EXHIBIT 4.1
RIGHTS AGREEMENT
Dated as of December 23, 2003
between
MERCER INTERNATIONAL INC.
and
COMPUTERSHARE TRUST COMPANY OF CANADA
as Rights Agent
TABLE OF CONTENTS
PAGE
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1. Certain Definitions 1
2. Appointment of Rights Agent 6
3. Issuance of Rights Certificates 6
4. Form of Rights Certificates 8
5. Countersignature and Registration 9
6. Transfer, Split Up, Combination and 9
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates
7. Exercise of Rights; Purchase Price; 10
Expiration Date of Rights
8. Cancellation and Destruction of 12
Rights Certificates
9. Reservation and Availability of 12
Preferred Shares
10. Preferred Shares Record Date 13
11. Adjustment of Purchase Price, Number 14
of Shares or Number of Rights
12. Certificate of Adjusted Purchase Price 21
or Number of Shares
13. Consolidation, Merger or Sale or Transfer 21
of Assets or Earning Power
14. Fractional Rights and Fractional Shares 24
15. Rights of Action 25
16. Agreement of Rights Holders 26
17. Rights Certificate Holder Not 26
Deemed a Shareholder
18. Concerning the Rights Agent 27
19. Merger or Consolidation or Change 27
of Name of Rights Agent
20. Duties of Rights Agent 28
21. Change of Rights Agent 30
22. Issuance of New Rights Certificates 31
23. Redemption 31
24. Exchange 32
25. Notice of Certain Events 34
26. Notices 34
27. Supplements and Amendments 35
28. Successors 35
29. Determinations and Actions by the 35
Board of Trustees, etc.
30. Benefits of this Agreement 36
31. Severability 36
32. Governing Law 36
33. Counterparts 36
34. Descriptive Headings 37
EXHIBITS
A Articles of Amendment to Declaration A-1
of Trust of Mercer International Inc.
B Form of Rights Certificate B-1
C Summary of Rights C-1
(i)
MERCER INTERNATIONAL INC.
RIGHTS AGREEMENT
Rights Agreement, dated as of December 23, 2003 (the "AGREEMENT"), between
Mercer International Inc., a Massachusetts trust organized under the laws of the
state of Washington (the "COMPANY"), and Computershare Trust Company of Canada,
a Canadian limited liability company, as Rights Agent (the "RIGHTS AGENT").
RECITALS
On November 11, 2003, the Board of Trustees of the Company authorized and
declared a dividend of one preferred share purchase right (a "RIGHT") for each
Common Share of the Company outstanding as of the Close of Business on December
31, 2003 (the "RECORD DATE"), each Right representing the right to purchase one
one-hundredth of a Preferred Share (as such number may be adjusted pursuant to
the provisions of this Agreement), having the rights, preferences and privileges
set forth in the Declaration of Trust (a copy of the Articles of Amendment to
the Declaration of Trust filed on August 17, 1993 creating the Preferred Shares
and setting forth the rights, preferences and privileges of the Preferred Shares
is attached to this Agreement as Exhibit A), upon the terms and subject to the
conditions herein set forth, and further authorized and directed the issuance of
one Right (as such number may be adjusted pursuant to the provisions of this
Agreement) with respect to each Common Share that shall become outstanding
between the Record Date and the earlier of the Distribution Date and the
Expiration Date, and in certain circumstances after the Distribution Date.
AGREEMENT
Accordingly, in consideration of the premises and the mutual agreements herein
set forth, the parties agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement (including the
recitals hereto), the following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the aggregate of the Common Shares of the Company then
outstanding and the Issuable Note Shares, but shall not include the Company, any
Subsidiary of the Company or any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person holding Common Shares for or pursuant
to the terms of any such plan.
Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring
Person as the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% or more of the aggregate of the
Common Shares of the Company then outstanding and the Issuable Note Shares;
provided, however, that if a Person shall become the Beneficial Owner of 15% or
more of the aggregate of the Common Shares of the Company then outstanding and
the Issuable Note Shares by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any
additional
Common Shares of the Company (other than pursuant to a dividend or
distribution paid or made by the Company on its outstanding Common Shares in
Common Shares or pursuant to a split or subdivision of the outstanding Common
Shares), then such Person shall be deemed to be an Acquiring Person unless upon
becoming the Beneficial Owner of such additional Common Shares of the Company
such Person does not beneficially own 15% or more of the aggregate of the Common
Shares of the Company then outstanding and the Issuable Note Shares.
Notwithstanding the foregoing, if the Board of Trustees determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this Section 1(a), has become such inadvertently
(including, without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of the Common Shares that would otherwise cause
such Person to be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this Section 1(a) or (B) such Person was aware of the extent of
the Common Shares it beneficially owned but had no actual knowledge of the
consequences of such beneficial ownership under this Agreement), and without any
intention of changing or influencing control of the Company, and if such Person
divested or divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this Section 1(a), then such Person
shall not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement.
(b) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement.
(c) A Person shall be deemed the "BENEFICIAL OWNER" of and shall be
deemed to "BENEFICIALLY OWN" any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, for purposes of Section 13(d) of the
Exchange Act and Rule 13d-3 thereunder (or any comparable or successor law or
regulation);
(ii) which such Person or any of such Person's Affiliates or Associates
has the right, directly or indirectly, (whether such right is exercisable
immediately or only after the passage of time or upon satisfaction of any
conditions or both):
(A) to acquire pursuant to any agreement, arrangement or
understanding, whether or not in writing (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering or an offering pursuant to Rule 144A and/or Regulation S of the
Securities Act), or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed pursuant to this Section l(c)(ii)(A)
to be the Beneficial Owner of, or to beneficially own, (1) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange or (2) securities which a Person or any of
such Person's Affiliates or Associates may be deemed to have the right to
acquire pursuant to any merger or other acquisition agreement between the
Company and such Person (or one or more of its Affiliates or Associates) if such
agreement has been approved by the Board of Trustees prior to a Triggering
Event; or
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(B) to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security under this Section l(c)(ii)(B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person or
any of such Person's Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering or an offering pursuant to Rule 144A and/or Regulation S under
the Securities Act) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section l(c)(ii)(B)) or disposing of any
securities of the Company; provided, however, that in no case shall an officer
or trustee of the Company be deemed (x) the Beneficial Owner of any securities
beneficially owned by another officer or trustee of the Company solely by reason
of actions undertaken by such Persons in their capacity as officers or trustees
of the Company or (y) the Beneficial Owner of securities held of record by the
trustee of any employee benefit plan of the Company or any Subsidiary of the
Company for the benefit of any employee of the Company or any Subsidiary of the
Company, other than the officer or trustee, by reason of any influence that such
officer or trustee may have over the voting of the securities held in the plan.
(d) "BOARD OF TRUSTEES" shall mean the Board of Trustees of the Company
then in office.
(e) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of Washington or the Province
of British Columbia are authorized or obligated by law or executive order to
close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 4:30 p.m.,
Seattle, Washington time, on such date; provided, however, that if such date is
not a Business Day it shall mean 4:30 p.m., Seattle, Washington time, on the
next succeeding Business Day.
