RIGHTS AGREEMENT
Between
CT COMMUNICATIONS, INC.
and
FIRST UNION NATIONAL BANK,
Rights Agent
Dated as of August 27, 1998
TABLE OF CONTENTS
SECTION 1. Certain Definitions . . . . . . . . . .1
SECTION 2. Appointment of Rights Agent . . . . . .5
SECTION 3. Issue 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; Purchase Price;
Expiration Date of Rights . . . . . . .9
SECTION 8. Cancellation and Destruction of
Right Certificates . . . . . . . . . 10
SECTION 9. Availability of Common Stock . . . . 10
SECTION 10. Record Holders of Common Stock
Issued upon Exercise of Rights. . . . 11
SECTION 11. Adjustment of Purchase Price, Number
and Kind of Common Stock or
Number of Rights. . . . . . . . . . . 11
SECTION 12. Certificate of Adjustment . . . . . . 17
SECTION 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power . 17
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 or Change
of Name of Rights Agent. .. . . . . . 23
SECTION 20. Duties of Rights Agent. . . . . . . . 23
SECTION 21. Change of Rights Agent. . . . . . . . 26
SECTION 22. Issuance of New Right Certificates. . 26
SECTION 23. Redemption. . . . . . . . . . . . . . 27
SECTION 24. Exchange. . . . . . . . . . . . . . . 27
SECTION 25. Notice of Certain Events. . . . . . . 28
SECTION 26. Notices . . . . . . . . . . . . . . . 29
SECTION 27. Supplements and Amendments. . . . . . 30
SECTION 28. Successors. . . . . . . . . . . . . . 30
SECTION 29. Determinations and Actions by
the Board of Directors . . . . . . . 30
SECTION 30. Benefits of this Rights Agreement . . 31
SECTION 31. Severability. . . . . . . . . . . . . 31
SECTION 32. Governing Law . . . . . . . . . . . . 31
SECTION 33. Counterparts. . . . . . . . . . . . . 32
SECTION 34. Descriptive Headings . . . . . . . . 32
EXHIBIT A-1 Form of Right Certificate (Voting
Common Stock) . . . . . . . . . . . . . . . .A-1-1
EXHIBIT A-2 Form of Right Certificate (Class B
Nonvoting Common Stock) . . . . . . . . . . .A-2-1
EXHIBIT B Form of Election to Purchase. . . . . . . . . . . .B-1
EXHIBIT C Summary of Rights to Purchase Common
Shares. . . . . . . . . . . . . . . . . . . . . . .C-1
RIGHTS AGREEMENT
This Rights Agreement (the "Rights Agreement"), is effective
as of August 27, 1998 between CT Communications, Inc., a North
Carolina corporation (the "Company"), and First Union National
Bank (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on August 27, 1998, the Board of Directors of the
Company authorized and declared a dividend of one common share
purchase right for each share of (i) the Company's Voting Common
Stock (the "Company Voting Common Stock") and (ii) the Company's
Class B Nonvoting Common Stock (the "Company Nonvoting Common
Stock" and together with the Company Voting Common Stock, the
"Company Common Stock") outstanding at the close of business on
August 28, 1998 (the "Record Date"), each such right representing
the right to purchase one share of Company Voting Common Stock,
in the event the dividend is distributed with respect to Company
Voting Common Stock, or Company Nonvoting Common Stock, in the
event the dividend is distributed with respect to Company
Nonvoting Common Stock, upon the terms and subject to the
conditions herein set forth; and
WHEREAS, at that time the Board of Directors of the Company
further authorized and directed the issuance of one common share
purchase right with respect to each share of Company Voting
Common Stock and Company Nonvoting Common Stock that became
outstanding between the Record Date and the Distribution Date (as
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 Rights Agreement, the following terms have
the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall
become, at any time after the date of this Rights Agreement
(whether or not such status continues for any period), (i) the
Beneficial Owner of Company Voting Common Stock representing 15%
or more of the Company Voting Common Stock then outstanding, or
(ii) the Beneficial Owner of Company Nonvoting Common Stock
representing 15% or more of the Company Nonvoting Common Stock
then outstanding (individually, a "15% Beneficial Owner") other
than as a result of a Permitted Offer. Notwithstanding the
foregoing, (A) the term "Acquiring Person" shall not include (i)
the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any
entity holding Company Voting Common Stock or Company Nonvoting
Common Stock for or pursuant to the terms of any such plan, (ii)
any Person, who or which together with all Affiliates and
Associates of such Person becomes the Beneficial Owner of 15% or
more of such shares by the acquisition thereof directly from the
Company (provided, however, that if, after such acquisition, such
Person, or an Affiliate or Associate of such Person, becomes the
Beneficial Owner of any additional Company Common Stock in an
acquisition not made directly from the Company, then such Person
shall be deemed an Acquiring Person), or (iii) ▇.▇. ▇▇▇▇▇▇▇▇ III
or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and (B) no Person shall be deemed to be
an "Acquiring Person" either (X) as a result of the acquisition
of Company Common Stock by the Company which, by reducing the
number of Company Voting Common Stock outstanding, increases the
proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person;
except that if (i) a Person would become an Acquiring Person (but
for the operation of this subclause (X)) as a result of the
acquisition of Company Common Stock by the Company, and (ii)
after such share acquisition by the Company, such Person, or an
Affiliate or Associate of such Person, becomes the Beneficial
Owner of any additional Company Common Stock, then such Person
shall be deemed an Acquiring Person, or (Y) if (i) such Person,
or an Affiliate or Associate of such Person, inadvertently
becomes a 15% Beneficial Owner, (ii) within 8 days thereafter
such Person notifies the Board of Directors that such Person did
so inadvertently and (iii) within 2 days after such notification,
such Person is no longer a 15% Beneficial Owner.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to have acquired "beneficial ownership" of, or to
"beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as
of the date hereof;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling
group members with respect to a bona fide public
offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than
the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange
Act and (2) is not also then reportable on Schedule
13D or Schedule 13E under the Exchange Act (or any
comparable or successor report); 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
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any agreement, arrangement or understanding (other
than customary agreements with and between underwriters
and selling group members with respect to a bona fide
public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B)) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of "Beneficial Owner"
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 together with the number of such securities not then
actually issued and outstanding which such Person would be deemed
to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in New
York, New York or the state in which the principal office of the
Rights Agent is located 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., Charlotte, North Carolina time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 p.m., Charlotte, North Carolina time, on the next succeeding
Business Day.
(f) "Common Stock" when used with reference to any Person
other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or,
if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned
Person.
(g) "Company Common Stock" shall have the meaning set forth
in the recitals to this Rights Agreement and shall include any
other class or classes or series of common stock of the Company
resulting from any subdivision, combination, recapitalization or
reclassification of shares of such common stock.
