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EXHIBIT 4.2
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RIGHTS AGREEMENT
by and between
INSPIRE INSURANCE SOLUTIONS, INC.
and
U.S. TRUST COMPANY OF TEXAS, N.A.
as Rights Agent
Dated as of
[DATE OF AGREEMENT]
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TABLE OF CONTENTS
Section 1. Certain Definitions....................................................................................1
Section 2. Appointment of Rights Agent............................................................................6
Section 3. Issuance of Right Certificates.........................................................................6
Section 4. Form of Right Certificates.............................................................................7
Section 5. Countersignature and Registration......................................................................8
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates...........................................................8
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights..........................................9
Section 8. Cancellation and Destruction of Right Certificates....................................................10
Section 9. Reservation and Availability of Shares of Preferred Stock.............................................11
Section 10. Preferred Stock Record Date..........................................................................12
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights..........................12
Section 12. Certification of Adjusted Exercise Price or Number of Shares.........................................17
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................................18
Section 14. Fractional Rights and Fractional Shares..............................................................20
Section 15. Rights of Action.....................................................................................21
Section 16. Agreement of Right Holders...........................................................................21
Section 17. Right Certificate Holder Not Deemed a Shareholder....................................................22
Section 18. Concerning the Rights Agent..........................................................................22
Section 19. Merger or Consolidation of, or Change in Name of, the Rights Agent...................................22
Section 20. Duties of Rights Agent...............................................................................23
Section 21. Change of Rights Agent...............................................................................24
Section 22. Issuance of New Right Certificates...................................................................25
Section 23. Redemption...........................................................................................25
Section 24. Exchange.............................................................................................26
Section 25. Notice of Proposed Actions...........................................................................27
Section 26. Notices..............................................................................................28
Section 27. Supplements and Amendments...........................................................................29
Section 28. Successors...........................................................................................29
Section 29. Benefits of this Rights Agreement....................................................................29
Section 30. Determinations and Actions by the Board; etc.........................................................29
Section 31. Texas Contract.......................................................................................29
Section 32. Counterparts.........................................................................................30
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Section 33. Descriptive Headings.................................................................................30
Section 34. Severability.........................................................................................30
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Statement of Resolution
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RIGHTS AGREEMENT
Rights Agreement, dated as of July ___, 1997, by and between INSpire
Insurance Solutions, Inc., a Texas corporation (the "Company"), and U.S. Trust
Company of Texas, N.A. (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on July 30, 1997, the Board of Directors of the Company has
authorized the issuance and declared a dividend of one right (a "Right") for
each share of the Company's Common Stock, par value $0.01 per share (the
"Common Stock"), outstanding as of the close of business on August ___, 1997
(the "Record Date"), each such Right representing the right to purchase one
one-hundredth of a share of Series A Junior Preferred Stock of the Company (the
"Preferred Stock") having the rights and preferences set forth in the form of
the Statement of Resolution attached hereto as Exhibit C authorized by the
Board of Directors on July 30, 1997, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Company has further authorized
the issuance of one Right (subject to adjustment) with respect to each share of
Common Stock that may become outstanding (whether originally issued or
delivered from the Company's treasury) between the Record Date and the earlier
to occur of the Redemption Date or the Final Expiration Date (as such terms are
hereinafter defined);
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 shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 15% or more of the Voting Stock (as such term is hereinafter
defined) of the Company then outstanding; provided that an Acquiring Person
shall not include (i) an Exempt Person (as such term is hereinafter defined) or
(ii) any Person, together with all Affiliates and Associates of such Person,
who or which would be an Acquiring Person solely by reason of (A) being the
Beneficial Owner of shares of Voting Stock of the Company, the Beneficial
Ownership of which was acquired by such Person pursuant to any action or
transaction or series of related actions or transactions approved by the Board
of Directors before such Person otherwise became an Acquiring Person, or (B) a
reduction in the number of issued and outstanding shares of Voting Stock of the
Company pursuant to a transaction or a series of related transactions approved
by the Board of Directors of the Company (upon approval, in the case of
subclauses (A) and (B) of this clause (ii), by a majority of the Continuing
Directors (as such term is hereinafter defined)); provided further that in the
event the Person described in this clause (ii) does not become an Acquiring
Person by reason of subclause (A) or (B) of this clause (ii), such Person shall
nonetheless become an Acquiring Person upon its becoming the Beneficial Owner,
together with all Affiliates and Associates of such Person, of an additional 1%
of more of the Company's Voting Stock unless such additional 1% or more
Beneficial Ownership will not
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result in such Person becoming an Acquiring Person by reason of subclause (A)
or (B) of this clause (ii). Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith (upon approval by a majority
of the Continuing Directors) that a Person who would otherwise be an "Acquiring
Person" as defined pursuant to the foregoing provisions of this paragraph (a)
has become such inadvertently, and such Person divests itself as promptly as
practicable (as determined in good faith by the Board of Directors of the
Company and a majority of the Continuing Directors), but in any event within
five Business Days, following receipt of written notice from the Company of
such event, of a sufficient number of shares of Voting Stock so that such
Person would no longer be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be
deemed an "Acquiring Person" for any purposes of this Rights Agreement.
(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 (the "Exchange Act"), as in
effect on the date of this Rights Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have
correlative meanings):
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly,
"beneficially owns" (as determined pursuant to Rule 13d-3 of
the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof); or
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the
right to acquire (whether such right is exercisable
immediately or only after the passage of time or the
fulfillment of a condition or both) pursuant to any
agreement, arrangement or understanding, or upon the exercise
of conversion rights, exchange rights, other rights (other
than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own", 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) the right to vote, alone or in concert with
others, 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 securities if the agreement,
arrangement or understanding to vote such securities (1)
arises solely from a revocable proxy or consent given in
response to a proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations
under the Exchange Act, and (2) is not at the time reportable
by such Person on a Schedule 13D report under the Exchange
Act (or any comparable or successor report), other than by
reference to a proxy or consent solicitation being conducted
by such Person; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except as
described in clause (B) of subparagraph (ii) of this
paragraph (c)) or disposing of any securities of the Company;
provided, however, that for purposes of determining
Beneficial Ownership of securities under this Rights
Agreement, officers and directors of the Company solely by
reason of their status as such shall not constitute a group
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(notwithstanding that they may be Associates of one another
or may be deemed to constitute a group for purposes of
Section 13(d) of the Exchange Act) and shall not be deemed to
own shares owned by another officer or director of the
Company.
Notwithstanding anything in this paragraph (c) to the contrary, a
Person shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own,"
any security beneficially owned by another Person solely by reason of an
agreement, arrangement or understanding with such other Person for the purposes
of: (x) soliciting the Company's shareholders for the election of director
nominees or any other shareholder resolution, the formation of and membership
on any committee for the purpose of promoting or opposing any shareholder
resolution or for electing a slate of nominees to the Company's Board of
Directors, service on such a slate of nominees, or agreement to a slate of
director nominees, provided that such other Person retains the right at any
time to withdraw as a nominee or member of any such committee, and to withhold
or revoke any vote or proxy for or against any such shareholder resolution or
for such slate of nominees; (y) entering into revocable voting agreements or
the granting or solicitation of revocable proxies with respect to any of the
matters described in the foregoing clause (x); or (z) the sharing of expenses
and the indemnification against expenses and liabilities by any such other
Person with respect to expenses incurred or conduct occurring during the time
such other Person is a nominee or a member of any such committee described in
the foregoing clause (x). Further, notwithstanding anything in this paragraph
(c) to the contrary, a Person engaged in the business of underwriting
securities shall not be deemed the "Beneficial Owner" of, or to "Beneficially
Own," any securities acquired in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition.
Notwithstanding anything in this paragraph (c) to the contrary, the
phrase "then outstanding," when used with reference to a Person's Beneficial
Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding which such Person would be deemed to own
beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of Texas 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. Fort
Worth, Texas time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Fort Worth, Texas time, on the next
succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall mean
the Common Stock (presently par value $0.01 per share) of the Company. "Common
Stock" when used with reference to any Person other than the Company which
shall be organized in corporate form shall mean the capital stock or other
equity security with the greatest per share voting power of such Person or, if
such Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest which shall represent
the right to participate in profits, losses, deductions and credits of such
Person and which shall be entitled to exercise the greatest voting power per
unit of such Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
(g) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Acquiring Person, or an
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Affiliate or Associate of an Acquiring Person, or a representative or
nominee of an Acquiring Person or of any such Affiliate or Associate, and who
either (i) was a member of the Board of Directors on the date of this Rights
Agreement or (ii) subsequently became a member of the Board of Directors, and
whose nomination for election or election to the Board of Directors was
recommended or approved by a majority of the Continuing Directors then on the
Board of Directors.