(g) "COMMON SHARES" when used with reference to the Company shall mean
the shares of beneficial interest of the Company, as authorized in the Company's
Declaration of Trust. "COMMON SHARES" when used with reference to any Person
other than the Company shall mean the capital stock (or equity interest) with
the greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(h) "DECLARATION OF TRUST" shall mean the Company's restated
declaration of trust dated June 11, 1990, as amended effective January 1, 1992,
July 8, 1993, August 17, 1993 and September 9, 1993, and as further or otherwise
amended, restated, or replaced from time to time;
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(i) "DISTRIBUTION DATE" shall mean the earlier of (i) the Close of
Business on the tenth day (or such later date as may be determined by action of
a majority of the Board of Trustees) after the Shares Acquisition Date (or, if
the tenth day after the Shares Acquisition Date occurs before the Record Date,
the Close of Business on the Record Date) or (ii) the Close of Business on the
tenth day (or such later date as may be determined by action of a majority of
the Board of Trustees) after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
organized, appointed or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act, if,
assuming the successful consummation thereof, such Person would be the
Beneficial Owner of 15% or more of the aggregate of the Common Shares of the
Company then outstanding and the Issuable Note Shares.
(j) "EQUIVALENT SHARES" shall mean Preferred Shares and any other class
or series of capital stock of the Company that is entitled to participate in
dividends and other distributions, including distributions upon the liquidation,
dissolution or winding up of the Company, on a proportional basis with the
Common Shares. In calculating the number of any class or series of Equivalent
Shares for purposes of Section 11 of this Agreement, the number of shares, or
fractions of a share, of such class or series of capital stock that is entitled
to the same dividend or distribution as a whole Common Share shall be deemed to
be one share.
(k) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "EXPIRATION DATE" shall mean the earliest of (i) the Close of
Business on the Final Expiration Date, (ii) the Redemption Date, (iii) the time
at which the Board of Trustees orders the exchange of the Rights as provided in
Section 24 of this Agreement or (iv) the consummation of a transaction
contemplated by Section 13(a) of this Agreement.
(m) "FINAL EXPIRATION DATE" shall mean December 31, 2005.
(n) "ISSUABLE NOTE SHARES" shall mean Common Shares of the Company into
which the then outstanding Notes are convertible as if the then outstanding
Notes had been fully converted;
(o) "NASDAQ" shall mean the Nasdaq Stock Market.
(p) "NOTES" shall mean the 8.5% Convertible Senior Subordinated Notes
due 2010 of the Company issued pursuant to an indenture made between the Company
and Wells Fargo Bank, Minnesota, N.A., as trustee, dated October 10, 2003 (as it
may be amended from time to time).
(q) "PERSON" shall mean any individual, firm, corporation, limited
liability company, partnership, limited partnership, trust, joint venture or
other entity, and shall include any successor (by merger or otherwise) thereof
or thereto.
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(r) "POST TRANSFERREE" shall have the meaning set forth in Section 7(e)
of this Agreement.
(s) "PREFERRED SHARES" shall mean shares of Series A Junior
Participating Preferred Stock of the Company.
(t) "PRINCIPAL PARTY" shall have the meaning set forth in Section 13(b)
of this Agreement.
(u) "PRIOR TRANSFERREE" shall have the meaning set forth in Section
7(e) of this Agreement.
(v) "PURCHASE PRICE" shall have the meaning set forth in Section 4(a)
of this Agreement.
(w) "RECORD DATE" shall have the meaning set forth in the recitals at
the beginning of this Agreement.
(x) "REDEMPTION DATE" shall mean the time at which the Board of
Trustees orders redemption of the Rights as provided in Section 23 of this
Agreement.
(y) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a) of this Agreement.
(z) "RIGHT" shall have the meaning set forth in the recitals at the
beginning of this Agreement.
(aa) "RIGHTS CERTIFICATE" shall have the meaning set forth in Section
3(a) of this Agreement.
(bb) "SECTION 13 EVENT" shall mean any event described in clause (i),
(ii) or (iii) of Section 13(a) of this Agreement.
(cc) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(dd) "SHARES ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a press release or a publicly available report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such; provided that, if such person is determined
not to have become an Acquiring Person pursuant to Section l(a) of this
Agreement, then no Shares Acquisition Date shall be deemed to have occurred.
(ee) "SUBSIDIARY" of any Person shall mean any Person of which an
amount of voting securities sufficient to elect a majority of the directors,
trustees or Persons having similar authority of such Person is beneficially
owned, directly or indirectly, by such Person, or any Person otherwise
controlled by such Person.
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(ff) "SUMMARY OF RIGHTS" shall have the meaning set forth in Section
3(b) of this Agreement.
(gg) "TOTAL EXERCISE PRICE" shall have the meaning set forth in Section
4(a) of this Agreement.
(hh) "TRADING DAY" shall have the meaning set forth in Section 11(d) of
this Agreement.
(ii) A "TRIGGERING EVENT" shall be deemed to have occurred upon any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any Person
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becoming an Acquiring Person.
2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights
Agent to act as rights agent for the Company in accordance with the terms and
conditions of this Agreement, 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. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Sections 3(b) and 3(c) of this Agreement) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates and (ii) the right to receive Rights Certificates
will be transferable only in connection with the transfer of Common Shares.
Until the earlier of the Distribution Date or the Expiration Date, the surrender
for transfer of such certificates for Common Shares shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested
and provided with all necessary information, send) by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Rights Certificate in substantially the form of
Exhibit B to this Agreement (a "RIGHTS CERTIFICATE"), evidencing one Right for
each Common Share so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per Common Share has been made
pursuant to Section 11(a)(i), Section 11(i) or Section 11(p) of this Agreement,
then at the time of distribution of the Rights Certificates, the Company shall
make the necessary and appropriate rounding adjustments (in accordance with
Section 14(a) of this Agreement) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and apart
from any transfer of one or more Common Shares, and the holders of such Rights
Certificates as listed in the records of the Company or any transfer agent or
registrar for the Rights shall be the
6
record holders thereof. The Company shall promptly notify the Rights Agent in
writing upon the occurrence of the Distribution Date and, if such notification
is given orally, the Company shall confirm the same in writing on or prior to
the next following Business Day. Until such notice is received by the Rights
Agent, the Rights Agent may presume conclusively for all purposes that the
Distribution Date has not occurred.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send (or cause to be sent) a copy of a Summary of Rights in
substantially the form of Exhibit C to this Agreement (the "SUMMARY OF RIGHTS"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company.
(c) Unless the Board of Trustees, by resolution adopted at or before
the time of the issuance (including pursuant to the exercise of rights under the
Company's benefit plans) of any Common Shares, specifies to the contrary, Rights
shall be issued in respect of all Common Shares that are issued after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date
or, in certain circumstances provided in Section 22 of this Agreement, after the
Distribution Date. Certificates representing such Common Shares shall also be
deemed to be certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain rights
("RIGHTS") as set forth in a Rights Agreement between Mercer International Inc.