(h) "Company Voting Common Stock" shall have the meaning
set forth in the recitals to this Rights Agreement.
(i) "Company Nonvoting Common Stock" shall have the meaning
set forth in the recitals to this Rights Agreement.
(j) "Company" shall have the meaning set forth in the
recitals to this Rights Agreement.
(k) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(l) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, as in effect from time to time during the
term of this Rights Agreement.
(m) "Exchange Ratio" shall have the meaning set forth in
Section 24 hereof.
(n) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
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(o) "Nasdaq" shall have the meaning set forth in Section
11(d) hereof.
(p) "Permitted Offer" shall mean a tender or exchange offer
which is for all outstanding Company Voting Common Stock, Company
Nonvoting Common Stock, or both, at a price and on terms
determined, prior to the purchase of shares under such tender or
exchange offer, by at least a majority of the members of the
Board of Directors who are not officers of the Company and who
are not (or would not be, if the offer were consummated)
Acquiring Persons or Affiliates, Associates, nominees or
representatives of an Acquiring Person, to be adequate and
otherwise in the best interests of the Company and its
shareholders (other than the Person or any Affiliate or Associate
thereof on whose basis the offer is being made). In determining
whether an offer is adequate or in the best interests of the
Company and its shareholders, the Board may take into account all
factors that it deems relevant including, without limitation, (1)
the consideration being offered in the proposal in relation to
the Board's estimate of (i) the current value of the Company in a
freely negotiated sale of either the Company by merger,
consolidation or otherwise, or all or substantially all of the
Company's assets, (ii) the current value of the Company if
orderly liquidated, and (iii) the future value of the Company
over a period of years as an independent entity discounted to
current value; (2) then existing political, economic and other
factors bearing on security prices generally or the current
market value of the Company's securities in particular; (3)
whether the proposal might violate federal, state or local laws;
(4) social, legal and economic effects on employees, suppliers,
customers and others having similar relationships with the
Company, and the communities in which the Company conducts its
businesses; (5) the financial condition and earnings prospects of
the person making the proposal, including the Person's ability to
service its debt and other existing or likely financial
obligations and the value of the consideration offered by such
Person; and (6) the competence, experience and integrity of the
Person making the acquisition proposal.
(q) "Person" shall mean any individual, firm, partnership,
corporation, limited liability company, trust, association, joint
venture or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(r) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(s) "Purchase Price" shall have the meaning set forth in
Section 7(a) hereof.
(t) "Record Date" shall have the meaning set forth in the
recitals to this Rights Agreement.
(u) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(v) "Redemption Price" shall have the meaning set forth in
Section 23 hereof.
(w) "Rights" shall mean the rights to purchase either
Company Voting Common Stock, in the event the rights were
distributed with respect to Company Voting Common Stock, or
Company Nonvoting Common Stock, in the event the rights were
distributed with respect to Company Nonvoting Common Stock,
authorized by the Board of Directors of the Company.
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(x) "Rights Agent" shall have the meaning set forth in the
recitals to this Rights Agreement.
(y) "Rights Agreement" shall have the meaning set forth in
the recitals to this Rights Agreement.
(z) "Right Certificates" shall have the meaning set forth
in Section 3(a) hereof.
(aa) "Securities Act" shall mean the Securities Act of 1933,
as amended, as in effect from time to time during the term of
this Rights Agreement.
(bb) "Shares Acquisition Date" shall mean the first date of
a public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such;
provided, that, if such Person is determined not to have become
an Acquiring Person pursuant to Section 1(a) hereof, then no
Shares Acquisition Date shall be deemed to have occurred.
(cc) "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
(dd) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(ee) "Trading Day" shall have the meaning set forth in
Section 11(d) hereof.
(ff) "Voting Securities" shall have the meaning set forth in
Section 13(a) hereof.
SECTION 2. APPOINTMENT OF RIGHTS AGENT
The Company hereby appoints the Rights Agent to act as agent
for the Company and the holders of the Rights (who, in accordance
with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Company Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or
desirable.
SECTION 3. ISSUE OF RIGHT CERTIFICATES
(a) Until the earlier of (i) the Close of Business on the
tenth business day after the Shares Acquisition Date or (ii) the
Close of Business on the tenth business day (or such later date
as may be determined by action of the Board of Directors of the
Company prior to such time as any Person becomes an Acquiring
Person) after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of
the Company or any entity holding Company Common Stock for or
pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2 of the General
Rules and Regulations under the Exchange Act, if upon
consummation thereof, such
5
Person would be a 15% Beneficial Owner (the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of Section 3(b) hereof) by
the certificates for the Company Voting Common Stock and Company
Nonvoting Common Stock, as the case may be, registered in the names
of the holders thereof (which certificates shall also be deemed to be
certificates for Rights) and not by separate certificates, and
(y) the Rights (and the right to receive separate certificates
("Right Certificates")) will be transferable only in connection
with the transfer of the underlying Company Common Stock
(including a transfer to the Company) as more fully set out
below. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and
the Rights Agent will, if requested, send) by first-class,
postage-prepaid mail, to each record holder of Company Common
Stock as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company, a
Right Certificate (the "Right Certificate"), which shall be in
substantially the form of Exhibit A-1 hereto in the case of
Company Voting Common Stock, or in substantially the form of
Exhibit A-2 hereto in the case of Company Nonvoting Common Stock,
evidencing one Right for each share of such type so held. As of
and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) As promptly as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase
Common Shares, in substantially the form of Exhibit C hereto (the
"Summary of Rights"), by first-class, postage- prepaid mail, to
each record holder of Company 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. Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date),
the surrender for transfer of any certificate for Company Common
Stock outstanding, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of
the Rights associated with the Company Common Stock.
(c) Certificates for Company Common Stock which become
outstanding (including, without limitation, reacquired shares
which are subsequently disposed of by the Company) after the
Record Date but prior to the earliest of the Distribution Date,
the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them
the following legend:
"This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement,
as it may from time to time be supplemented or amended,
between CT Communications, Inc. and First Union National
Bank, (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of CT
Communications, Inc. Under certain circumstances, as set
forth in the Rights Agreement, such rights may be redeemed
or exchanged, may expire, or may be evidenced by separate
certificates and no longer be evidenced by this certificate.
CT Communications, Inc. will mail to the 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, rights issued to or
held by Acquiring Persons or their Affiliates or Associates
(as defined in the Rights Agreement) and any subsequent
holder of such rights may become null and void."
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With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Company Common Stock represented by such certificates shall
be evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated therewith. In the event that
the Company purchases or acquires any Company Common Stock prior
to the Distribution Date, any Rights associated with such Company
Common Stock shall be deemed canceled and retired.