(h) "Distribution Date" shall have the meaning set forth in Section
3(b) hereof.
(i) "Exchange Act" shall have the meaning set forth in Section 1(b)
hereof.
(j) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary
of the Company, (iii) any employee benefit plan or employee stock plan of the
Company or any Subsidiary of the Company, or any trust or other entity
organized, appointed, established or holding Common Stock for or pursuant to
the terms of any such plan; (iv) The Millers Mutual Fire Insurance Company and
its Affiliates and Associates; (v) F. ▇▇▇▇▇▇ ▇▇▇▇▇▇, III ("▇▇▇▇▇▇") and any
descendant of ▇▇▇▇▇▇, or any spouse, widow or widower of ▇▇▇▇▇▇ or of any such
descendant (▇▇▇▇▇▇ and any such descendants, spouses, widows and widowers
collectively defined as the "Family Members"); (vi) any trust of which ▇▇▇▇▇▇
is a trustee; (vii) any estate of a Family Member, or any trust established by
or for the benefit directly or indirectly of one or more Family Members
provided that one or more Family Members or charitable organizations which
qualify as exempt organizations under Section 501(c) of the Internal Revenue
Code of 1986, as amended ("Charitable Organizations") collectively are the
beneficiaries of at least 50% of the actuarially-determined beneficial interest
in such estate or trust; (viii) any charitable Organization which is
established by one or more Family Members (a "Family Charitable Organization");
(ix) any corporation of which a majority of the voting power or a majority of
the equity interest is held, directly or indirectly, by or for the benefit of
one or more Family Members, estates or trusts described in clause (vii) above,
or Family Charitable Organizations; (x) any partnership, limited liability
company or other entity or arrangement of which a majority of the voting
interest or a majority of the economic interest is held, directly or
indirectly, by or for the benefit of one or more Family Members, estates or
trusts described in clause (vii) above, or Family Charitable Organizations;
(xi) any trustee, executor, director or indirect managing or general partner or
other Person who has or shares voting and/or investment power over Common
Shares beneficially owned by any of the foregoing Persons solely in their
capacities as such; or (xiii) any Person designated as such an "Exempt Person"
by the Board of Directors of the Company (but only if such action is approved
by a majority of Continuing Directors); provided, however, that the Board of
Directors may determine by a two-thirds (2/3) majority vote that a Person
previously designated as an "Exempt Person" shall no longer be designated as
such an "Exempt Person" with effect on the date of such vote (but only if such
action is approved by a majority of Continuing Directors).
(k) "Exercise Price" shall have the meaning set forth in Sections 4
and 7(b) hereof.
(l) "Fair Market Value" of any property shall mean the fair market
value of such property as determined in accordance with Section 11(d) hereof.
(m) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
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(n) "Person" shall mean individual, corporation, partnership, limited
liability company, business trust, association, estate, trust, foundation or
other entity and shall include any successor (by merger or otherwise) of such
entity.
(o) "Preferred Stock" shall mean shares of Series A Junior Preferred
Stock, $1.00 par value, of the Company and, to the extent that there is not a
sufficient number of shares of Series A Junior Preferred Stock authorized to
permit the full exercise of the Rights, any other series of Preferred Stock,
$1.00 par value, of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Preferred Stock.
(p) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(q) "Qualifying Tender Offer" shall mean a tender or exchange offer
for all outstanding shares of Common Stock of the Company approved by a
majority of the Board of Directors (upon approval by a majority of the
Continuing Directors), after taking into account the potential long-term value
of the Company and all other factors that they consider relevant. (r)
"Redemption Date" shall have the meaning set forth in Section 7(a) hereof.
(s) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(t) "Right Certificate" shall have the meaning set forth in Section
3(d) hereof.
(u) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(v) "Stock Acquisition Date" shall mean the first date on which there
shall be a public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) or such earlier date as a majority of the Continuing Directors
shall become aware of the existence of an Acquiring Person.
(w) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person or by any corporation or other entity that is otherwise controlled
by such Person.
(x) "Summary of Rights" shall have the meaning set forth in Section
3(a) hereof.
(y) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(z) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or regulatory
authority in respect of any transfer of any security, instrument or right,
including Rights, shares of Common Stock and shares of Preferred Stock.
(aa) "Triggering Event" shall mean any event described in Section
11(a)(ii) or Section 13(a).
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(bb) "Voting Stock" shall mean (i) the Common Stock of the Company,
and (ii) any other shares of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together with the
Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or winding
up. For purposes of this Agreement, a stated percentage of the Voting Stock
shall mean a number of shares of the Voting Stock as shall equal in voting
power that stated percentage of the total voting power of the then outstanding
shares of Voting Stock in the election of a majority of the Board of Directors
or in respect of any merger, consolidation, sale of all or substantially all of
the Company's assets, liquidation, dissolution or winding up.
Section 2. Appointment of Rights. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights 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. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the
Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit A (the "Summary of Rights"),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Record Date, at the address of such holder
shown on the records of the Company.
(b) Until the Close of Business on the day which is the earlier of
(i) the tenth day after the Stock Acquisition Date, or (ii) the tenth business
day (or such later date as may be determined by action of the Board of
Directors upon approval by a majority of the Continuing Directors, prior to
such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt Person)
to commence, a tender or exchange offer upon the successful consummation of
which such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 15% or more of the then outstanding shares of Voting Stock
of the Company (irrespective of whether any shares are actually purchased
pursuant to any such offer) (the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the Rights shall be evidenced by the
certificates for Common Stock registered in the name of the holders of Common
Stock and not by separate Right Certificates and the record holders of such
certificates for Common Stock shall be the record holders of the Rights
represented thereby, and (y) each Right shall be transferable only
simultaneously and together with the transfer of a share of Common Stock
(subject to adjustment as hereinafter provided), including a transfer to the
Company, except pursuant to the provisions of Section 23 or Section 24. Until
the Distribution Date (or, if earlier, the Redemption Date or Final Expiration
Date), the surrender for transfer of any certificate for Common Stock shall
constitute the surrender for transfer of the Right or Rights associated with
the Common Stock evidenced thereby, whether or not accompanied by a copy of the
Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect
of shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Company's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earliest of the Distribution Date, the
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Redemption Date, or the Final Expiration Date (or, in certain
circumstances as provided in Section 22 hereof, after the Distribution Date)
shall have impressed, printed, written or stamped thereon or otherwise affixed
thereto the following legend:
This certificate also evidences and entitles the holder
hereof to the same number of Rights (subject to adjustment)
as the number of shares of Common Stock represented by this
certificate, such Rights being on the terms provided under
the Rights Agreement between INSpire Insurance Solutions,
Inc. and U.S. Trust Company of Texas, N.A. (the "Rights
Agent"), dated as of July ___, 1997, as it may be amended
from time to time (the "Rights Agreement"), the terms of
which are incorporated herein by reference and a copy of
which is on file at the principal executive offices of
INSpire Insurance Solutions, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights shall be evidenced by separate certificates and shall
no longer be evidenced by this certificate. INSpire
Insurance Solutions, Inc. shall mail to the registered
holder of this certificate a copy of the Rights Agreement
without charge within five days after receipt of a written
request therefor. Under certain circumstances as provided in
Section 7(e) of the Rights Agreement, Rights issued to or
Beneficially Owned by Acquiring Persons or their Affiliates
or Associates (as such terms are defined in the Rights
Agreement) or any subsequent holder of such Rights shall be
null and void and may not be transferred to any Person.
(d) As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the Close of Business on the Distribution Date, as shown by the records
of the Company, at the address of such holder shown on such records, a
certificate in the form provided by Section 4 hereof (a "Right Certificate"),
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. As of and after the Distribution Date, the Rights
shall be evidenced solely by Right Certificates and may be transferred by the
transfer of the Right Certificate as permitted hereby, separately and apart
from any transfer of one or more shares of Common Stock.
Section 4. Form of Right Certificates. The Right Certificates (and
the forms of election to purchase shares, certificate and assignment to be
printed on the reverse thereof), when, as and if issued, shall 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 may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Stock or the Rights may from time to time be
listed or as the Company may deem appropriate to conform to usage or otherwise
and as are not inconsistent with the provisions of this Rights Agreement.