("MERCER") and Computershare Trust Company of Canada, as Rights Agent, dated as
of December 23, 2003 (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 Mercer. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. Mercer will mail to the holder
of this certificate a copy of the Rights Agreement without charge after receipt
of a written request therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof) shall
be substantially in the form of
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Exhibit B to this Agreement and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate (but which do not affect the rights, duties or
responsibilities of the Rights Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of Nasdaq or any stock exchange on which the Rights may from
time to time be listed or quoted, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 of this Agreement, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date (or in
the case of Rights issued with respect to Common Shares issued by the Company
after the Record Date, as of the date of issuance of such Common Shares), shall
show the date of countersignature by the Rights Agent, and on their face shall
entitle the holders thereof to purchase such number of one-hundredths of a
Preferred Share as shall be set forth therein at the price set forth therein
(such exercise price per one one-hundredth of a Preferred Share being
hereinafter referred to as the "PURCHASE PRICE" and the aggregate exercise price
of all Preferred Shares issuable upon exercise of one Right being hereinafter
referred to as the "TOTAL EXERCISE PRICE"), but the number and type of
securities purchasable upon the exercise of each Right and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 of this Agreement that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights or (B) a transfer that the Board of Trustees
has determined is part of a plan, arrangement or understanding that has as a
primary purpose or effect the avoidance of Section 7(e) of this Agreement, and
any Rights Certificate issued pursuant to Section 6 or Section 11 of this
Agreement upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent the
Rights Agent has notice thereof and to the extent feasible) the following
legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement between Mercer International Inc. and Computershare Trust Company
of Canada, as Rights Agent, dated as of December 23, 2003 (the "RIGHTS
AGREEMENT")). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified
in Section 7(e) of the Rights Agreement.
5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its President or any
Vice President, either manually or by facsimile signature, and by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature, and shall have affixed thereto the
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Company's seal (if any) or a facsimile thereof. The Rights Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the Person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Agreement any
such Person was not such an officer.
(b) Following the Distribution Date, receipt by the Rights Agent of
notice to that effect and all other relevant information referred to in Section
3(a) of this Agreement, the Rights Agent will keep or cause to be kept, at its
office designated for such purpose, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 14 and 24 of this
Agreement, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the Expiration Date, any Rights
Certificate or Rights Certificates (other than Rights Certificates representing
Rights that have become null and void pursuant to Section 7(e) hereof or that
have been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Rights Certificate or Rights Certificates,
entitling the registered holder to purchase a like number of one-hundredths of a
Preferred Share (or, following a Triggering Event, Common Shares, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Rights Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate or Rights Certificates until
the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company or the Rights Agent shall reasonably request. Thereupon the Rights Agent
shall, subject to Sections 7(e), 14 and 24 of this Agreement, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment from the holders of Rights Certificates of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates. The Rights Agent shall
have no duty or obligation to take any action under any Section of this
Agreement which requires the payment by
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a Rights holder of applicable taxes and governmental charges unless and until
the Rights Agent is satisfied that all such taxes and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security satisfactory to them, and, at the Company's or Rights Agent's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will make and
deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Sections 7(e), 23(b) or 24 of this Agreement, the
registered holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate, with the
form of election to purchase on the reverse side thereof duly executed and
properly completed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each one-hundredth of a Preferred Share as to which the Rights are exercised,
and an amount equal to any tax or charge required to be paid under Section 9(e)
hereof, at or prior to the Expiration Date.
(b) The Purchase Price for each one-hundredth of a Preferred Share
issuable pursuant to the exercise of a Right shall initially be $75.00, shall be
subject to adjustment from time to time as provided in Sections 11 and 13 of
this Agreement and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed and properly
completed, accompanied by payment of the Purchase Price for the number of
one-hundredths of a Preferred Share (or Common Shares or other securities or
property, as the case may be) to be purchased and an amount equal to any
applicable tax or charge required to be paid by the holder of such Rights
Certificate in cash, or by certified check or cashier's check payable to the
order of the Company, the Rights Agent shall, subject to Section 20(k) of this
Agreement, thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent
for the Preferred Shares) a certificate or certificates for the number of
one-hundredths of a Preferred Share to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests or
(B) if the Company shall have elected to deposit the total number of
one-hundredths of a Preferred Share issuable upon exercise of the Rights
hereunder with a depository agent, requisition from the depository agent of
depository receipts representing such number of one-hundredths of a Preferred
Share as are to be purchased (in which case certificates for the Preferred
Shares represented by such receipts shall be deposited by the transfer agent
with the depository agent) and the Company hereby directs the depository agent
to comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 of this Agreement, (iii) after receipt of such
certificates or depository receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered
in such name or names as
10
may be designated by such holder and (iv) when appropriate, after receipt
thereof, deliver such cash to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated to issue other
securities (including Common Shares) of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) of this Agreement, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Rights Certificate or to
such registered holder's duly authorized assigns, subject to the provisions of
Section 14 of this Agreement.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Triggering Event or a Section 13 Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such (a "POST TRANSFEREE"), (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board of Trustees has determined
is part of a plan, arrangement or understanding which has as a primary purpose
or effect the avoidance of this Section 7(e) (a "PRIOR TRANSFEREE") or (iv) any
subsequent transferee receiving transferred Rights from a Post Transferee or a
Prior Transferee, either directly or through one or more intermediate
transferees, shall become null and void without any further action and no holder
of such Rights shall have any rights whatsoever with respect to such Rights or
any Rights Certificate which formerly evidenced such Rights, whether under any
provision of this Agreement or otherwise, and neither the Company nor the Rights
Agent shall have any obligations whatsoever with respect to such Rights or any
Rights Certificate, whether under any provision of this Agreement or otherwise.
The Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) of this Agreement are complied with, but
neither the Company nor the Rights Agent shall have any liability to any holder
of Rights Certificates or to any other Person as a result of the Company making
or failing to make any determinations with respect to an Acquiring Person or any
of such Acquiring Person's Affiliates, Associates or transferees hereunder or
taking or failing to take any actions with respect to any Rights or Rights
Certificates of any such Person.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
properly completed and duly executed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) and/or Affiliates
and Associates thereof as the Company or the Rights Agent shall require.
11
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will use its best efforts
to cause to be reserved and kept available out of and to the extent of its
authorized and unissued shares of preferred stock not reserved for another
purpose (and, following the occurrence of a Triggering Event, out of its
authorized and unissued Common Shares and/or other securities), the number of
Preferred Shares (and, following the occurrence of the Triggering Event, Common
Shares and/or other securities) that will be sufficient to permit the exercise
in full of all outstanding Rights.
(b) If the Company shall hereafter list or have quoted any of its
Preferred Shares on a national securities exchange or on Nasdaq, then so long as
the Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) issuable and deliverable upon exercise of
the Rights may be listed or quoted on a national securities exchange or Nasdaq,
the Company shall use its reasonable best efforts to cause, from and after such
time as the Rights become exercisable (but only to the extent that it is
reasonably likely that the Rights will be exercised), all shares reserved for
such issuance to be listed on such exchange or quoted on Nasdaq upon official
notice of issuance upon such exercise.