SECTION 4. FORM OF RIGHT CERTIFICATES
(a) The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof)
shall be substantially the same as provided for in Section 3(a)
hereof and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with
the provisions of this Rights Agreement, or as may be required to
comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 22
hereof, the Right Certificates shall entitle the holders thereof
to purchase such number and kind of Company Common Stock as shall
be set forth therein at the price per share set forth therein,
but the number and kind of such Company Common Stock and the
price per share shall be subject to adjustment as provided
herein.
(b) Any Right Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights which are null and
void pursuant to Section 11(a)(iv) of this Rights Agreement and
any Right Certificate issued pursuant to Section 6, Section 11 or
Section 22 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this
sentence, shall contain (to the extent feasible) the following
legend:
"The Rights represented by this Right Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and the
Rights represented hereby are null and void."
Notwithstanding the above provision, failure to place such
legend on any Right Certificate representing Rights that are
otherwise null and void pursuant to the terms of this Rights
Agreement shall not affect the null and void status of such
Rights.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION
The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive
Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have
affixed thereto the Company's seal or a facsimile thereof, and
shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the
Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and
delivery by the Company,
7
such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any
person who, at the actual 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. Following the
Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office or offices designated as the
appropriate place for surrender of such Right Certificate or
transfer, 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
Subject to the provisions of Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Redemption
Date or the Final Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights
that have become void pursuant to Section 11(a)(ii) hereof or
that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, respectively, entitling the
registered holder to purchase a like number and kind of Company
Common Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office or offices of
the Rights Agent designated for such purpose. 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 tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Right Certificates. 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, at
the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
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SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS
(a) Subject to Section 11(a)(iv) hereof, the registered
holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part
at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for
such purpose, together with payment of the price per share
(rounded to the nearest cent) provided for in paragraph (b) below
(the "Purchase Price") for each class of Company Common Stock as
to which the Rights are exercised, at or prior to the earliest of
(i) the Close of Business on August 27, 2008 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed
as provided in Section 23 hereof (the "Redemption Date"), or
(iii) the time at which such Rights are exchanged as provided in
Section 24 hereof.
(b) The Purchase Price for each share of (i) Company Voting
Common Stock pursuant to the exercise of a Right shall initially
be $500, and (ii) Company Nonvoting Common Stock pursuant to
the exercise of a Right shall initially be $500, in each case
subject to adjustment from time to time as provided in Sections
11 and 13 hereof, and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
kind of Company Common Stock to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by
certified check, cashier's check or money order payable to the
order of the Company, the Rights Agent shall thereupon promptly
(i) requisition from any transfer agent of the Company Common
Stock certificates for the number and kind of Company Common
Stock to be purchased (or depository receipts when appropriate)
and the Company hereby irrevocably authorizes its transfer agents
to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates, 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 (iv) when appropriate,
after receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(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 to his duly
authorized assigns, subject to the provisions of Section 14
hereof.
(e) So long as the Company Common Stock issuable upon the
exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause all
shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
9
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 so cancel
and retire, any other 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 of the Company, destroy
such canceled Right Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
SECTION 9. AVAILABILITY OF COMMON STOCK
(a) The Company covenants and agrees that it will cause to
be reserved and kept available out of its authorized and unissued
Company Common Stock or any Company Common Stock held in its
treasury, the number and kind of Company Common Stock that will
be sufficient to permit the exercise in full of all outstanding
Rights in accordance with this Rights Agreement.
(b) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Company Common
Stock delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued
and fully paid and nonassessable Company Common Stock.
(c) The Company covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Company Common Stock
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 Right Certificates to a person
other than, or the issuance or delivery of certificates or
depository receipts for the Company Common Stock in a name other
than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or to deliver any
certificates for Company Common Stock upon the exercise of any Rights
until any such tax shall have been paid (any such 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 reasonable satisfaction
that no such tax is due.
SECTION 10. RECORD HOLDERS OF COMMON STOCK ISSUED UPON
EXERCISE OF RIGHTS
Each person in whose name any certificate for Company Common
Stock is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the
Company Common Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the
Purchase 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 Company's transfer books for the Company
10
Common Stock are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which such
transfer books are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Company Common Stock for
which the Rights evidenced thereby shall be exercisable,
including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
COMMON STOCK OR NUMBER OF RIGHTS
The Purchase Price, the number of Company Common Stock or
other securities covered by each Right, and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)
(i) In the event the Company shall at any time
after the Record Date (A) declare a dividend on Company
Common Stock payable in Company Common Stock, (B)
subdivide the outstanding Company Common Stock into a
greater number of such shares, (C) combine the
outstanding Company Common Stock into a smaller number
of such shares, or (D) issue any shares of its capital
stock in a reclassification of Company Common Stock
(including any such reclassification in connection with
a consolidation or merger in which the Company is the
continuing or surviving corporation) or any other
similar transaction for the purpose of reclassifying
the Company Common Stock, except as otherwise provided
in this Section 11(a), the Purchase Price in effect for
Rights at the time of the record date for such dividend
or of the effective date of such subdivision,
combination or reclassification, and the number and
kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of
any Right exercised after such time
shall, upon payment of the Purchase Price then in effect,
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
Company Common Stock transfer books of the Company were
open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be
paid upon the exercise of one such Right be less than
the per share par value, if any, of the applicable kind
of Company Common Stock. If an event occurs which would
require an adjustment under both Section 11(a)(i) and
Section 11(a)(iv), 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)(iv).
(ii) Subject to Section 24 of this Rights
Agreement, in the event any Person becomes an Acquiring
Person, then proper provision shall be made so that
each holder of a Right (except as provided below and in
Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current
Purchase
11
Price in accordance with the terms of this
Agreement, such number of shares of Company Common
Stock as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then
number of shares of Company Common Stock for which a
Right was exercisable by such holder immediately prior
to the Shares Acquisition Date, and dividing that
product (such product shall be referred to as the
"Purchase Price" for each Right and for all purposes of
this Agreement) by (y) 50% of the current market price
(determined pursuant to Section 11(d) hereof) per share
of Company Common Stock on the Shares Acquisition Date.