Subject to the provisions of Section 22 hereof, Right Certificates evidencing
Rights whenever issued, (i) shall be dated as of the date of issuance of the
Rights they represent, and (ii) subject to adjustment from time to time as
provided herein, on their face shall entitle the holders thereof to purchase
such number of shares (including fractional shares which are integral multiples
of one-hundredth of a share) of Preferred Stock as shall be set forth therein
at the price payable upon exercise of a Right provided by Section 7(b) hereof
as the same may from time to time be adjusted as provided herein (the "Exercise
Price").
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Section 5. Countersignature and Registration
(a) Each Right Certificate shall be executed on behalf of the Company
by its Chairman of the Board, President or any Vice President, either manually
or by facsimile signature, and have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or any Assistant
Secretary of the Company, either manually or by facsimile signature. Each Right
Certificate shall be countersigned by the Rights Agent either manually or by
facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
Right Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Right Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed
on behalf of the Company by any person who, on the date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right 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 one or more offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f), 14 and 24
hereof, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate may be (i) transferred, or
(ii) split up, combined or exchanged for one or more other Right Certificates,
entitling the registered holder to purchase a like number of shares of
Preferred Stock as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer
any Right Certificate shall surrender the Right Certificate at the office of
the Rights Agent designated for the surrender of Right Certificates with the
form of certificate and assignment on the reverse side thereof duly endorsed
(or enclosed with such Right Certificate a written instrument of transfer in
form satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature duly guaranteed. Any registered holder desiring to split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate to be
split up, combined or exchanged at the office of the Rights Agent designated
therefor. Thereupon, the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any Transfer Tax that may be imposed in connection with any transfer,
split up, combination or exchange of any Right Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f), 14 and 24
hereof, upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested
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by the Company, reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, or upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated,
the Company shall issue and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e), 23(b) and 24 hereof). Except as otherwise provided herein, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent, in Dallas, Texas, together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the Close of Business on the earliest of (i) August ___, 2007
(the "Final Expiration Date"), (ii) the date on which the Rights are redeemed
as provided in Section 23 hereof (the "Redemption Date"), (iii) the date on
which such Rights expire pursuant to Section 13(e) hereof, or (iv) the date on
which the Rights are exchanged as provided in Section 24 hereof.
(b) The Exercise Price shall initially be $40.00 for each one
one-hundredth (1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the United
States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable to the Company or the Rights Agent of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Right
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Preferred
Stock of the Company one or more certificates representing the number of shares
of Preferred Stock to be so purchased, and the Company hereby authorizes and
directs such transfer agent to comply with all such requests, (ii) as provided
in Section 14(b) hereof, at the election of the Company, cause depositary
receipts to be issued in lieu of fractional shares of Preferred Stock, (iii) if
the election provided for in the immediately preceding clause (ii) has not been
made, requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with Section 14(b) hereof, (iv)
after receipt of such Preferred Stock certificates and, if applicable,
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder, and (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of
such Right Certificate; provided, however, that in the case of a purchase of
securities, other than Preferred Stock, pursuant to Section 13 hereof, the
Rights Agent shall promptly take the appropriate actions corresponding in such
case to that referred to in the foregoing clauses (i) through (v) of this
Section 7(c). Notwithstanding the foregoing provisions of this Section 7(c),
the Company may suspend the exercisability of the Rights for a reasonable
period, not in excess of 90 days, during which the Company seeks to register
under the Securities Act of 1933, as amended (the
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"Securities Act"), and any applicable securities law of any other
jurisdiction, the shares of Preferred Stock to be issued pursuant to the
Rights.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or his assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, other than pursuant to a Qualifying Tender
Offer, any Rights that are beneficially owned by (x) such Acquiring Person (or
any Associate or Affiliate of such Acquiring Person), (y) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
after the invalidation time, or (z) a transferee of such Acquiring Person (or
any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the invalidation time pursuant to either (I) a transfer from
the Acquiring Person to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or understanding regarding
the transferred Rights, or (II) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clause (y) and (z) above,
shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) are complied with,
but shall have no liability to any holder of Right Certificates or any other
Person as a result of its failure to make any determination with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder. No
Right Certificate shall be issued pursuant to Section 3 hereof that represents
Rights Beneficially Owned by an Acquiring Person whose Rights would be void
pursuant to the provisions of this Section 7(e) or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
provisions of this Section 7(e) or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the provisions of this Section 7(e)
shall be canceled.
(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 record holder shall have
(i) completed and signed the certificate following the form of election to
purchase set forth on the reverse side of the Right 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 Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request
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of the Company, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of authorized and issued shares of Preferred Stock held
in its treasury, such number of shares of Preferred Stock as will from time to
time be sufficient to permit the exercise in full of all outstanding Rights
and, after the occurrence of a Triggering Event, shall, to the extent
reasonably practicable, so reserve and keep available a sufficient number of
shares of Common Stock (and/or other securities) which may be required to
permit the exercise in full of all outstanding Rights.
(b) If the Preferred Stock (or, following the occurrence of a
Triggering Event, the Common Stock and/or other securities) is at any time
listed on a national securities exchange or included for quotation on any
transaction reporting system, then so long as the Preferred Stock (and,
following the occurrence of any such Triggering Event, Common Stock and/or
other securities) issuable and deliverable upon exercise of the Rights may be
listed on such exchange or included for quotation on any such transaction
reporting system, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable (but only to the extent that
it is reasonably likely that the Rights will be exercised), all shares reserved
for such issuance to be listed on such exchange or included for quotation on
any such transaction reporting system upon official notice of issuance upon
such exercise.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights (or, following the occurrence of a Triggering
Event, shares of Common Stock and/or other securities) shall, at the time of
delivery of the certificates for such shares or other securities (subject to
payment of the Exercise Price in respect thereof), be duly and validly
authorized and issued and fully paid and nonassessable.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section
11(a)(ii) hereof, or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Securities Act,
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (b) the
date of the expiration of the Rights. The Company may temporarily suspend, for
a period of time not to exceed 90 days, exercisability of the Rights in order
to prepare and file a registration statement under the Securities Act and
permit it to become effective. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration
statement under the Securities Act (if required) shall have been declared
effective.
(e) The Company covenants and agrees that it will pay when due and
payable any and all U.S. federal and state Transfer Taxes which may be payable
in respect of the issuance or delivery of the Right Certificates or of any
shares of Preferred Stock (or, following the occurrence of a Triggering Event,
Common Stock and/or other securities) issued or delivered
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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 a Right Certificate to a Person other
than, or the issuance or delivery of certificates for Preferred Stock
(or, following the occurrence of a Triggering Event, Common Stock
and/or other securities) upon exercise of Rights in a name other than
that of, the registered holder of the Right Certificate, and the
Company shall not be required to issue or deliver a Right Certificate
or certificate for Preferred Stock (or, following the occurrence of a
Triggering Event, Common Stock and/or other securities) to a Person
other than such registered holder until any such Transfer Tax shall
have been paid (any such Transfer Tax being payable by the holder of
such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such Transfer Tax is
due.