(c) The Company shall use its reasonable best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence of a
Triggering Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Sections 11(a)(ii)
or 11(a)(iii) of this Agreement, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the Expiration Date. The Company may temporarily suspend, for a period not
to exceed one hundred and twenty (120) days after the date set forth in clause
(i) of the first sentence of this Section 9(c), the exercisability of the Rights
in order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating, and notify the Rights Agent in writing, that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement and written notification to the Rights Agent at such time as the
suspension is no longer in effect. The Company will also take such
12
action as may be appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states and provinces in connection with the
exercisability of the Rights. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction, unless
the requisite qualification in such jurisdiction shall have been obtained, or an
exemption therefrom shall be available, and until a registration statement has
been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all taxes and governmental charges which may be payable in
respect of the issuance or delivery of the Rights Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall not, however, be
required to pay any tax or charge which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of certificates or depository receipts for the Preferred
Shares in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depository receipts for Preferred Shares upon the exercise
of any Rights until any such tax or charge shall have been paid (any such tax or
charge being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's or the Rights
Agent's satisfaction that no such tax or charge is due.
10. PREFERRED SHARES RECORD DATE. Each Person in whose name any
certificate for a number of one-hundredths of a Preferred Share (or Common
Shares and/or securities as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
Preferred Shares (or Common Shares and/or securities as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price multiplied by the number of one-hundredths of a Preferred
Share (or Common Shares and/or securities as the case may be) with respect to
which the Rights have been exercised (and any applicable taxes or governmental
charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares (or Common Shares and/or
securities as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares (or Common Shares and/or securities as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to shares (including
Preferred Shares) for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS.
The Purchase Price, the number and kind of shares or other property covered by
each Right and the
13
number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares (by reverse stock split or otherwise) into a smaller number of
Common Shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11(a) and Section 7(e) of this Agreement: (1) each of
the Rights outstanding at the time of the record date for such dividend or the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted to that number of Rights (calculated to the nearest one
one-thousandth (1/1,000) of a Right) equal to a fraction (the "EXCHANGE RATIO"),
the numerator of which shall be the total number of Common Shares or shares of
capital stock issued in such dividend, subdivision, combination or
reclassification of the Common Shares outstanding immediately following such
dividend, subdivision, combination or reclassification and the denominator of
which shall be the total number of Common Shares outstanding immediately prior
to such time, and the number of Rights that shall thereafter be issued with
respect to each Common Share or share of such other capital stock that shall
become outstanding thereafter prior to the Distribution Date shall be equal to
the total number of outstanding Rights immediately after such event (as adjusted
pursuant to this clause (1)) divided by the total number of outstanding Common
Shares or shares of such other capital stock immediately after such event
(subject to further adjustment pursuant to the provisions of this Agreement);
(2) the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification shall be adjusted so that the Purchase Price thereafter shall
equal the result obtained by dividing the Purchase Price in effect immediately
prior to such time by the Exchange Ratio; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (3) the number of Preferred Shares or shares of
such other capital stock issuable upon the exercise of each Right shall remain
unchanged immediately after such event, but, in the event of a reclassification,
the kind of shares issuable upon the exercise of each Right immediately after
such reclassification shall be adjusted to be the kind of shares of such other
capital stock issued in such reclassification, rather than Preferred Shares. If
an event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) of this Agreement, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) of this Agreement.
(ii) Subject to Section 24 of this Agreement, in the event a Triggering
Event shall have occurred, then promptly following such Triggering Event, proper
provision shall be made so that each holder of a Right, except as provided in
Section 7(e) of this Agreement, shall thereafter have the right to receive for
each Right, upon exercise thereof in accordance with the terms of this Agreement
and payment of the then-current Total Exercise Price, in lieu of a number of
one-hundredths of a Preferred Share, such number of Common Shares of the Company
as shall equal the result obtained by multiplying the then-current Purchase
Price by the then number of one-hundredths of a Preferred Share for which a
Right was exercisable (or would have been exercisable if the Distribution Date
had occurred) immediately prior to the first
14
occurrence of a Triggering Event, and dividing that product by 50% of the
current per share market price (determined pursuant to Section 11(d) of this
Agreement) for Common Shares on the date of occurrence of the Triggering Event
(such number of shares being hereinafter referred to as the "ADJUSTMENT
SHARES"). The Company shall notify the Rights Agent when this Section 11(a)(ii)
applies.
(iii) In lieu of issuing Common Shares in accordance with Section 11(a)(ii)
of this Agreement, the Company may, if the Board of Trustees determines that
such action is necessary or appropriate and not contrary to the interest of
holders of Rights (and, in the event that the number of Common Shares which are
authorized by the Company's Declaration of Trust but not outstanding or reserved
for issuance for purposes other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights, the Company shall):
(A) determine the excess of (1) the value of the Common Shares issuable upon the
exercise of a Right (the "CURRENT VALUE") over (2) the Purchase Price (such
excess, the "SPREAD") and (B) with respect to each Right, make adequate
provision to substitute for such Common Shares, upon exercise of the Rights, (1)
cash, (2) a reduction in the Purchase Price, (3) other equity securities of the
Company (including, without limitation, shares or units of shares of any series
of preferred stock which the Board of Trustees has deemed to have the same value
as Common Shares (such shares or units of shares of Preferred Stock are herein
called "COMMON STOCK EQUIVALENTS"), (4) debt securities of the Company, (5)
other assets or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined by
the Board of Trustees based upon the advice of an investment banking firm
selected by the Board of Trustees (which determination shall be described in a
statement filed with the Rights Agent and shall be conclusive and binding on the
Rights Agent, the holders of the Rights and all other Persons); provided,
however, if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the later of (x)
the first occurrence of a Triggering Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later of
(x) and (y) being referred to herein as the "SECTION 11(A)(II) TRIGGER DATE"),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available), and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of Trustees shall
determine in good faith that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise in full of the Rights or
that any necessary regulatory approval for such issuance will be obtained, the
thirty (30) day period set forth above may be extended to the extent necessary
(with prompt written notice of such extension to the Rights Agent), but not more
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek shareholder approval for the authorization of such
additional shares or take action to obtain such regulatory approval (such
period, as it may be extended, the "SUBSTITUTION PERIOD"). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) of this Agreement, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any required
regulatory approval and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating, and notify the Rights Agent in writing, that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement and
written notification to the
15
Rights Agent at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Shares shall be the current
per share market price (as determined pursuant to Section 11(d) of this
Agreement) of the Common Shares on the Section 11(a)(ii) Trigger Date and the
value of any "common stock equivalent" shall be deemed to have the same value as
the Common Shares on such date.