Notwithstanding the above, 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 the event that there shall not be
sufficient Company Common Stock (A) issued but not
outstanding or (B) authorized but unissued to permit
the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii), the Company shall, to
the extent permitted by applicable law, take all such
action as may be necessary to authorize additional
Company Common Stock for issuance upon exercise of the
Rights, including the calling of a meeting of
shareholders; provided, however, if the Company is
unable to cause the authorization of additional Company
Common Stock then the Company, to the extent necessary
and permitted by applicable law and any agreements or
instruments in effect on the date hereof to which it is
a party, shall, at its option (A) pay cash equal to
twice the applicable Purchase Price (as adjusted
pursuant to this Section 11) in lieu of issuing any
such Company Common Stock and requiring payment
therefor, or (B) issue equity securities having a value
equal to the market price of such kind of Company
Common Stock which otherwise would have been issuable
pursuant to the foregoing subparagraph (ii), which value
shall be determined by the Board of Directors of the Company,
whose determination shall be described in a statement
filed with the Rights Agent, or (C) distribute a combination
of Company Common Stock, cash and/or other equity securities
having a value equal to the market price of the shares of the
kind of Company Common Stock which otherwise would have been
issuable pursuant to the foregoing subparagraph (ii), determined
in accordance with the preceding clause (B), upon
exercise of the related Rights.
(iv) From and after the occurrence of the event
described above, any Rights that are or were acquired
or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall
be void and any holder of such Rights shall thereafter
have no right to exercise such Rights under any
provision of this Rights Agreement. No Right
Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring
Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any
time upon the transfer of any Rights to or from an
Acquiring Person whose Rights would be void pursuant to
the preceding sentence or any Associate or Affiliate
thereof or to or from any nominee of such Acquiring
Person, Associate or Affiliate; and any Right
Certificate delivered
12
to the Rights Agent for transfer
to or from an Acquiring Person (or any Associate,
Affiliate or nominee of such Acquiring Person) whose
Rights would be void pursuant to the preceding sentence
shall be canceled.
(b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants
to all holders of a particular kind of Company Common Stock
entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase such kind of
Company Common Stock, or securities convertible into such kind of
Company Common Stock at a price per share (or having a conversion
price per share, if a security convertible into Company Common
Stock) less than the then current per share market price (as
defined in Section 11(d)) of such Company Common Stock on such
record date, the Purchase Price to be in effect after such record
date with respect to such kind of Company Common Stock shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of such Company
Common Stock outstanding on such record date plus the number of
shares of such Company Common Stock which the aggregate offering
price of the total number of shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price and
the denominator of which shall be the number of shares of such
Company Common Stock outstanding on such record date plus the
number of additional shares of such Company Common 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 per share par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent. Company Common Stock owned
by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of a particular kind of
Company Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), of evidences of
indebtedness or assets (other than a regular quarterly cash
dividend, a dividend payable in Company Common Stock or other
distribution referred to in Section 11(a) hereof) or subscription
rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record
date with respect to such kind of Company Common Stock shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market
price of the kind of Company Common Stock on such record date,
less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent) of the portion of such assets or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of such
Company Common Stock and the denominator of which
13
shall be such current per share market price of such kind of Company Common
Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the per share 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 Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(d) For the purpose of any computation hereunder, the
"current per share market price" of a share of a particular kind
of Company Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of a share of such
Company Common Stock for the 30 consecutive Trading Days
immediately prior to such date; provided, however, that in the
event that the current per share market price of a share of such
Company Common Stock is determined during a period following the
announcement by the Company of (A) a dividend or distribution on
the Company Common Stock, payable in Company Common Stock or
securities convertible into Company Common Stock, or (B) any
subdivision, combination or reclassification of the Company
Common Stock, and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the
current market price per share of a share of such Company Common
Stock. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Company Common Stock is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Company Common Stock
is listed or admitted to trading or, if Company Common Stock is not
listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc. Automated
Quotations System ("Nasdaq") or such other system then in use,
or, if on any such date Company Common Stock is not quoted by any
such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in Company Common Stock, selected by the Board of
Directors of the Company. If on any such date no market-maker is
making a market in Company Common Stock, the fair value of
Company Common Stock on such date as determined in good faith by
the Board of Directors of the Company shall be used, whose
determination shall be described in a statement filed with the
Rights Agent. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which Company
Common Stock is listed or admitted to trading is open for the
transaction of business or, if Company Common Stock is not listed
or admitted to trading on any national securities exchange, a
Business Day. If Company Common Stock is not publicly held or so
listed or traded, "current per share market price" shall mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1%
in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are
14
not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth of a
share as the case may be.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital
stock of the Company other than Company Common 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 Company Common Stock contained in
Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Company Common
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made hereunder to the Purchase Price applicable
thereto shall evidence the right to purchase, at the adjusted
Purchase Price, the number of shares and kind of Company Common
Stock or other capital stock purchasable from time to time
hereunder upon exercise of such Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and
(c), each related Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of
the applicable kind of Company Common Stock (calculated to the
nearest one ten-thousandth of a share) obtained by (i)
multiplying (x) the number of shares covered by such Right
immediately prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such Purchase Price adjustment and
(ii) dividing the product so obtained by the Purchase Price in
effect immediately after such Purchase Price adjustment.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights
in substitution for any adjustment in the number of shares of
Company Common Stock purchasable upon the exercise of a Right.