Section 10. Preferred Stock Record Date". Each Person in whose name
any certificate for shares of Preferred Stock (or Common Stock 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 the securities represented thereby on, and such certificate
shall be dated as of, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the
Exercise Price (and any applicable Transfer Taxes) was made; provided,
however, that, if the date of such surrender and payment is a date
upon which the Preferred Stock (or Common Stock 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 securities on, and such certificate shall be dated as of, the
next succeeding Business Day on which the applicable transfer books of
the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate, as such, 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 Exercise Price, Number and Kind of Shares
or Number of Rights. The Exercise Price, the number and kind of shares
which may be purchased upon exercise of a 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 Rights Agreement (A) declare or pay any dividend on
the Preferred Stock payable in shares of Preferred Stock, (B)
subdivide or split the outstanding shares of Preferred Stock into a
greater number of shares, (C) combine or consolidate the outstanding
shares of Preferred Stock into a smaller number of shares or effect a
reverse split of the outstanding shares of Preferred Stock, or (D)
issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this
Section 11(a), the Exercise Price in effect at the time of the record
date for such event, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer
books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such event;
provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par
value of the
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shares of capital stock of the Company issuable upon exercise of one
Right. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) Subject to Section 23 and Section 24 of this Rights
Agreement, in the event that any Person (other than an Exempt
Person), alone or together with its Affiliates and Associates, shall
become an Acquiring Person, except pursuant to a Qualifying Tender
Offer, then, except as otherwise provided in this Section 11, each
holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive upon exercise of such Right at a
price equal to the then current Exercise Price multiplied by the
number of one one-hundredths of a share of Preferred Stock for which
a Right is then exercisable, in accordance with the terms of this
Rights Agreement and in lieu of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Exercise Price by the
number of one one-hundredths of a share of Preferred Stock for which
a Right is then exercisable and dividing that product by (y) 50% of
the Fair Market Value of the Company's Common Stock (determined
pursuant to Section 11(d) hereof) on the date of the occurrence of
such event; provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) In lieu of issuing Common Stock in accordance with Section
11(a)(ii) hereof, the Company may, if the Board of Directors of the
Company, upon approval by a majority of the Continuing Directors,
determines that such action is necessary or appropriate and not
contrary to the interest of holders of Rights (and, in the event that
the number of shares of Common Stock which are authorized by the
Company's Articles of Incorporation but not outstanding or reserved
for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights, the
Company shall): (A) determine the excess of (1) the value of the
Common Stock issuable upon the exercise of a Right (the "Current
Value") over (2) the Exercise Price (such excess being referred to as
the "Spread") and (B) with respect to each Right, make adequate
provision to substitute for such Common Stock, upon exercise of the
Rights, (1) cash, (2) a reduction in the Exercise Price, (3) other
equity securities of the Company (including, without limitation,
shares or units of shares of any series of preferred stock which the
Board of Directors of the Company, upon approval by a majority of the
Continuing Directors, has deemed to have the same value as Common
Stock (such shares or units of shares of preferred stock are herein
called "common stock equivalents")), (4) debt securities of the
Company, (5) other assets or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the
Company, upon approval by a majority of the Continuing Directors;
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) days following the occurrence of an event described in Section
11(a)(ii), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of
the Exercise Price, Common Stock (to the extent available), and then,
if necessary, cash, which shares and/or cash have an
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aggregate value equal to the Spread. If the Board of Directors, upon
approval by a majority of the Continuing Directors, shall determine
in good faith that it is likely that sufficient additional Common
Stock 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
occurrence of an event described in Section 11(a)(ii), in order that
the Company may seek stockholder approval for the authorization of
such additional shares. To the extent that the Company determines
that some action need be taken pursuant to the preceding sentences of
this Section 11(a)(iii), the Company may suspend the exercisability
of the Rights until the expiration of any such period, as extended,
in order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to
this Section 11(a)(iii) and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public
announcement 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 and shall promptly notify
the Rights Agent of such suspension. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Fair Market
Value (as determined pursuant to Section 11(d) hereof) per share of
the Common Stock at the Close of Business on the date of the
occurrence of one of the events described in Section 11(a)(ii) and
the value of any "common stock equivalent" shall be deemed to have
the same value as the Common Stock on such date.
(b) In the event that the Company shall, after the Record Date, fix a
record date for the issuance of rights, options or warrants to all holders of
Preferred Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Stock (or shares
having the same rights, privileges and preferences as the Preferred Stock
("equivalent preferred stock")) or securities convertible into Preferred Stock
or equivalent preferred stock at a price per share of Preferred Stock or
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the Fair Market Value per share of the Preferred Stock (as defined in
Section 11(d)) on such record date, the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or the
equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Fair Market Value and the denominator of which shall be the number of
shares of Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants
are not so issued, the Exercise Price shall be adjusted to be the Exercise
Price which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation)
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or evidences of indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Fair Market Value per share of
the Preferred Stock on such record date, less the Fair Market Value of the
portion of the assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one share of Preferred Stock
and the denominator of which shall be the Fair Market Value per share of the
Preferred Stock; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
(d) For the purpose of this Rights Agreement, the "Fair Market Value"
of any share of Preferred Stock, Common Stock or any other stock or any Right
or other security or any other property on any date shall be determined as
provided in this Section 11(d). In the case of a publicly-traded stock or other
security, the Fair Market Value on any date shall be deemed to be the average
of the daily closing prices per share of such stock or per unit of such other
security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Fair Market Value per share of any security is determined during a
period which includes any date that is within 30 Trading Days after (i) the
ex-dividend date for a dividend or distribution on such security payable in
shares of such security or securities convertible into shares of such security,
or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such security, then,
and in each such case, the Fair Market Value shall be appropriately adjusted by
the Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange), or,
if the securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national securities exchange on
which such security is listed or admitted to trading; or, if not listed or
admitted to trading on any national securities exchange, the last quoted price
(or, if not so quoted, the average of the high bid and low asked prices) in the
over-the-counter market, as reported by The Nasdaq Stock Market or such other
system then in use; or, if no bids for such security are quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such security selected by the
Board of Directors of the Company (upon approval by a majority of the
Continuing Directors). The term "Trading Day" shall mean a day on which the
principal national securities exchange on which such security is listed or
admitted to trading is open for the transaction of business or, if such
security is not listed or admitted to trading on any national securities
exchange, a Business Day. If a security is not publicly held or not so listed
or traded, "Fair Market Value" shall mean the fair value per share of stock or
per other unit of such other security, as determined in good faith by the Board
of Directors of the Company (upon approval by a majority of the Continuing
Directors); provided, however, that if the Preferred Stock is not publicly
traded, the Fair Market Value of a share of Preferred Stock shall be
conclusively deemed to be the Fair Market Value of a share of Common Stock
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. In the
case of property other than securities, the
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"Fair Market Value" thereof shall be determined in good faith by
the Board of Directors of the Company (upon approval by a majority of the
Continuing Directors). Any such determination of Fair Market Value shall be
described in a statement filed with the Rights Agent and shall be binding upon
the Rights Agent and the holders of the Rights.
(e) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-hundredth of a share, as the case may
be. No adjustment in the Exercise Price shall be required unless adjustment
would require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. Notwithstanding the preceding sentence, any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which mandates the adjustment or
(ii) the date of the expiration of the right to exercise the Rights.
(f) Irrespective of any adjustment or change in the Exercise Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price and the number of shares to be issued upon
exercise of the Rights as in the initial Right Certificates issued hereunder
but, nevertheless, shall represent the Rights as so adjusted.
(g) Before taking any action that would cause an adjustment reducing
the purchase price per whole share of Preferred Stock upon exercise of the
Rights below the then par value, if any, of the shares of Preferred Stock, the
Company shall use its best efforts to take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Preferred Stock
at such adjusted purchase price per share.
(h) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in ▇▇▇▇▇▇▇▇ ▇▇(▇), (▇), (▇), (▇), (▇),
(▇), (▇), (▇) and (k), and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(i) Unless the Company shall have exercised its election as provided
in Section 11(j), upon each adjustment of the Exercise Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of one one-hundredths of
a share of Preferred Stock (calculated to the nearest one one-hundred
thousandth of a share) 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 Exercise Price in effect immediately prior to such
adjustment of the Exercise Price and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(j) The Company may elect on or after the date of any adjustment of
the Exercise Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such
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adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-hundredth) obtained by dividing the
Exercise Price in effect immediately prior to adjustment of the Exercise Price
by the Exercise Price in effect immediately after adjustment of the Exercise
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Exercise Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(j), the Company shall, as promptly as practicable, cause to be distributed
to holders of record of Right Certificates on such record date Right
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 Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(k) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any Preferred Stock at less than the current market price,
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable for Preferred Stock, dividends on
Preferred Stock payable in Preferred Stock or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to such
stockholders.