(b) In case the Company shall, at any time after the date of this Agreement,
fix a record date for the issuance of rights, options or warrants to all holders
of Common Shares or of any class or series of Equivalent Shares entitling such
holders (for a period expiring within forty-five (45) calendar days after such
record date) to subscribe for or purchase Common Shares or Equivalent Shares or
securities convertible into Common Shares or Equivalent Shares at a price per
share (or having a conversion price per share, if a security is convertible into
Common Shares or Equivalent Shares) less than the then current per share market
price (as defined in Section 11(d) hereof) of the Common Shares or Equivalent
Shares on such record date, then, in each such case, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Common Shares and Equivalent Shares
(if any) outstanding on such record date, plus the number of Common Shares or
Equivalent Shares, as the case may be, which the aggregate offering price of the
total number of Common Shares or Equivalent Shares, as the case may be, so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market
price, and the denominator of which shall be the number of Common Shares and
Equivalent Shares (if any) outstanding on such record date, plus the number of
additional Common Shares or Equivalent Shares, as the case may be, to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in 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
Trustees, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive and binding on the Rights Agent, the
holders of the Rights and all other Persons. Common Shares and Equivalent Shares
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such
rights, options or warrants are not so issued, the 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, at any time after the date of this
Agreement, fix a record date for the making of a distribution to all holders of
the Common Shares or of any class or series of Equivalent Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend, if any, or a dividend
payable in Common Shares) or subscription rights, options or warrants (excluding
those referred to in Section 11(b) hereof), then, in each such case, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current per share market
price (as determined pursuant to Section 11(d) of this Agreement) of a Common
Share or an Equivalent Share on such record date, less the fair market value (as
determined in good faith by the Board of Trustees, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive and
binding on the Rights Agent, the holders of
16
the Rights and all other Persons) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights,
options or warrants applicable to a Common Share or Equivalent Share, as the
case may be, and the denominator of which shall be such current per share market
price of a Common Share or Equivalent Share on such record date. Such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) of this Agreement, the "current
per share market price" of any security (a "SECURITY" for the purpose of this
Section 11(d)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days immediately prior to but not including such date, and for purposes
of computations made pursuant to Section 11(a)(iii) of this Agreement, the
"current per share market price" of any Security on any date shall be deemed to
be the average of the daily closing prices per share of such Security for the
ten (10) consecutive Trading Days immediately prior to but not including such
date; provided, however, that in the event that the current per share market
price of the Security is determined during a period following the announcement
by the issuer of such Security of (i) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of the requisite thirty (30) Trading Day
or ten (10) Trading Day period, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the last sale price or,
if such last sale price is not reported, the average of the high bid and low
asked prices on Nasdaq, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System or, if the security is not quoted, the
last sale price or, if such last sale price is not reported, the average of the
high bid and low asked prices on the Toronto Stock Exchange, or, if the security
is not quoted, the last sale price or, if such last sale price is not reported,
the average of the high bid and low asked prices on the Over-the-Counter
Bulletin Board of the National Association of Securities Dealers, Inc. or such
other system then in use, or, if on any such date the Security 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 the Security
selected by the Board of Trustees. If on any such date no market maker is making
a market in the Common Shares, the fair value of such shares on such date as
determined in good faith by the Board of Trustees (which determination shall be
described in a statement filed with the Rights Agent and shall be conclusive and
binding on the Rights Agent, the holders of the Rights and all other Persons)
shall be used. The term "TRADING DAY" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange, a Business
Day. If the Common Shares are 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 Trustees, whose determination shall
17
be described in a statement filed with the Rights Agent and shall be conclusive
and binding for all purposes.
(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 not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a Common Share or other share or one
ten-thousandth of a Preferred Share, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years from the date of
the transaction which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Sections 11(a) or
13(a) of this Agreement, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right and if required, the Purchase Price thereof, shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares contained in
Sections 11(a), (b), (c), (e), (h), (i), (j), (k), (1) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b), each Right outstanding immediately prior to
the making of such adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of Preferred Shares (calculated to
the nearest one ten-thousandth of a share) obtained by (i) multiplying (x) the
number of Preferred Shares covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price as a result of the calculations made in Section 11(b) to adjust
the number of Rights, in substitution for any adjustment in the number of
Preferred Shares purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest ten-hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the
18
amount of the adjustment to be made, and shall promptly give the Rights Agent a
copy of such announcement. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 of this Agreement, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-hundredth of a Preferred Share and the number of
one-hundredths of a Preferred Share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par or stated value, if any, of the number of
one-hundredths of a Preferred Share issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue as
fully paid and nonassessable shares such number of one-hundredths of a Preferred
Share at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (with prompt written notice
thereof to the Rights Agent) until the occurrence of such event the issuing to
the holder of any Right exercised after such record date of the number of
one-hundredths of a Preferred Share and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of
one-hundredths of a Preferred Share 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 bill or other appropriate instrument evidencing
such holder's right to receive such additional shares (fractional or otherwise)
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, prior
to the Distribution Date, 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 any (i) consolidation or subdivision of
the Preferred or Common Shares, (ii) issuance wholly for cash of any Preferred
or Common Shares at less than the current per share market price, (iii)
issuance wholly for cash of
19
Preferred or Common Shares or securities which by their terms are convertible
into or exchangeable for Preferred or Common Shares, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred or Common Shares shall
not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, effect or permit to occur any Triggering Event or
Section 13 Event, if (i) at the time or immediately after such Triggering Event
or Section 13 Event there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits afforded by the Rights or (ii)
prior to, simultaneously with or immediately after such Section 13 Event, the
shareholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(b) of this Agreement shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Sections 23, 24 or 27 of this Agreement,
take (or permit to be taken) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, in the
event the Company shall at any time after the date of this Agreement (A) declare
a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares
(by reverse stock split or otherwise) into a smaller number of Preferred Shares,
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such event, except as otherwise provided in this
Section 11 and Section 7(e) of this Agreement: (1) each of the Rights
outstanding at the time of the record date for such dividend or the effective
date of such subdivision, combination or reclassification shall be
proportionately adjusted to that number of Rights (calculated to the nearest one
one-thousandth (1/1,000) of a Right) equal to a fraction (the "EXCHANGE
FRACTION"), the numerator of which shall be the total number of Preferred Shares
or shares of capital stock issued in such reclassification of the Preferred
Shares outstanding immediately following such time and the denominator of which
shall be the total number of Preferred Shares outstanding immediately prior to
such time, and the number of Rights that shall thereafter be issued with respect
to each Common Share or share of other capital stock that shall be issued in a
reclassification of the Common Shares prior to the Distribution Date shall be
equal to the total number of outstanding Rights immediately after such event (as
adjusted pursuant to this clause (1)) divided by the total number of outstanding
Common Shares or shares of such other capital stock immediately after such event
(subject to further adjustment pursuant to the provisions of this Agreement);
(2) the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification shall be adjusted so that the Purchase Price thereafter shall
equal the result obtained by dividing the Purchase Price in effect immediately
prior to such time by the Exchange Fraction; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (3) the number of one-hundredths of a Preferred
Share or share of such other capital stock issuable upon the exercise of each
Right shall remain
20
unchanged immediately after such event, but, in the event of a reclassification,
the kind of shares issuable upon the exercise of each Right immediately after
such reclassification shall be adjusted to be the kind of shares of such other
capital stock issued in such reclassification, rather than Preferred Shares.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13 of this
Agreement, the Company shall promptly (a) prepare a certificate setting forth
such adjustment and a brief statement of the computations and facts accounting
for such adjustment, (b) file with the Rights Agent and with each transfer agent
for the Preferred Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 26 of
this Agreement. Notwithstanding the foregoing sentence, the failure of the
Company to make such certification or give such notice shall not affect the
validity of such adjustment or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment or statement contained therein and shall have
no duty or liability with respect to, and shall not be deemed to have knowledge
of, any such adjustment unless and until it shall have received such
certificate.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, following the Shares Acquisition Date, directly
or indirectly:
(i) the Company shall consolidate with, or merge with and/or into, any
other Person (other than a Subsidiary of the Company in a transaction the
principal purpose of which is to change the state of incorporation of the
Company or that does not violate Section 11(o) of this Agreement);
(ii) any Person (other than a Subsidiary of the Company in a
transaction that does not violate Section 11(o) of this Agreement) shall
consolidate with the Company, or merge with and into the Company and the Company
shall be the continuing or surviving corporation of such consolidation or
merger; or
(iii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company or one or more of its wholly owned Subsidiaries
in one or more transactions, each of which does not violate Section 11(o) of
this Agreement),
then, and in each such case, proper provision shall be made so that
(A) each holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid and nonassessable Common Shares of the Principal Party
free of any liens, charges, encumbrances, security interests, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Triggering Event has occurred prior
to the first occurrence of a Section 13 Event,
21
multiplying the number of such one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to the first occurrence of a Triggering
Event by the Purchase Price in effect immediately prior to such first
occurrence) and (2) dividing that product (which, following the first occurrence
of a Section 13 Event, shall be referred to as the "TOTAL EXERCISE PRICE" for
each Right and for all purposes of this Agreement) by 50% of the current per
share market price (determined pursuant to Section 11(d) of this Agreement) of
the Common Shares of such Principal Party on the date of consummation of such
Section 13 Event;
(B) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement;
(C) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of
Section 11 of this Agreement shall apply only to such Principal Party following
the first occurrence of a Section 13 Event; and
(D) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of its Common Shares)
in connection with the consummation of any such transaction as may be necessary
to assure that the provisions of this Agreement shall thereafter be applicable,
as nearly as reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights.