Each of such Rights outstanding after such adjustment of the
number of such Rights shall be exercisable for the number of
shares of Company Common Stock for which such Right was
exercisable immediately prior to such adjustment. Each such Right
held of record prior to such adjustment of the number of Rights
shall become that number of such Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of such Purchase
Price by the Purchase Price in effect immediately after such
adjustment. The Company shall make a public announcement of its
election to adjust the number of Rights indicating the record
date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but,
if the 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 such Rights pursuant to this Section 11(i), the Company shall,
as promptly as practicable, cause to be distributed to holders of
record of such Right Certificates on such record date additional
Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company,
15
shall cause to be distributed to such holders of record in substitution and
replacement for such 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 Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of a kind of Company
Common Stock issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of shares of a kind of
Company Common Stock which were expressed in such Right
Certificates theretofore issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of
the Company Common Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and nonassessable
Company Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of
any related Right exercised after such record date of the Company
Common Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
Company Common Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due ▇▇▇▇
or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price in addition to those adjustments
expressly required by this Section 11, as and to the extent that
it in its sole discretion shall determine to be advisable in
order that (i) any consolidation or subdivision of any of the
Company Common Stock, (ii) issuance wholly for cash of any
Company Common Stock at less than the current market price, (iii)
issuance wholly for cash of Company Common Stock or securities
which by their terms are convertible into or exchangeable for
Company Common Stock, (iv) dividends on Company Common Stock
payable in Company Common Stock or (v) issuance of rights,
options or warrants referred to hereinabove in Section 11(b),
hereafter made by the Company to holders of Company Common Stock,
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections
23 or 27 hereof, take (or permit any Subsidiary to take) any
action the purpose of which is to, or if at the time such action
is taken it is reasonably foreseeable that the effect of such
action is to, materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
16
SECTION 12. CERTIFICATE OF ADJUSTMENT
Whenever an adjustment is made as provided in Sections 11 or
13 hereof, the Company shall promptly (a) prepare a certificate
setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent
and with each transfer agent for the Company Common Stock a copy
of such certificate and, (c) include a brief summary thereof in
the next quarterly or current report filed pursuant to the
Exchange Act by the Company, and, following the Distribution
Date, mail such summary to each holder of a Right Certificate in
accordance with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment
therein and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such a certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER
(a) In the event that, on or following the Distribution
Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into any other Person, (y) the Company
shall consolidate with, or merge with, any other Person, and the
Company shall be the continuing or surviving corporation of such
consolidation or merger (other than, in a case of any transaction
described in (x) or (y), a merger or consolidation which would result
in all of the securities generally entitled to vote in the election
of directors ("voting securities") of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving
entity) all of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation and
the holders of such securities not having changed as a result of such
merger or consolidation), or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or a series of related transactions,
assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person (other than the Company or any
Subsidiary of the Company in one or more transactions each of
which does not violate Section 11(n) hereof), then, and in each
such case (except as provided in Section 13(d) hereof), proper
provision shall be made so that (i) each holder of a Right,
except as provided in Section 11(a) hereof, shall thereafter have
the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price (without giving effect to any
adjustment to such Purchase Price pursuant to Section 11(a)(iv))
multiplied by the number of shares of Company Common Stock for
which such Right is then exercisable, in accordance with the
terms of this Rights Agreement, such number of freely tradable
shares of Common Stock of the Principal Party, not subject to any
liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (A) multiplying the
then current Purchase Price (without giving effect to any
adjustment to such Purchase Price pursuant to Section 11(a)(iv))
by the number of shares of Company Common Stock for which such
Right is then exercisable and dividing that product by (B) 50% of
the then current per share market price of the Common Stock of
such Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation,
merger, sale or transfer; (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" shall thereafter be deemed to refer to such
Principal Party, it
17
being specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first occurrence
of an event described in this Section 13; and (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation
of a sufficient number of its Common Stock in accordance with
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 the
Common Stock thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section
13(a), the Person that is the issuer of any securities
into which Company Common Stock is converted in such
merger or consolidation, and if no securities are so
issued, the Person that is the other party to such
merger or consolidation (including, if applicable, the
Company if it is the surviving corporation); and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion
of the assets or earnings power transferred pursuant to
such transaction or transactions; provided, however,
that in any of the foregoing cases, (1) if the Common
Stock of such Person is not at such time and have not
been continuously over the preceding twelve (12) month
period registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has
been so registered, "Principal Party" shall refer to
such other Person; (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one
Person, the Common Stock of two or more of which are
and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market
value; and (3) in case such Person is owned, directly
or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by
the same Person, the rules set forth in (1) and (2)
above shall apply to each of the chains of ownership
having an interest in such joint ventures as if such
party were a "Subsidiary" of both or all of such joint
ventures and the Principal Parties in each such chain
shall bear the obligations set forth in this Section 13
in the same ratio as their direct or indirect interests
in such Person bear to the total of such interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized Common
Stock which has not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such
Principal Party shall have executed delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any consolidation,
merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense shall:
18
(i) prepare and file a registration statement
under the Securities Act of 1933, as amended, with
respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration
statement to (A) become effective as soon as
practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the
requirements of such Act) until the Final Expiration
Date;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise
of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate; 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 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
In the event that the events described in this Section 13 shall
occur at any time after the occurrence of the events described in
Section 11(a)(iv), the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner
described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in subparagraphs (x) and (y) of Section 13(a) if (i)
such transaction is consummated with a Person or Persons who
acquired Company Common Stock pursuant to a Permitted Offer (or a
wholly owned subsidiary of any such Person or Persons), (ii) the
price per share of the Company Common Stock offered in such
transaction is not less than the price per share of Company
Common Stock whose shares were purchased pursuant to such tender
offer or exchange offer and (iii) the form of consideration being
offered to the remaining holders of shares of Company Common
Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders 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
current market value of a whole Right. For the purposes of this
Section 14(a), the current market value of a whole Right shall be
the closing price of such Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed
19
on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if such Rights are not listed or
admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by Nasdaq
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in such Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is
making a market in the Rights, the fair value of such Rights on
such date as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a
statement filed with the Rights Agent, shall be used.
(b) The Company shall not be required to issue fractions of
shares of Company Common Stock upon (i) exercise of the Rights or
exchange of the Rights for Company Common Stock
pursuant to Section 24 of this Rights Agreement, or to distribute
certificates which evidence fractional shares of such securities.
Fractions of shares of Company Common Stock may, at the election
of the Company, be evidenced by depository receipts, 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 the rights,
privileges and preferences to which they are entitled as
beneficial owners of the Company Common Stock represented by such
depositary receipts. In lieu of fractional shares of Company
Common Stock or depositary receipts, the Company may pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one share of Company
Common Stock. For the purposes of this Section 14(b), the current
market value of a share of Company Common Stock shall be the
closing price of a share of Company Common Stock (as determined
pursuant to the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of such Right
expressly waives his right to receive any fractional Rights or
any fractional shares upon exercise of a Right (except as
provided above).
SECTION 15. RIGHTS OF ACTION
All rights of action in respect of this Rights Agreement,
excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of Company Common Stock); and any
registered holder of any Right Certificate (or, prior to the
Distribution Date, of Company 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 Company
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
20
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
Every holder of a Right, by accepting the same, consents and
agrees with the Company and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Company
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 principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer; and
(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 certificates for Company Common
Stock) 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
certificates for Company Common Stock made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Rights Agreement to
the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or a beneficial interest
in 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 executive order
promulgated or enacted by any governmental authority, prohibiting
or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have
any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
SECTION 17. 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 Company Common Stock or any other securities of the
Company which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein
or in any 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.
21
SECTION 18. CONCERNING THE RIGHTS AGENT
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, its directors, officers,
employees and agents for, and to hold each of them harmless against,
any loss, liability, or expense, incurred without gross negligence,
bad faith or willful misconduct on the part of the Rights Agent, of such
other indemnified party for anything done or omitted by the Rights
Agent or such other indemnifed party in connection with the acceptance and
administration of this Rights Agreement or the exercise or performance
of its duties hereunder, including the costs and expenses of defending
against any claim of liability in the premises. The indemnity provided
for herein shall survive the expiration of the Rights and the termination
of this Rights Agreement. The Rights Agent shall be fully protected
and shall incur no liability for, or in respect of any action taken,
suffered or omitted by it in connection with, its administration of
this Rights Agreement or the exercise or performance of its duties
hereunder inreliance upon any Right Certificate or certificate for Company
Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper Person or Persons, or otherwise
upon the advice of counsel as set forth in Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT
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 stock transfer or all
or substantially all of the corporate trust 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 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 Right 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.