(l) In the event that at any time after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock)
into a greater or lesser number of shares of Common Stock, then in any such
case (A) the number of one one-hundredths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (B) each
share of Common Stock outstanding immediately after such event shall have
issued with respect to it that number of Rights which each share of Common
Stock outstanding immediately prior to such event had issued with respect to
it. The adjustments provided for in this Section 11(1) shall be made
successively whenever such dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. Certification of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section
13, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof. Notwithstanding the
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foregoing sentence, the failure of the Company to make such certification or
give such notice shall not affect the validity of or the force or effect of the
requirement for such adjustment. Any adjustment to be made pursuant to Section
11 or Section 13 of this Rights Agreement shall be effective as of the date of
the event giving rise to such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any adjustment unless
and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) Except for any transaction approved by the Board of Directors
(upon approval by a majority of the Continuing Directors), in the event that,
at any time on or after the Distribution Date, (x) the Company shall, directly
or indirectly, consolidate with, or merge with and into, any other Person or
Persons (other than an Exempt Person) and the Company shall not be the
surviving or continuing corporation of such consolidation or merger, or (y) any
Person or Persons (other than an Exempt Person) shall, directly or indirectly,
consolidate with, or merge with and into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (other than an Exempt Person) or of the Company
or cash or any other property, or (z) the Company or one or more of its
Subsidiaries shall, directly or indirectly, sell or otherwise transfer to any
other Person or any Affiliate or Associate of such Person, in one or more
transactions, or the Company or one or more of its Subsidiaries shall sell or
otherwise transfer to any Persons in one or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole), then, on the
first occurrence of any such event (except as may be contemplated by Section
13(e) hereof), proper provision shall be made so that (i) each holder of record
of a Right, except as provided in Section 7(e) hereof, shall thereafter have
the right to receive, upon the exercise thereof and payment of the Exercise
Price in accordance with the terms of this Rights Agreement, such number of
shares of validly issued, fully paid, non-assessable and freely tradable Common
Stock of the Principal Party (as defined herein), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall, based
on the Fair Market Value of the Common Stock of the Principal Party on the date
of the consummation of such consolidation, merger, sale or transfer, equal
twice the Exercise Price; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this Rights
Agreement; (iii) the term "Company" for all purposes of this Rights Agreement
shall thereafter be deemed to refer to such Principal Party; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in accordance
with the provisions of Section 9 hereof) in connection with such consummation
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the
occurrence of any event described in clause (x), (y) or (z) above of this
Section 13(a). The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
(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) hereof: (A) the Person that is
the issuer of the securities into which shares of Common Stock of the Company
are changed or otherwise exchanged or converted in
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such merger, consolidation or other fundamental transaction, or, if there is
more than one such issuer, the issuer the Common Stock of which has the
greatest market value or (B) if no securities are so issued, (x) the Person
that is the other party to the merger, consolidation or other fundamental
transaction and that survives such merger, consolidation or other fundamental
transaction, or, if there is more than one such Person, the Person the Common
Stock of which has the greatest market value or (y) if the Person that is the
other party to the merger, consolidation or other fundamental transaction does
not survive the merger, consolidation or other fundamental transaction, the
Person that does survive the merger, consolidation or other fundamental
transaction (including the Company if it survives); and
(ii) in the case of any transaction described in clause (z)
of the first sentence in Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of such
Persons is the issuer of Common Stock having the greatest market value of
shares outstanding; provided, however, that in any such case, if the Common
Stock of such Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, the term "Principal Party" shall
refer to such other Person, or if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of all of which are and
have been so registered, the term "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest market value
of shares outstanding.
(c) The Company shall not consummate any consolidation, merger, other
fundamental transaction or sale or transfer of assets or earning power referred
to in Section 13(a) unless the Principal Party shall have a sufficient number
of authorized shares of its Common Stock that have not been issued or reserved
for issuance to permit exercise in full of all Rights in accordance with this
Section 13 and unless prior thereto the Company and the Principal Party
involved therein shall have executed and delivered to the Rights Agent an
agreement confirming that the Principal Party shall, upon consummation of such
consolidation, merger, other fundamental transaction or sale or transfer of
assets or earning power, assume this Rights Agreement in accordance with
Section 13(a) hereof and that all rights of first refusal or preemptive rights
in respect of the issuance of shares of Common Stock of the Principal Party
upon exercise of outstanding Rights have been waived and that such transaction
shall not result in a default by the Principal Party under this Rights
Agreement, and further providing that, as soon as practicable after the date of
any consolidation, merger, other fundamental transaction or sale or transfer of
assets or earning power referred to in Section 13(a) hereof, the Principal
Party will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use
its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the date of expiration of the Rights, and
similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights
on a national securities
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exchange or to meet the eligibility requirements for quotation on The
Nasdaq Stock Market; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.
In the event that any of the transactions described in Section 13(a)
hereof shall occur at any time after the occurrence of a transaction described
in Section 11(a)(ii) hereof, the Rights which have not theretofore been
exercised shall, subject to the provisions of Section 7(e) hereof, thereafter
be exercisable in the manner described in Section 13(a) hereof.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Articles of Incorporation, Certificate of
Incorporation, By-laws, or other instrument governing its corporate affairs,
which provision would have the effect of (i) causing such Principal Party to
issue, in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common Stock of such
Principal Party at less than the then Fair Market Value per share (determined
pursuant to Section 11(d) hereof) or securities exercisable for, or convertible
into, Common Stock of such Principal Party at less than such then Fair Market
Value (other than to holders of Rights pursuant to this Section 13) or (ii)
providing for any special tax or similar payment in connection with the
issuance to any holder of a Right of Common Stock of such Principal Party
pursuant to the provisions of this Section 13, then, in such event, the Company
shall not consummate any such transaction unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect on the benefits intended to be afforded by the Rights in
connection with, or as a consequence of, the consummation of the proposed
transaction.
(e) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons (or a wholly-owned subsidiary of any such Person or Persons)
who acquired shares of Common Stock pursuant to a Qualifying Tender Offer, (ii)
the price per share of Common Stock offered in such transaction is not less
than the price per share of Common Stock paid to all holders of Common Stock
whose shares were purchased pursuant to such Qualifying Tender Offer and (iii)
the form of consideration being offered to the remaining holders of shares of
Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such Qualifying Tender 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 or
to distribute Right Certificates which evidence fractional Rights (i.e., Rights
to acquire less than one one-hundredth of a share of Preferred Stock). If the
Company shall determine not to issue such fractional Rights, then, in lieu of
such fractional Rights, there shall be paid to the holders of record of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the Fair Market
Value of a whole Right.
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(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one one-hundredth of a share). In lieu of issuing
fractions of shares of Preferred Stock, the Company may, at its election, issue
depositary receipts evidencing fractions of shares pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all of the rights, privileges and preferences to which they would be
entitled as owners of the Preferred Stock. With respect to fractional shares
that are not integral multiples of one one-hundredth of a share, if the Company
does not issue such fractional shares or depositary receipts in lieu thereof,
there shall be paid to the holders of record of Right Certificates at the time
such Right Certificates are exercised as herein provided an amount in cash
equal to the same fraction of the Fair Market Value of a share of Preferred
Stock.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredths of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Rights 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 Rights Agreement and will be entitled to
specific performance of the obligations under, and injunctive relief against
actual or threatened violations of, the obligations of any Person subject to
this Rights Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for Common Stock registered in the name of the holders of
Common Stock (together, as applicable, with the Summary of Rights), which
certificates for Common Stock shall also constitute certificates for Rights,
and not by separate Right Certificates, and each Right shall be transferable
only simultaneously and together with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
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purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Rights 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 Rights 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 execute order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting shareholders (except
as provided in Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
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 to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this Rights
Agreement.
(b) The Rights Agent shall be protected against, 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 Rights Agreement in reliance upon
any Right Certificate or certificate for Preferred Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the
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parties hereto, provided 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 Rights Agreement any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; in case at that
time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name
or in its changed name; in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
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 Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking 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 or any Vice President and by the Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent. Any such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
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 Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights 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 Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall
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it be responsible for any adjustment required under the provisions of Section
11 or 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
Right Certificates after receipt of a certificate describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Preferred Stock will, when issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of the Rights 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 or any Vice President or the Secretary or
the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken 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
the Rights Agent under this Rights 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 reasonable care was exercised in the
selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate following the form of
election to purchase set forth on the reverse side of such Rights Certificate
has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take further action with respect
to the requested exercise or transfer without first consulting with the
Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon 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 Stock and the Preferred Stock by registered or
certified 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. Notwithstanding the foregoing provisions of this Section 21,
in no event shall the resignation or removal of a Rights Agent be effective
until a successor Rights Agent shall have been appointed and have accepted such
appointment. If the Company shall fail to
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make such appointment within a period of 30 days after 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 Right Certificate (who
shall, with such notice, submit his Right Certificate for inspection by the
Company), then the incumbent Rights Agent or the holder of record of any Right
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) a corporation
organized and doing business under the laws of the United States or of any
state thereof, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination in the conduct of its corporate trust or stock transfer business
by federal or state authorities and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $5,000,000, or (b) an
Affiliate controlled by a corporation described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed, but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock
and Preferred Stock, and mail a notice thereof in writing to the registered
holders of the Right 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. Notwithstanding
the foregoing provisions, in the event of resignation, removal or incapacity of
the Rights Agent, the Company shall have the authority to act as the Rights
Agent until a successor Rights Agent shall have assumed the duties of the
Rights Agent hereunder.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Rights Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Exercise Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Rights
Agreement.
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors (upon approval by a majority of the
Continuing Directors), redeem all but not less than all of the then outstanding
Rights, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Stock Acquisition Date; provided, however, that, during
the time period relating to when the Rights may be redeemed, the Board of
Directors of the Company (upon approval of a majority of the Continuing
Directors) may extend the time during which the Rights may be redeemed to be at
any time as may be determined by the Board of Directors of the Company and the
Continuing Directors, or (ii) the Final Expiration Date, at a redemption price
of $0.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction after the date hereof (the "Redemption Price").