(b) "PRINCIPAL PARTY" shall mean, in the case of any transaction
described in clause (i), (ii) or (iii) of Section 13(a), the Person referred to
therein or such Person's successor, including, if applicable, the Company, if it
is the surviving corporation, provided, however, that in any such case, (i) if
such Person is a direct or indirect Subsidiary of another Person, "Principal
Party" shall refer to such other Person and (ii) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, "Principal Party"
shall refer to whichever of such Persons is the issuer of the Common Shares
having the greatest aggregate value, and provided, further, that for purposes of
transactions described in clause (iii) of this Section 13(b), "Principal Party"
shall refer to that Person receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions.
(c) If, for any reason, the Rights cannot be exercised for Common
Shares of such Principal Party as provided in Section 13(a), then each holder of
Rights shall have the right to exchange its Rights for cash from such Principal
Party in an amount equal to the number of Common Shares that it would otherwise
be entitled to purchase times 50% of the current per share market price, as
determined pursuant to Section 11(d) of this Agreement, of such Common Shares of
such Principal Party. If, for any reason, the foregoing formulation cannot be
applied to determine the cash amount into which the Rights are exchangeable,
then the Board of Trustees, based upon the advice of one or more investment
banking firms, and based upon the total value of the Company, shall determine
such amount reasonably and with good faith to the holders of Rights (which
determination shall be described in a statement filed with the Rights Agent).
Any such determination shall be conclusive and binding on the Rights Agent.
(d) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized Common Shares that
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section
22
13 and unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that such
Principal Party shall, upon consummation of such Section 13 Event, assume this
Agreement in accordance with Sections 13(a) and (b) of this Agreement, that all
rights of first refusal or preemptive rights in respect of the issuance of
Common Shares of such Principal Party upon exercise of outstanding Rights have
been waived, that there are no rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights and that such transaction shall
not result in a default by such Principal Party under this Agreement, and
further providing that, as soon as practicable after the date of such Section 13
Event, such Principal Party will:
(i) prepare and file a registration statement under the Securities Act
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and use
its best efforts to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date, and similarly comply with applicable state and provincial
securities laws;
(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;
(iii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for quotation on
Nasdaq;
(iv) deliver to holders of the Rights historical financial statements
for such Principal Party which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act; and
(v) take all such other steps as are required under applicable laws in
the United States and in other relevant jurisdictions to enable the exercise in
full of the Rights in accordance with this Section 13.
In the event that at any time after the occurrence of a Triggering Event
some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not theretofore
been exercised shall thereafter be exercisable in the manner described in
Section 13(a) (without taking into account any prior adjustment required by
Section 11(a)(ii)). The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, options, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation
of such transaction, would eliminate or substantially diminish the benefits
intended to be afforded by the Rights.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
23
(f) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in subparagraphs
(i) and (ii) of Section 13(a) if: (i) such transaction is consummated with a
Person or Persons who acquired Common Shares of the Company pursuant to a tender
offer or exchange offer for all outstanding Common Shares of the Company at a
price and on terms determined by at least a majority of the members of the Board
of Trustees who are not nominees, representatives, Affiliates or Associates of
the Person making such an offer, after receiving advice from one or more
investment banking firms, to be at a price that is fair to stockholders of the
Company (taking into account all factors which such members of the Board of
Trustees deem relevant including, without limitation, prices which could be
reasonably achieved if the Company or its assets were sold on an orderly basis
designed to realize maximum value) and otherwise in the best interests of the
Company and its stockholders (or a wholly owned Subsidiary of any such Person or
Persons); (ii) the price per Common Share offered in such transaction is not
less than the price per Common Share paid to all holders of Common Shares of the
Company whose shares were purchased pursuant to such tender offer or exchange
offer; and (iii) the form of consideration being offered to the remaining
holders of Common Shares of the Company pursuant to such transaction is the same
as the form of consideration paid pursuant to such offer. Upon consummation of
any such transactions contemplated by this Section 13(f), all Rights hereunder
shall expire.
(g) In no event shall a Rights Agent, except with respect to duties set
forth in this Agreement, have any liability with respect to any transaction with
a Principal Party, including, without limitation, the proprietary thereof. The
Rights Agent may rely upon and be fully protected in relying upon a certificate
of the Company stating that the provisions of this Section 13 have been
fulfilled. Notwithstanding anything in this Agreement to the contrary, the
prior written consent of the Rights Agent must be obtained in connection with
any supplemental agreement which alters the rights or duties of the Rights
Agent.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates that evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable, as determined pursuant to the second sentence of
Section 11(d) of this Agreement.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions that are
integral multiples of one one-hundredth of a Preferred Share). In lieu of
fractional Preferred Shares that are not integral multiples of one one-hundredth
of a Preferred Share, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of a Common
Share. For purposes of this Section 14(b), the current market value of a Common
Share shall be the closing price of a Common Share (as determined pursuant
24
to the second sentence of Section 11(d) of this Agreement) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
(d) Whenever a payment for fractional Rights or fractional shares is to
be made by the Rights Agent, the Company shall (i) promptly prepare and deliver
to the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payment and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any Section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
15. RIGHTS OF ACTION.
(a) All rights of action in respect of this Agreement, excepting the
rights of action given to the Rights Agent under Section 18 of this Agreement,
are vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach by the Company of this
Agreement and will be entitled to specific performance of the obligations under,
and injunctive relief against actual or threatened violations by the Company of,
the obligations of any Person subject to this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, judgment, decree or ruling (whether interlocutory or
final) issued by a court or by a governmental, regulatory, self-regulatory or
administrative agency or commission, or under any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, that the Company must use all reasonable efforts to have any such
injunction, order, judgment, decree or ruling stayed, lifted or otherwise
overturned as soon as possible.
25
16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right, by accepting
the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed; and
(c) subject to Sections 6(a) and 7(f) of this Agreement, the Company
and the Rights Agent may deem and treat the Person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary.
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder, as
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of trustees 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 of this Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions of this Agreement.