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; and 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; and
22
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 or its own in-house
counsel), and the written advice or 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 written advice or 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 any one of the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full 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 to the
Company and any other Person only for its own gross negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Rights Agreement or in the Right Certificates (except its
countersignature on such Right Certificates) 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 any provision 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 it be responsible for any change
in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 11(a)(iv) hereof) or any
adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for herein, or the ascertaining
of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced
by Right Certificates after actual notice that such change or adjustment
is required); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation
of Company Common Stock to be issued pursuant to this Rights Agreement
or any Right Certificate or as to whether any Company Common Stock
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
23
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the
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 by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for
those instructions.
Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth
in writing any action consistent with the terms of this Rights
Agreement proposed to be taken by the Rights Agent under this
Agreement and the date on or after which such action shall be taken.
The Rights Agent shall not be liable for any action consistent with
the terms of this Rights Agreement taken by the Rights Agent in
accordance with a proposal included in any such application on or
after the date specified in such application (which date shall not
be less than five Business Days after the date any officer of the
Company actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior
to taking any such action, the Rights Agent shall have received
written instructions in response to such application specifying the
action to be taken.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Rights Agreement; provided that neither the
Rights Agent nor any Affiliate of the Rights Agent may act in
such manner on behalf of or in concert with an Acquiring Person,
or its agents or Affiliates. 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) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or
obligations shall be read into this Agreement against the Rights Agent.
24
(k) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kindi whatsoever (including but
not limited to lost profits).
(l) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnication against such risk
or liability is not reasonably assured to it.
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 Company Common Stock by registered or certified
mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor
Rights Agent 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 Company Common Stock by registered or
certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered
holder 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 of
the United States, in good standing, which is authorized under
such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $25 million, or
(b) an affiliate of 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 Company
Common 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.
25
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 Purchase Price and the number or
kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with
the provisions of this Rights Agreement. In addition, in
connection with the issuance or sale of Company Common Stock
following the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date, the Company (a)
shall with respect to Company Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee
plan or arrangement, or upon the exercise, conversion or exchange
of securities, notes or debentures issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Right Certificates
representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) the Company
shall not be obligated to issue any such Right Certificates if,
and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom
such Right Certificate would be issued, and (ii) no Right
Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
SECTION 23. REDEMPTION
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier to occur of (i) the
Distribution Date or (ii) the Final Expiration Date, redeem all
but not less than all of the then outstanding Rights at an
initial redemption price of $.01 per Right ("Redemption Price").
The Redemption Price shall be appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring
after the date hereof. The redemption of the Rights by the Board
of Directors may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole
discretion may establish.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights pursuant to
paragraph (b) of this Section 23 and without any further action
and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within
10 days after such action of the Board of Directors ordering the
redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights 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 Company Common Stock.
Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23
26
or in Section 24 hereof, and other than in connection with the purchase of
Company Common Stock prior to the Distribution Date.
SECTION 24. EXCHANGE
(a) The Board of Directors of 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 that have become void
pursuant to the provisions of Section 11(a)(iv) hereof) for
Company Common Stock at an exchange ratio of one share of Company
Common Stock per Right of the same kind, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or
any entity holding Company Common Stock for or pursuant to the
terms of any such plan or any trust agreement entered into by the
Company to secure benefits payable under any employee benefit
plan of the Company or any Subsidiary of the Company), together
with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of Company Common Stock representing 50% or more
of the kind of Company Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action
and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of the kind of shares of
Company Common Stock equal to the number of such kind of Rights
held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of Company Common Stock for
Rights will be effected and, in the event of any partial exchange, the
number and kind of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights being exchanged
(other than Rights which have become void pursuant to the provisions of
Section 11(a)(iv) hereof) held by each holder of such Rights.
(c) In the event that there shall not be sufficient Company
Common Stock (i) issued but not outstanding or (ii) authorized
but unissued, to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Company Common
Stock for issuance upon exchange of the Rights.
27
SECTION 25. NOTICE OF CERTAIN EVENTS
(a) In case the Company, following the Distribution Date,
shall propose (i) to pay any dividend payable in stock of any
class or series to holders of Company Common Stock or to make any
other distribution to holders of Company Common Stock (other than
a regular quarterly cash dividend), (ii) to offer to holders of
Company Common Stock rights or warrants to subscribe for or to
purchase any additional Company Common Stock or any other
securities, rights or options, (iii) to effect any
reclassification of Company Common Stock (other than a
reclassification involving only the subdivision of outstanding
Company Common Stock), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of
the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person (other than the Company
and/or any of its Subsidiaries in one or more transactions each
of which does not violate Section 11(n) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice
of such proposed action to the extent feasible, which shall
specify the record date for the purposes of such stock dividend,
or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the
date of participation therein by holders of Company Common Stock
if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining
holders of Company Common 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 holders of Company Common 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 of the events set forth in Section
11(a)(iv) 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)(iv) 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 any Right
Certificate to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent)
as follows:
CT Communications, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
28
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 any Right Certificate to or on
the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
First Union National Bank
▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Shareholders Services
Notices or demands authorized by this Rights Agreement to be
given or made by the Company or the Rights Agent to the holder of
any Right Certificate shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS
Prior to the Distribution Date, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend any
provision of this Rights Agreement without the approval of any
holders of certificates representing Company Common Stock. From
and after the Distribution Date, the Company 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 in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder or (iv) to
change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this
Rights Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable, or (B) any other time period
unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights. Without limiting the foregoing, the
Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Rights Agreement to lower the thresholds
set forth in Sections 1(a) and 3(a) hereof from 15% to not less than
the greater of (i) any percentage greater than the largest percentage
of the then outstanding Company Voting Common Stock or Company Nonvoting
Common Stock, as the case may be, then known by the Company to be
beneficially owned by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any Subsidiary
of the Company, any entity holding Company Voting Common Stock or
Company Nonvoting Common Stock for or pursuant to the terms of
any such plan, ▇.▇. ▇▇▇▇▇▇▇▇ III or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇) together
with all Affiliates or Associates of such Person, or (ii) 10%.
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, provided
that such supplement or amendment does not adversely affect the
rights or obligations of the Rights Agent under this Rights Agreement.
Prior to the Distribution Date, the interests of the
29
holders of Rights shall be deemed coincident with the interests of
the holders of Company Common Stock.