Notwithstanding anything contained in this Rights Agreement to the contrary,
the Rights shall not be exercisable pursuant to Section 11(a)(ii) hereof prior
to the expiration of the Company's right of redemption hereunder.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the effective time of the
action of the Board of Directors and the Continuing Directors ordering the
redemption of the Rights and the only right thereafter of the
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holders of Rights shall be to receive the Redemption Price. Within 10 days
after the effective time of the action of the Board of Directors and the
Continuing Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of such
redemption. Each notice of redemption will state the method by which the
payment of the Redemption Price will be made. At the option of the Board of
Directors, the Redemption Price may be paid in cash to each Rights holder or by
the issuance of shares (and, at the Company's election pursuant to Section
14(b) hereof, cash or depositary receipts in lieu of fractions of shares other
than fractions which are integral multiples of one one-hundredth (1/100) of a
share) of Preferred Stock or Common Stock having a Fair Market Value equal to
such cash payment.
Section 24. Exchange.
(a) By the vote of a majority of the Board of Directors (upon
approval by a majority of the Continuing Directors), the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights which have become void pursuant to Section 7(e) hereof) for shares of
Common Stock at an exchange rate of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of any class of Voting Stock of the Company
then outstanding.
(b) Without any further action and without any notice, the right to
exercise the Rights to be so exchanged will terminate at the effective time of
the action of the Board of Directors and the Continuing Directors ordering the
exchange and the only right thereafter of each holder of such Rights shall be
to receive that number of shares of Common Stock equal to the number of such
rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give notice of the exchange to the holders of such Rights then
outstanding by mailing such notice to all such holders at their last addresses
as they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice; provided, however, that
the failure to give, or any defect in, any such notice shall not affect the
validity of such exchange. Each such notice shall state the method by which the
exchange for Rights will be effected and, in the event of a partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute shares of Preferred Stock for shares of Common Stock
exchangeable for the Rights, at the initial rate of one one-hundredth of a
share of Preferred Stock for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the same
voting rights as one share of Common Stock.
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(d) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall either take such action as may be necessary to
authorize additional Common Stock or Preferred Stock for issuance upon exchange
of the Rights or, alternatively, by the vote of a majority of the Board of
Directors (upon approval by a majority of the Continuing Directors) with
respect to each Right, (i) pay cash in an amount equal to the Exercise Price,
in lieu of issuing Common Stock or Preferred Stock in exchange therefor, or
(ii) issue debt or equity securities, or a combination thereof, having a value
equal to the Current Value (as hereinafter defined) of the Common Stock or
Preferred Stock exchangeable for each such Right, where the value of such
securities shall be determined in good faith by the Board of Directors (upon
approval by a majority of the Continuing Directors), or (iii) deliver any
combination of cash, property, Common Stock, Preferred Stock and/or other
securities having a value equal to the Current Value in exchange for each
Right. The term "Current Value," for purposes of this Section 24, shall mean
the product of the per share market price of the Common Stock (determined
pursuant to Section 11(d) on the date of the occurrence of the event described
above in subparagraph (a)), multiplied by the number of shares of Common Stock
for which the Right otherwise would be exchangeable if there were sufficient
shares available. To the extent that the Company determines that some action
need be taken pursuant to clauses (i), (ii) or (iii) of this Section 24(d), the
Board of Directors (upon approval by a majority of the Continuing Directors)
may temporarily suspend the exercisability of the Rights for a period of up to
sixty (60) days following the date on which the event described in Section
24(a) shall have occurred, in order to seek any authorization of additional
Common Stock or Preferred Stock and/or to decide the appropriate form of
distribution to be made pursuant to the above provision and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to each registered holder of a Right Certificate with regard to which
a fractional share of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the fair market value of a whole share of
Common Stock. For the purposes of this paragraph (e), the fair market value of
a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall propose
(i) to pay any dividend payable in stock of any class to the holders of its
Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer
to the holders of record of its Preferred Stock rights or warrants to subscribe
for or to purchase shares of Preferred Stock or shares of stock of any class or
any other securities, rights or options, (iii) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding Preferred Stock), (iv) to effect any consolidation
or merger with or into, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or
Persons, or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of
record of a Right Certificate, in accordance with Section 26 hereof, notice of
such proposed action, which shall specify the record date for the purposes of
such stock dividend or distribution of rights or
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warrants, or the date on which such reclassification, consolidation, merger,
sale or transfer of assets, liquidation, dissolution, or winding up is to take
place and the record date for determining participation therein by the holders
of record of Common Stock or Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least 10 days prior to the record date for determining
holders of record of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of record of Common Stock or Preferred Stock, whichever shall be the
earlier. The failure to give notice required by this Section 25 or any defect
therein shall not affect the legality or validity of the action taken by the
Company or the vote upon any such action.
(b) In case any event described in Section 11(a)(ii) hereof shall
occur, then the Company shall, as soon as practicable thereafter, give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice
of the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or Right 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:
INSpire Insurance Solutions, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
With a copy to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right 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:
U.S. Trust Company of Texas, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right
Certificate or Right 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.
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Section 27. Supplements and Amendments. For as long as the Rights are
then redeemable and except as provided in the last sentence of this Section 27,
the Company may in its sole and absolute discretion, 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 the Rights. At any time when the Rights
are not then redeemable and except as provided in the last sentence of this
Section 27, the Company may, and the Rights Agent shall if the Company so
directs, supplement or amend this Rights Agreement without the approval of any
holders of Right Certificates (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, or (iii) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable, provided that no such supplement or amendment pursuant to this
clause (iii) shall materially adversely affect the interest of the holders of
Right Certificates. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment. Notwithstanding anything contained in
this Rights Agreement to the contrary, supplements or amendments may be made
only upon approval by a majority of the Continuing Directors.
Section 28. Successors. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights) any legal or equitable right,
remedy or claim under this Rights Agreement; but this Rights Agreement shall be
for the sole and exclusive benefit of the Company, the Rights Agent and the
holders of record of the Right Certificates (and, prior to the Distribution
Date, the holders of Common Stock in their capacity as holders of the Rights).
Section 30. Determinations and Actions by the Board; etc. The Board
of Directors (upon approval by a majority of the Continuing Directors) shall
have the exclusive power and authority to administer this Rights Agreement and
to exercise all rights and powers specifically granted to the Board, or to the
Company, or as may be necessary or advisable in the administration of this
Rights 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. 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 of Directors in good faith (and with the
approval of a majority of the Continuing Directors then in office) in
accordance with the preceding sentence, 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 any director to any liability to the holders
of the Rights. Notwithstanding anything contained in this Agreement to the
contrary, whenever any action, calculation, interpretation or determination
made pursuant to this Agreement requires the approval of a majority of the
Continuing Directors, and no Continuing Directors are then in office, such
action, calculation, interpretation or determination may not be made.
Section 31. Texas Contract. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Texas and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
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Section 32. Counterparts. This Rights 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 Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 34. Severability. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
INSPIRE INSURANCE SOLUTIONS, INC.
Attest: By:
-------------------- ---------------------------------------
(SEAL) Name: F. ▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Title: President and Chief Executive Officer
U.S. TRUST COMPANY OF TEXAS, N.A.
Attest: By:
-------------------- ---------------------------------------
(SEAL) Name:
---------------------------------
Title:
--------------------------------
35
EXHIBIT A
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND
VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
INSPIRE INSURANCE SOLUTIONS, INC.