18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, delivery, amendment,
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, damage, judgment,
fine, penalty, claim, demand, settlement, cost or expense (including, without
limitation, the reasonable fees and expenses of legal counsel), incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent (which gross negligence, bad faith or willful misconduct must be
determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction), for any action taken, suffered or omitted by
the Rights Agent in connection with the acceptance administration, exercise and
performance of its duties under this Agreement, including, without limitation,
the costs and expenses of defending against and appealing any claim of liability
arising therefrom, directly or indirectly. The provisions of this Section 18 and
26
Section 20 below shall survive the termination of this Agreement, the exercise
or expiration of the Rights and the resignation or removal of the Rights Agent.
The costs and expenses incurred in enforcing this right of indemnification shall
be paid by the Company.
(b) The Rights Agent shall be authorized and protected and shall incur
no liability for, or in respect of any action taken, suffered or omitted by it
in connection with its acceptance and administration of this Agreement and the
exercise and performance of its duties hereunder, in reliance upon any Rights
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 of this
Agreement. The Rights Agent shall not be deemed to have knowledge of any event
of which it was supposed to receive notice thereof hereunder, and the Rights
Agent shall be fully protected and shall incur no liability for failing to take
any action in connection therewith unless and until it has received such notice
in writing.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties to this Agreement; provided, however, that such Person would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
of this Agreement. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes to perform only
the duties and obligations expressly imposed by this Agreement (and no implied
duties) upon the following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof, shall be bound:
27
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company or an employee of the Rights Agent), and the opinion or
advice of such counsel shall be full and complete authorization and protection
to the Rights Agent and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted by it and in accordance with
such opinion or advice.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current per share market price") be proved or established by
the Company prior to taking, suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full and complete
authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability for or in respect of any action taken, suffered or omitted by
it under the provisions of this 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
(as determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction). Anything to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, punitive, indirect,
consequential or incidental loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage. Any liability of the Rights Agent under this
Rights Agreement will be limited to the amount of fees paid by the Company to
the Rights Agent.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any liability for or be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery of this Agreement (except the due execution of this Agreement by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming null
and void pursuant to this Agreement) or any change or adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in
Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after receipt by the Rights Agent of
a certificate furnished pursuant to Section 12 hereof describing such change or
adjustment, upon which the Rights Agent may rely); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be
28
issued pursuant to this Agreement or any Rights Certificate or as to whether any
Preferred Shares will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such instructions shall be full
authorization and protection to the Rights Agent and the Rights Agent shall not
be liable for or in respect of any action taken, suffered or omitted by it in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. The Rights Agent shall be fully authorized
and protected in relying upon the most recent instructions received by any such
officer. 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
proposed to be taken, suffered or omitted by the Rights Agent under this
Agreement and the date on and/or after which such action shall be taken or
suffered or such omission shall be effective. The Rights Agent shall not be
liable for any action taken or suffered by, or omission of, 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 (5)
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 (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken,
suffered or omitted.
(h) The Rights Agent and any shareholder, affiliate, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent or any such stockholder, affiliate, director, officer or employee from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself (through
its trustees, officers and employees) 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 or any other Person resulting from any such act, default, neglect
or misconduct, absent gross negligence, bad faith or willful misconduct in the
selection and continued employment thereof (each as determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction).
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties
29
hereunder or in the exercise of its rights if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer without first
consulting with the Company.
21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company and to each transfer
agent of the Preferred Shares or the Common Shares known to the Rights Agent by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Preferred Shares or the Common Shares by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit such
holder's Rights Certificate for inspection by the Company), then the registered
holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall either be (a)
a Person organized and doing business under the laws of the United States or of
any state of the United States, or under the laws of Canada or any province of
Canada, in good standing, which is authorized under such laws to exercise stock
transfer powers and is subject to supervision or examination by federal, state
or provincial authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50 million or (b) an Affiliate
of such a Person. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Preferred Shares or the Common Shares, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Trustees to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares
30
or other securities or property purchasable under the Rights Certificates made
in accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Trustees, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued and this sentence shall be null and void
ab initio if, and to the extent that, such issuance or this sentence would
create a significant risk of or result in material adverse tax consequences to
the Company or the Person to whom such Rights Certificate would be issued or
would create a significant risk of or result in such options' or employee plans'
or arrangements' failing to qualify for otherwise available special tax
treatment and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
23. REDEMPTION.
(a) The Company may, at its option and with the approval of the Board
of Trustees, at any time prior to the earlier of (i) the Close of Business on
the tenth day following the Shares Acquisition Date or such later date as may be
determined by action of a majority of the Board of Trustees and publicly
announced by the Company (with prompt written notice thereof to the Rights
Agent) or (ii) the Close of Business on the Final Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of
$0.001 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of this Agreement (such
redemption price being herein referred to as the "REDEMPTION PRICE") and the
Company may, at its option, pay the Redemption Price either in Common Shares
(based on the current per share market price thereof (as determined pursuant to
Section 11(d) of this Agreement) at the time of redemption), cash or any other
form of consideration deemed appropriate by the Board of Trustees. Such
redemption by the Company may be made effective at such time, on such basis and
with such conditions as the Board of Trustees in its sole discretion may
establish.
(b) Immediately upon the action of the Board of Trustees ordering the
redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption (with prompt written notice
thereof to the Rights Agent); provided, however, that the failure to give, or
any defect in, such notice shall not affect the legality or validity of such
redemption. Within ten (10) days after the action of the Board of Trustees
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Shares. Any notice
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
31
time in any manner other than that specifically set forth in this Section 23 or
in Section 24 of this Agreement or in connection with the purchase of Common
Shares prior to the Distribution Date.
24. EXCHANGE.
(a) Subject to applicable laws, rules and regulations, and subject to
subsection (c) below, the Company may, at its option, by majority vote of the
Board of Trustees, at any time after the occurrence of a Triggering Event,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become null and void pursuant to the provisions of
Section 7(e) of this Agreement) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of this Agreement (such
exchange ratio being hereinafter referred to as the "RATIO OF EXCHANGE").
Notwithstanding the foregoing, the Board of Trustees 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 Person holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Trustees 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 Common Shares equal to the number of such Rights
held by such holder multiplied by the Ratio of Exchange. The Company shall
promptly give public notice of any such exchange (with prompt written notice
thereof to the Rights Agent); provided, however, that the failure to give, or
any defect in, such notice shall not affect the legality or validity of such
exchange. The Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice 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 the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become null and void pursuant to the provisions of Section
7(e) of this Agreement) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with Section 24(a), the Company shall
either take such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights or alternatively, at the option
of a majority of the Board of Trustees, with respect to each Right (i) pay cash
in an amount equal to the Current Value, in lieu of issuing Common Shares in
exchange therefor, (ii) issue debt or equity securities or a combination
thereof, having a value equal to the Current Value, in lieu of issuing Common
Shares in exchange for each such Right, where the value of such securities shall
be determined by an investment banking firm selected by the Board of Trustees by
majority vote of the Board of Trustees (which determination shall be described
in a statement filed with the Rights Agent and shall be conclusive and binding
on the Rights Agent, the holders of the Rights and all other Persons), or (iii)
deliver any combination of cash, property,
32
Common Shares and/or other securities having a value equal to the Current Value
in exchange for each Right. For purposes of this Section 24(c) only, the
"CURRENT VALUE" shall mean the product of the current per share market price of
Common Shares (determined pursuant to Section 11(d) on the date of the
occurrence of the event described above in subparagraph (a)) multiplied by the
number of Common Shares for which the Right otherwise would be exchangeable if
there were sufficient shares available. To the extent that the Company
determines that some action need be taken pursuant to clauses (i), (ii) or (iii)
of this Section 24(c), the Board of Trustees may temporarily suspend the
exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) hereof shall have occurred,
in order to seek any authorization of additional Common Shares and/or to decide
the appropriate form of distribution to be made pursuant to the above provision
and to determine the value thereof. In the event of any such suspension, the
Company shall promptly notify the Rights Agent in writing of such suspension and
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement and written
notification to the Rights Agent at such time as the suspension is no longer in
effect.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates that evidence fractional Common Shares. In
lieu of such fractional Common Shares, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Common
Shares would otherwise be issuable, an amount in cash equal to the same fraction
of the current per share market value of a whole Common Share (as determined
pursuant to the second sentence of Section 11(d) of this Agreement).