SECTION 28. SUCCESSORS
All 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. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS
For all purposes of this Rights Agreement, any calculation
of the number of shares of Company Common Stock outstanding at
any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall
be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company shall have
the exclusive power and authority to administer this 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 Rights Agreement, and (ii) make
all determinations deemed necessary or advisable for the
administration of this Rights Agreement (including a
determination to redeem or not redeem the Rights or to amend the
Rights Agreement or a determination that an adjustment to the
Redemption Price or Exchange Ratio is or is not appropriate). 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 in
good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board to any liability to
the holders of the Rights.
SECTION 30. 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 Company Common Stock) 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
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Company Common Stock).
SECTION 31. 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.
30
SECTION 32. GOVERNING LAW
THIS RIGHTS AGREEMENT AND EACH RIGHT CERTIFICATE ISSUED
HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NORTH CAROLINA AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH
STATE APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY
WITHIN SUCH STATE.
SECTION 33. 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 34. 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.
31
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their behalf as of the date
first above written.
CT COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
FIRST UNION NATIONAL BANK, as
Rights Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
32
EXHIBIT A-1
FORM OF RIGHT CERTIFICATE
(Voting Common Stock)
Certificate No. R- ______ ______Rights
NOT EXERCISABLE AFTER AUGUST 27, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
CT COMMUNICATIONS, 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
August 27, 1998 (the " Rights Agreement"), between CT
Communications, Inc., a North Carolina corporation (the
"Company"), and First Union National Bank (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., Charlotte, North Carolina time, on August 27, 2008,
at the principal office of the Rights Agent, or at the office of
its successor as Rights Agent, one fully paid non-assessable
share of CT Communications, Inc. Voting Common Stock (the
"Stock"), at a purchase price of $500 per share (the
"Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the
number of shares of Stock which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of August 28, 1998 (the
"Record Date") based on the shares of Stock of the Company as
constituted at such date. As provided in the Rights Agreement,
the Purchase Price and the number of shares of 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.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at
the principal executive offices of the Company and the
above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Certificates of like tenor and date evidencing Rights entitling
the holder to purchase a like aggregate number of
A-1-1
shares of Stock as the Rights evidenced by the Right Certificate
or 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
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Right Certificate (i) may be redeemed by
the Company at its option at a redemption price of $.01 per Right
or (ii) may be exchanged in whole or in part for shares of Stock.
No fractional shares of Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of the shares of 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 any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in
the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this
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.
Witness the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of ___________, _____.
ATTEST: CT COMMUNICATIONS, INC.
__________________ By: _____________________________
Name:____________________________
Title:___________________________
Countersigned:
FIRST UNION NATIONAL BANK
By:_______________________________
Name:_____________________________
Title:____________________________
A-1-2
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)
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 Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
- - - - - - - - - - - - - - - - - - - - - - - - -
A-1-3
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are
[ ] are not beneficially owned by an Acquiring Person or an
Affiliate or an Associate thereof (as defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] 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.
Dated: ________________________
_______________________________
Signature
Signature Guaranteed:
______________________________________________________________________
NOTICE
The signature in the foregoing Assignment and Certificate
must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above is not
completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Right
Certificates issued in exchange for this Right Certificate.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF RIGHT CERTIFICATE
(Class B Nonvoting Common Stock)
Certificate No. R- ______ ______Rights
NOT EXERCISABLE AFTER AUGUST 27, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
CT COMMUNICATIONS, 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
August 27, 1998 (the " Rights Agreement"), between CT
Communications, Inc., a North Carolina corporation (the
"Company"), and First Union National Bank (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., Charlotte, North Carolina time, on August 27, 2008,
at the principal office of the Rights Agent, or at the office of
its successor as Rights Agent, one fully paid non-assessable
share of CT Communications, Inc. Class B Nonvoting Common Stock
(the "Stock"), at a purchase price of $500 per share (the
"Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the
number of shares of Stock which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of August 28, 1998 (the
"Record Date") based on the shares of Stock of the Company as
constituted at such date. As provided in the Rights Agreement,
the Purchase Price and the number of shares of 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.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at
the principal executive offices of the Company and the
above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Certificates of like tenor and date evidencing Rights entitling
the holder to purchase a like aggregate number of
A-2-1
shares of Stock as the Rights evidenced by the Right Certificate or
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 Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Right Certificate (i) may be redeemed by
the Company at its option at a redemption price of $.01 per Right
or (ii) may be exchanged in whole or in part for shares of Stock.
No fractional shares of Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of the shares of 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 any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in
the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this
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.
Witness the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of ___________, _____.
ATTEST: CT COMMUNICATIONS, INC.
__________________ By:__________________________________
Name:________________________________
Title:_______________________________
Countersigned:
FIRST UNION NATIONAL BANK
By:_____________________________
Name:___________________________
Title:__________________________
A-2-2
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)
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 Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
- - - - - - - - - - - - - - - - - - - - - - - - -
A-2-3
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are
[ ] are not beneficially owned by an Acquiring Person or an
Affiliate or an Associate thereof (as defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] 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.
Dated: ____________________
____________________________________
Signature
Signature Guaranteed:
_____________________________________________________________________________
NOTICE
The signature in the foregoing Assignment and Certificate
must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above is not
completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Right
Certificates issued in exchange for this Right Certificate.
A-2-4
EXHIBIT B
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Right Certificate.)
To: CT Communications, Inc.
The undersigned hereby irrevocably elects to exercise
_____________ Rights represented by this Right Certificate to
purchase the Company Common Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any
other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such
Company Common Stock be issued in the name of and delivered to:
(Please print name and address)
_____________________________________________________________
_____________________________________________________________
Please insert social security
or other identifying number: _________________________________
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for
the balance of such Rights shall be registered in the name of and
delivered to:
(Please print name and address)
_________________________________________________________________
_________________________________________________________________
Please insert social security
or other identifying number: _________________________________
Dated: _____________________
_________________________________
Signature
Signature Guaranteed:
B-1
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are
[ ] are not beneficially owned by an Acquiring Person or an
Affiliate or an Associate thereof (as defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] 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.
Dated: _____________________
__________________________________
Signature
Signature Guaranteed:
_____________________________________________________________________________
NOTICE
The signature in the foregoing Election to Purchase and
Certificate must conform to the name as written upon the face of
this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above is not
completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and, in the case of an Assignment, will affix
a legend to that effect on any Right Certificates issued in exchange
for this Right Certificate.