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PREFERRED STOCK
On July 30, 1997, the Board of Directors of INSpire Insurance Solutions,
Inc. (the "Company"), declared a dividend distribution of one right (a "Right")
for each outstanding share of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), outstanding at the close of business on August ___,
1997 (the "Record Date") and has authorized the issuance of one Right (subject
to adjustment) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are defined in
the Rights Agreement). Each Right entitles the registered holder to purchase
from the Company one one-hundredth (1/100) of a share of preferred stock of the
Company, designated as Series A Junior Preferred Stock (the "Preferred Stock"),
at a price of $40.00 per one one-hundredth (1/100) of a share ("Exercise
Price"). The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement"), between the Company and U.S. Trust Company
of Texas, N.A., as Rights Agent (the "Rights Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights will automatically
trade with the Common Stock.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date"),
which is the earlier of (i) the tenth day following a public announcement that
a person or group of affiliated or associated persons, with certain exceptions
set forth below, has acquired beneficial ownership of 15% or more of the
outstanding voting stock of the Company (an "Acquiring Person"), and (ii) the
tenth business day after the date of the commencement or announcement of a
person's or group's intention to commence a tender or exchange offer the
consummation of which would result in the ownership of 15% or more of the
Company's outstanding voting stock (even if no shares are actually purchased
pursuant to such offer) or such later date as may be determined by a majority
of the Board of Directors and the Continuing Directors (as defined in the
Rights Agreement); prior thereto, the Rights will not be exercisable, will not
be represented by a separate certificate, and will not be transferable apart
from the Company's Common Stock, but will instead be evidenced, with respect to
any of the Common Stock certificates outstanding as of August ___, 1997, by
such Common
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Stock certificate. An Acquiring Person does not include the following (each an
"Exempt Person") (A) the Company, (B) any subsidiary of the Company, (C) any
employee benefit plan or employee stock plan of the Company or of any
subsidiary of the Company, or any trust or other entity organized, appointed,
established or holding Common Stock for or pursuant to the terms of any such
plan, (D) The Millers Mutual Fire Insurance Company and its Affiliates and
Associates; (E) F. ▇▇▇▇▇▇ ▇▇▇▇▇▇, III ("▇▇▇▇▇▇") and any descendant of ▇▇▇▇▇▇,
or any spouse, widow or widower of ▇▇▇▇▇▇ or of any such descendant (▇▇▇▇▇▇ and
any such descendants, spouses, widows and widowers collectively defined as the
"Family Members"); (F) any trust of which ▇▇▇▇▇▇ is a trustee; (G) any estate
of a Family Member, or any trust established by or for the benefit directly or
indirectly of one or more Family Members provided that one or more Family
Members or charitable organizations which qualify as exempt organizations under
Section 501(c) of the Internal Revenue Code of 1986, as amended ("Charitable
Organizations") collectively are the beneficiaries of at least 50% of the
actuarially-determined beneficial interest in such estate or trust; (H) any
charitable Organization which is established by one or more Family Members (a
"Family Charitable Organization"); (I) any corporation of which a majority of
the voting power or a majority of the equity interest is held, directly or
indirectly, by or for the benefit of one or more Family Members, estates or
trusts described in clause (H) above, or Family Charitable Organizations; (J)
any partnership, limited liability company or other entity or arrangement of
which a majority of the voting interest or a majority of the economic interest
is held, directly or indirectly, by or for the benefit of one or more Family
Members, estates or trusts described in clause (H) above, or Family Charitable
Organizations; (K) any trustee, executor, director or indirect managing or
general partner or other Person who has or shares voting and/or investment
power over Common Shares beneficially owned by any of the foregoing Persons
solely in their capacities as such; (L) any Person designated as such an Exempt
Person by the Board of Directors of the Company (but only if such action is
approved by a majority of Continuing Directors); provided, however, that the
Board of Directors may determine by a two-thirds (2/3) majority vote that a
Person previously designated as an Exempt Person shall no longer be designated
as such an Exempt Person with effect on the date of such vote (but only if such
action is approved by a majority of Continuing Directors); (M) any Person
designated as such an Exempt Person by the Board of Directors of the Company
(but only if such determination is approved by a majority of Continuing
Directors); provided however, that the Board of Directors may determine by a
two-thirds (2/3) majority vote that a Person previously designated as an Exempt
Person shall no longer be designated as such an Exempt Person with effect on
the date of such vote (but only if such action is approved by a majority of
Continuing Directors), or (N) any person or group whose ownership of 15% or
more of the shares of voting stock of the Company then outstanding results
solely from (i) any action or transaction or transactions approved by a
majority of the Board of Directors and the Continuing Directors before such
person or group became an Acquiring Person, or (ii) a reduction in the number
of issued and outstanding shares of voting stock of the Company pursuant to a
transaction or transactions approved by a majority of the Board of Directors
and Continuing Directors (provided that any person or group that does not
become an Acquiring Person by reason of clause (i) or (ii) above shall become
an Acquiring Person upon acquisition of an additional 1% or more of the
Company's voting stock unless such acquisition of additional voting stock will
not result in such person or group becoming an Acquiring Person by reason of
such clause (i) or (ii)).
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after August ___, 1997 will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as
of August ___, 1997, with or without a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and such separate certificates
alone will evidence the Rights from and after the Distribution Date.
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The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on August ___, 2007, unless earlier
redeemed by the Company as described below.
The Preferred Stock is nonredeemable and, unless otherwise provided in
connection with the creation of a subsequent series of preferred stock,
subordinate to any other series of the Company's preferred stock. The Preferred
Stock may not be issued except upon exercise of Rights. Each share of Preferred
Stock will be entitled to a minimum quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 100 times the dividend
declared on the Company's Common Stock. In the event of the liquidation of the
Company, the holders of Preferred Stock will be entitled to receive, for each
share of Preferred Stock, a payment of the greater of (i) $100.00 per share
plus accrued and unpaid dividends or (ii) 100 times the aggregate amount to be
distributed per share to holders of Common Stock. Each share of Preferred Stock
will have 100 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is exchanged,
each share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. The rights of Preferred Stock as to
dividends, liquidation and voting are protected by anti-dilution provisions.
The Exercise Price payable, and the number of shares of Preferred Stock 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 stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then current market price of the Preferred Stock or (iii) upon
the distribution to holders of the Preferred Stock of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a dividend
on the Common Stock payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share) may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash
in lieu of fractional shares which are not integral multiples of one
one-hundredth of a share.
Unless the Rights are earlier redeemed or the transaction is approved by a
majority of the Board of Directors and the Continuing Directors, if the Company
at any time after the Distribution Date were to be acquired in a merger or
other business combination (in which any shares of Common Stock are changed
into or exchanged for other securities or assets) (other than, subject to
certain conditions, a merger that follows a tender offer or exchange offer for
all outstanding shares of the Company approved by a majority of the Board of
Directors and Continuing Directors after taking into account the potential
long-term value of the Company and all other factors that they consider
relevant (a "Qualifying Tender Offer")) or more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a whole) were to be
sold or transferred in one or a series of related transactions, the Rights
Agreement provides
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that proper provision will be made so that each holder of record of a Right
will from and after such date have the right to receive, upon payment of the
Exercise Price, that number of shares of common stock of the acquiring company
having a market value at the time of such transaction equal to two times the
Exercise Price. In addition, unless the Rights are earlier redeemed, in the
event that a person or group becomes an Acquiring Person (other than pursuant
to a Qualifying Tender Offer), the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right, other than the
Acquiring Person (whose Rights will thereupon become null and void), will
thereafter have the right to receive, upon payment of the Exercise Price, that
number of shares of the Common Stock (or cash, other securities or property)
having a market value at the time of the transaction equal to two times the
Exercise Price (such market value to be determined with reference to the market
value of the Company's Common Stock as provided in the Rights Agreement).
At any time on or prior to the close of business on the earlier of (i) the
tenth day after the time that a person (or group of affiliated or associated
persons) has become an Acquiring Person (or such later date as a majority of
the Board of Directors and the Continuing Directors may determine) or (ii)
August ___, 2007, the Company may, with the approval of a majority of the
Continuing Directors, redeem the Rights in whole, but not in part, at a price
of $0.01 per Right, subject to adjustment (the "Redemption Price"). Immediately
upon the effective time of the action of the Board of Directors of the Company
authorizing redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
For as long as the Rights are then redeemable, the Company may amend the
Rights in any manner, including an amendment to extend the time period in which
the Rights may be redeemed. At any time when the Rights are not then
redeemable, the Company may amend the Rights in any manner that does not
materially adversely affect the interests of holders of the Rights as such.
Amendments to the Rights Agreement require the approval of the Continuing
Directors.
At any time after a person (or group of affiliated or associated persons)
becomes an Acquiring Person and prior to the acquisition by any such person or
group of 50% or more of any class of outstanding voting stock of the Company,
the Board of Directors of the Company (with the approval of a majority of the
Continuing Directors) may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock (or a fraction of a share of Preferred Stock
or other consideration having equivalent market value) per Right (subject to
adjustment).
Until a Right is exercised, the holder, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.
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 in this summary description herein by reference.
4
39
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER AUGUST ___, 2007 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $0.01 PER RIGHT (SUBJECT TO ADJUSTMENT), AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED
TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS
OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE
NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
Right Certificate
INSPIRE INSURANCE SOLUTIONS, INC.
