of cash,
property, common share or other securities) having a value of
twice the right's exercise price.
Under certain circumstances, if Recoton Corporation is acquired
in a merger or similar transaction with another person, or sells
more than 50 percent of its assets, earning power or cash flow to
another entity, each right that has not previously been exercised
will entitle its holder to purchase, at the right's then-current
exercise price, common stock of such other entity having a value
of twice the right's exercise price.
Recoton Corporation will generally be entitled to redeem the
rights at one cent per right at any time until the 10th day
following public announcement that a 20 percent position has been
acquired. Prior to such time, the redemption period may be
extended by the Board of Directors.
Recoton Corporation products, which are sold under the AmbicoR,
Ampersand*, CalibronR, Christie Design*, DiscwasherR, InteractR,
ParsecR, RembrandtR, RecotonR, SoleControlR, and SoundQuest*
brand names, encompass over 3,500 highly functional and versatile
accessories. They are used for the enhancement, hook up,
installation, interconnection, maintenance, storage and
replacement of consumer electronic equipment such as audio,
video, care audio, camcorder, multimedia, computer, telephone,
cellular, music, home office, video games and 900MHz wireless
technology.