B-2
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
On August 27, 1998, the Board of Directors of CT
Communications, Inc. (the "Company") adopted a Rights Agreement
(the "Rights Agreement") and authorized and declared a dividend
of one common share purchase right (a "Right") for each
outstanding share of (i) Voting Common Stock of the Company (the
"Company Voting Common Stock") and (ii) Class B Nonvoting Common
Stock of the Company (individually, the "Company Nonvoting Common
Stock" and together with the Company Voting Common Stock, the
"Company Common Stock"). The dividend is payable (i) on August
28, 1998 to the shareholders of record on that date (the "Record
Date") and (ii) with respect to Company Common Stock issued
thereafter until the Distribution Date (as hereinafter defined)
or the expiration or earlier redemption or exchange of the
Rights.
Except as set forth below, each Right entitles the
registered holder to purchase from the Company, at any time after
the Distribution Date, one share of Company Voting Common Stock
at a price per share of $500, in the event the Right was
distributed with respect to Company Voting Common Stock, or one
share of Company Nonvoting Common Stock at a price per share of
$500, in the event the Right was distributed with respect to
Company Nonvoting Common Stock, in each case subject to
adjustment (each applicable per share purchase price referred to
herein separately and together as the "Purchase Price"). The
description and terms of the Rights are as set forth in the
Rights Agreement.
Initially, the Rights will be attached to all certificates
representing Company Common Stock then outstanding, and no
separate Right Certificates will be distributed. The Rights will
separate from the Company Common Stock upon the earlier to occur
of (i) 10 days after the public announcement of a person's or
group of affiliated or associated persons' (other than ▇.▇.
▇▇▇▇▇▇▇▇ III, Chairman of the Board of the Company, or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, President and Chief Executive Officer of the Company)
having acquired beneficial ownership of 15% or more of (X) the
outstanding Company Voting Common Stock or (Y) the outstanding
Company Nonvoting Common Stock (such person or group being
hereinafter referred to as an "Acquiring Person"), or (ii) 10
days (or such later date as the Board may determine) following
the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would
result in a person or group's becoming an Acquiring Person (the
earlier of such dates being called the "Distribution Date").
Until the Distribution Date, the Rights will be transferred
with, and only with, the Company Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), new Company Common Stock certificates issued after the
Record Date upon transfer or new issuance of Company Common Stock
will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Company Common Stock outstanding as of the
Record Date, even without such notation or a copy of this Summary
of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Company 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 Company Common Stock as of the close of business on the
Distribution Date (and to each initial record holder of certain
Company Common Stock issued after the Distribution Date), and
such separate Right Certificates alone will evidence the Rights.
The Rights will expire on August 27, 2008 (the "Final
Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below.
The Rights initially are not exercisable. In the event that
any person becomes an Acquiring Person (except pursuant to a
tender or exchange offer that is for all outstanding Company
Common Stock at a price and on terms which a majority of certain
members of the Board of Directors determines to be adequate and
in the best interests of the Company, its shareholders and other
relevant constituencies, other than such Acquiring Person, its
affiliates and associates (a "Permitted Offer")), each holder of
a Right will thereafter have the right (the "Flip-In Right") to
receive, upon exercise and payment of the applicable Purchase
Price, Company Common Stock of the applicable class having a
value equal to two times the applicable Purchase Price.
Notwithstanding the foregoing, all Rights that are, or were,
beneficially owned by any Acquiring Person or any affiliate or
associate thereof will be null and void and not exercisable.
In the event that, at any time following the Distribution
Date, (i) the Company is acquired in a merger or other business
combination transaction in which the holders of all of the
outstanding Company Voting Common Stock immediately prior to the
consummation of the transaction are not the holders of all of the
surviving corporation's voting power, or (ii) more than 50% of
the Company's assets or earning power is sold or transferred,
then each holder of a Right (except Rights which have previously
been voided as set forth above) shall thereafter have the right
(the "Flip-Over Right") to receive, upon exercise and payment of
the applicable Purchase Price, common stock of the acquiring
company having a value equal to two times the applicable Purchase
Price. If a transaction would otherwise result in a holder's
having a Flip-In as well as a Flip-Over Right, then only the
Flip-Over Right will be exercisable; if a transaction results in
a holder's having a Flip-Over Right subsequent to a transaction
resulting in a holder's having a Flip-In Right, a holder will
have Flip-Over Rights only to the extent such holder's Flip-In
Rights have not been exercised.
The Purchase Price payable, and the number of shares of
Company Common Stock or other securities or property issuable,
upon exercise of 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 Company
Common Stock, (ii) upon the grant to holders of Company Common
Stock of certain rights or warrants to subscribe for or purchase
Company Common Stock at a price, or securities convertible into
Company Common Stock with a conversion price, less than the then
current market price of Company Common Stock, or (iii) upon the
distribution to holders of Company Common Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in
Company Common Stock) or of subscription rights or warrants
(other than those referred to above). However, no adjustment in
the Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1%. No fractional shares of
Company Common Stock will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of
Company Common Stock on the last trading day prior to the date of
exercise.
At any time prior to the earlier to occur of (i) the
Distribution Date and (ii) the Final Expiration Date, the Board
of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at
such time on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon
any 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 in cash.
At any time after any person becomes an Acquiring Person and
prior to the acquisition by such person or group of Company
Voting Common Stock representing 50% or more of the then
outstanding Company Voting Common Stock, the Board of Directors
of the Company may exchange the Rights (other than Rights which
have become null and void), in whole or in part, at an exchange
ratio of one share of such applicable kind of Company Common
Stock per Right (subject to adjustment).
All of the provisions of the Rights Agreement may be amended
prior to the Distribution Date by the Board of Directors of the
Company, without the consent of the holders of the Rights, for
any reason it deems appropriate. After the Distribution Date,
the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, defect or inconsistency, to
make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring
Person), or, subject to certain limitations, to shorten or
lengthen any time period under the Rights Agreement. Without
limiting the foregoing, prior to the time any person becomes an
Acquiring Person, the Board of Directors is also authorized, as
it deems appropriate, to lower the thresholds required to become
an Acquiring Person to not less than the greater of (i) any
percentage greater than the largest percentage then held by any
shareholder other than ▇.▇. ▇▇▇▇▇▇▇▇ III or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
or (ii) 10%.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
Although the distribution of the Rights will not be taxable
to shareholders of the Company, shareholders may, depending upon
the circumstances, recognize taxable income should the Rights
become exercisable or upon the occurrence of certain events
thereafter.
The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that
attempts to acquire the Company on terms not approved by the
Company's Board of Directors. The Rights should not interfere
with any merger or other business combination approved by the
Board of Directors because the Rights may be redeemed by the
Company at the Redemption Price prior to the date that is 10 days
after the public announcement that a person or group has become
the beneficial owner of 15% or more of a class of the Common
Stock.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to the Company's
Registration Statement on Form 8-A with respect to the Rights
filed with the Securities and Exchange Commission (Commission
File No. 0-19179 ). 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 hereby