This certifies that ______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of July ___, 1997 (the "Rights Agreement")
between INSpire Insurance Solutions, Inc., a Texas corporation (the "Company"),
and U.S. Trust Company of Texas, N.A. (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M. Fort Worth, Texas time on August
___, 2007 at the office of the Rights Agent designated in the Rights Agreement
for such purpose, or its successor as Rights Agent, one one-hundredth (1/100)
of a fully paid nonassessable share of Series A Junior Preferred Stock (the
"Preferred Stock") of the Company at a purchase price of $40.00, as the same
may from time to time be adjusted in accordance with the Rights Agreement (the
"Exercise Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Preferred Stock which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events and,
1
40
upon the happening of certain events, securities other than shares of Preferred
Stock, or other property, may be acquired upon exercise of the Rights evidenced
by this Right Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and 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 of the Rights Agent,
the Company and the holders of record of Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Preferred Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall
be exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $0.01 per Right, subject to adjustment or (ii) may be
exchanged in whole or in part for shares of the Company's Common Stock, par
value $0.01 per share, shares of Preferred Stock or substantially equivalent
rights or other consideration as determined by the Company.
No fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-hundredth (1/100) of a share) are required to
be issued upon the exercise of any Right or Rights evidenced hereby, and in
lieu thereof the Company may cause depositary receipts to be issued and/or a
cash payment may be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock 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 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 Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
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WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________.
ATTEST: INSPIRE INSURANCE SOLUTIONS, INC.
By:
-------------------------- ----------------------------------
[Secretary or Assistant Name:
Secretary] Title:
Countersigned:
U.S. TRUST COMPANY OF TEXAS, N.A.
By:
-----------------------
Name:
Title:
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED
---------------------------------------------------
hereby sells, assigns and transfers unto
----------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------------------------
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
------------
--------------------------------------------------------------------------------
Attorney to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated:
-----------------
------------------------------
Signature
(Signature must conform in
all respects to name of
holder as specified on the
face of the Right
Certificate)
Signature Guaranteed:
43
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold,
assigned or transferred by or on behalf of a Person who is or was an Acquiring
Person or an Associate or an Affiliate thereof (as such terms are defined in
the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement).
Dated:
--------------
------------------------------
Signature
(Signature must conform in
all respects to name of
holder as specified on the
face of the Right
Certificate)
44
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate)
TO INSPIRE INSURANCE SOLUTIONS, INC.:
The undersigned hereby irrevocably elects to exercise________________
Rights represented by this Right Certificate to purchase the shares of
Preferred Stock (or other securities) issuable upon the exercise of such Rights
and requests that certificates for such share(s) be issued in the following
name:
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
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying
number:
-------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Pleaseprint name and address)
--------------------------------------------------------------------------------
Dated:
------------
------------------------------
Signature
(Signature must conform in
all respects to name of
holder as specified on the
face of the Right
Certificate)
Signature Guaranteed:
45
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being exercised by
or on behalf of a Person who is or was an Acquiring Person or an Associate or
an Affiliate thereof (as such terms are defined in the Rights Agreement); and
(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 thereof (as such terms are
defined in the Rights Agreement).
Dated:
---------------------
------------------------------
Signature
(Signature must conform in
all respects to name of
holder as specified on the
face of the Right
Certificate)
46
EXHIBIT C
FORM OF
STATEMENT OF RESOLUTION
FOR
SERIES A PREFERRED STOCK
OF
INSPIRE INSURANCE SOLUTIONS, INC.
PURSUANT TO ARTICLE 2.13 OF THE TEXAS
BUSINESS CORPORATION ACT
I, F. ▇▇▇▇▇▇ ▇▇▇▇▇▇, III, President of INSpire Insurance
Solutions, Inc., a corporation organized and existing under the Texas Business
Corporation Act (the "Company"), DO HEREBY CERTIFY that at a meeting of the
Board of Directors on July 30, 1997, at which meeting a quorum was present, the
following resolutions were adopted:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Company in accordance with the provisions of Article 4 of
the Company's Restated Articles of Incorporation, as amended, a series of
Preferred Stock, par value $1.00 per share ("Preferred Stock"), of the Company
be, and hereby is, created, and the designations, preferences, and relative
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof, be, and hereby are, as follows:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series A Junior Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting such series initially
shall be 300,000. Notwithstanding the foregoing, however, if more than a total
of 300,000 shares of Series A Preferred Stock shall be issuable upon the
exercise of Rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of July ___, 1997, between the Company and U.S. Trust Company of
Texas, N.A., as Rights Agent (as such agreement may be amended from time to
time, the "Rights Agreement"), the Board of Directors of the Company shall
direct by resolution or resolutions that the total number of shares of Series A
Preferred Stock authorized to be issued be increased (to the extent that the
Articles of Incorporation, as amended and/or restated, then permits) to the
largest number of whole shares (rounded up to the nearest whole number)
issuable upon exercise of such Rights.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of
any series of Preferred Stock (or any similar stock) ranking prior and superior
to the Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of Common
Stock, par value $.01 per share (the "Common Stock"), of the Company, and of
any other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of
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March, June, September and December in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (x) $1.00 or (y) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the event
the Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (y) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share
on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
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48
Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Company. In the event the Company shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or a combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Company's
Restated Articles of Incorporation, in each case as the same may be restated or
amended, in any other Statement of Resolutions creating a series of Preferred
Stock or any similar stock, or by law, the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock and any other capital
stock of the Company having general voting rights shall vote together as one
class on all matters submitted to a vote of shareholders of the Company.
(C) Except as set forth herein, or as otherwise required
by the Company's Restated Articles of Incorporation, in each case as the same
may be restated or amended, or as otherwise required by law, holders of Series
A Preferred Stock shall have no other special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for the taking of any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, and in addition to any and all other
rights which any holder of shares of Series A Preferred Stock may have in such
circumstances, the Company shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
3
49
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock, provided that the Company may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Company ranking junior (both as to
dividends and upon liquidation, dissolution or winding up) to the
Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, 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 Company shall not permit any Subsidiary (as
hereinafter defined) of the Company to purchase or otherwise acquire for
consideration any shares of stock of the Company unless the Company could,
under paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner. A "Subsidiary" of the Company shall
mean any corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient to elect a majority of the
board of directors of such corporation or other entity or other persons
performing similar functions are beneficially owned, directly or indirectly, by
the Company or by any corporation or other entity that is otherwise controlled
by the Company.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares upon their retirement and cancellation shall become
authorized but unissued shares of Preferred Stock, without designation as to
series, and such shares may be reissued as part of a new series of Preferred
Stock to be created by resolution or resolutions of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, no distribution shall be made (1) to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received an amount per share (the "Series A Liquidation Preference") equal to
the higher of (i) $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (ii) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of shares of Common Stock; or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all
such shares are
4
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entitled upon such liquidation, dissolution or winding up. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other classes and series of
stock of the Corporation, if any, that rank on a parity with the Series A
Preferred Stock in respect thereof, then the assets available for such
distribution shall be distributed ratably to the holders of such parity shares
in proportion to their respective liquidation preferences.
(C) Neither the merger or consolidation of the
Corporation into or with another corporation nor the merger or consolidation of
any other corporation into or with the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 6.
Section 7. Consolidation, Merger, etc. In case the
Company shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Company shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. No Redemption. The shares of Series A
Preferred Stock shall not be redeemable at the option of the Company or any
holder thereof. Notwithstanding the foregoing sentence of this Section, the
Company may acquire shares of Series A Preferred Stock in any other manner
permitted by law, and the provisions hereof and the Restated Articles of
Incorporation of the Company, in each case as the same may be restated or
amended.
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Section 9. Ranking. Unless otherwise provided in a
Statement of Resolution relating to a subsequent series of preferred stock of
the Company, the Series A Preferred Stock shall rank junior to all other series
of the Company's preferred stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and senior to
the Common Stock.
Section 10. Amendment. The provisions hereof and the
Restated Articles of Incorporation, as restated or amended, of the Company
shall not be amended in any manner which would adversely affect the rights,
privileges or powers of the Series A Preferred Stock without, in addition to
any other vote of shareholders required by law, the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Series A Preferred
Stock, voting together as a single class.
Section 11. Fractional Shares. Series A Preferred Stock
may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Preferred Stock. Notwithstanding the
foregoing, fractions of shares of Preferred Stock (other than fractions which
are integral multiples of one one-hundredth of a share) may, at the election of
the Company, be evidenced by depositary receipts. The Company may also issue
cash in lieu of fractional shares which are not integral multiples of one
one-hundredth of a share.
[The remainder of this page is intentionally left blank]
6
52
IN WITNESS WHEREOF, I have executed and subscribed this
Statement of Resolution and do affirm the foregoing as true under the penalties
of perjury this 30th day of July, 1997.
By:
-------------------------------
Name: F. ▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Title: President
ATTEST:
By:
--------------------------------
Name:
------------------------------
Title: Secretary
7