(e) The Company may, at its option, by majority vote of the Board of
Trustees, at any time before any Person has become an Acquiring Person, exchange
all or part of the then outstanding Rights for rights of substantially
equivalent value, as reasonably determined by the Board of Trustees, based upon
the advice of one or more investment banking firms.
(f) Immediately upon the action of the Board of Trustees ordering the
exchange of any Rights pursuant to subsection (e) 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 rights in exchange therefor as has been determined
by the Board of Trustees in accordance with subsection (e) above. The Company
shall promptly give public notice of any such exchange (with prompt written
notice thereof to the Rights Agent); provided, however, that the failure to
give, or any defect in, such notice shall not affect the legality or validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the transfer agent for the Common Shares of the Company.
Any notice 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 the Rights will be effected.
25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose to effect or permit to occur any
Section 13 Event, the Company shall give notice thereof to the Rights Agent and
to each holder of Rights, in accordance with Section 26 of this Agreement, at
least twenty (20) days prior to occurrence of such Section 13 Event.
33
(b) In case any Triggering Event or Section 13 Event shall occur, then,
in any such case, the Company shall as soon as practicable thereafter give to
the Rights Agent and to each holder of a Rights Certificate, in accordance with
Section 26 of this Agreement, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights
under Sections 11(a)(ii) and 13 of this Agreement.
26. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) or by facsimile transmission as follows:
Mercer International Inc.
14900 Interurban Avenue South, Suite 282
Seattle, WA 98168
Attention: Chief Financial Officer
Facsimile No.: (206) 674-4639
Subject to the provisions of Section 21 of this Agreement, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Rights Agent with the Company) as follows:
Computershare Trust Company of Canada
Suite 408, 510 Burrard Street
Vancouver, BC V6B 3V9
Attention: Manager
Facsimile No.: (604) 683-3694
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date, the
Company may supplement or amend this Agreement in any respect as it deems
necessary or desirable without the approval of any holders of Rights and the
Rights Agent shall, if the Company so directs, execute such supplement or
amendment, except as otherwise provided herein. From and after the Distribution
Date, the Company and the Rights Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Rights in order to (i)
cure any ambiguity, (ii) correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
shorten or lengthen any time period hereunder or (iv) change or supplement the
provisions hereunder in any manner that the Company may deem necessary or
desirable and that shall not adversely affect the interests of the holders of
Rights (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided, this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as
34
the Rights are not then redeemable or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, the Rights Agent may, but
shall not be obligated to, enter into any supplement or amendment that affects
the Rights Agent's own rights, duties, obligations or immunities under this
Agreement and it shall not be bound by any such supplement or amendment not
executed by it. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Shares.
28. SUCCESSORS. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
29. DETERMINATIONS AND ACTIONS BY THE BOARD OF TRUSTEES, ETC. For all
purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any Person is
the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in
effect on the date hereof. The Board of Trustees shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Trustees, or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Trustees in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights Certificates and all other
Persons and (y) not subject the Board of Trustees or any member thereof to any
liability to the holders of the Rights or any other Person. The Rights Agent
shall always be entitled to assume that the Board of Trustees acted in good
faith and shall be fully protected and incur no liability in reliance thereon.
30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares).
31. SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision,
35
covenant or restriction is held by such court or authority to be invalid, void
or unenforceable and the Board of Trustees determines in its good faith judgment
that severing the invalid language from this Agreement would adversely affect
the purpose or effect of this Agreement, the right of redemption set forth in
Section 23 of this Agreement shall be reinstated and shall not expire until the
Close of Business on the tenth day following the date of such determination by
the Board of Trustees.
32. GOVERNING LAW. This Agreement and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the state of
Washington 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.
33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
36
34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
MERCER INTERNATIONAL INC.
By: /s/ David M. Gandossi
--------------------------------
Name: David M. Gandossi
------------------------------
Title: Secretary
------------------------------
COMPUTERSHARE TRUST COMPANY OF CANADA,
AS RIGHTS AGENT
By: /s/ Ian Malcolm
---------------------------------
Name: Ian Malcolm
-------------------------------
Title: Account Manager
------------------------------
37
EXHIBIT A [GRAPHIC OMITED]
ARTICLES OF AMENDMENT TO
DECLARATION OF TRUST OF
MERCER INTERNATIONAL INC.
Mercer International Inc., a Massachusetts trust organized under RCW 23.90,
hereby amends it Declaration of Trust to establish a series of preferred stock.
1. The name of the Massachusetts trust is Mercer International Inc.
2. the text of the amendment is as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
----------------------
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 500,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
-----------------------------
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock ("Series A Preferred Stock")
with respect to dividends, the holders of shares of Series A Preferred Stock
shall be entitled to receive, when, as and if declared by the Trustees out of
funds legally available for the purpose, quarterly dividends payable in cash on
the fifteenth day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred Stock in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $10.00 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in common shares of beneficial
interest, $1.00 par value, of the Company ("Common Stock") or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Company shall at any time after August 20,
1993 (the "Rights Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
A-1
(B) The Company shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10.00 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of
Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Trustees may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
-------------
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Company. In
the event the Company shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six (6) quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a period
(herein called a "default period") which shall extend until such time when all
accrued and unpaid dividends for all pervious quarterly
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dividend periods and for the current quarterly dividend period on all
shares of Series A Preferred Stock then outstanding shall have been declared and
paid or set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Preferred Stock) with
dividends in arrears in an amount equal to six (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the right to elect two (2)
Trustees.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Trustees shall be exercised unless the holders
of ten percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Trustees to fill such
vacancies, if any, in the Trustees as may then exist up to two (2) Trustees or,
if such right is exercised at an annual meeting, to elect two (2) Trustees. If
the number which may be so elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall have the right to make
such increase in the number of Trustees as shall be necessary to permit the
election by them of the required number. After the holders of the Preferred
Stock shall have exercised their right to elect Trustees in any default period
and during the continuance of such period, the number of Trustees shall not be
increased or decreased except by vote of the holders of Preferred Stock as
herein provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Preferred Stock.
-----------
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Trustees, the Trustees may order, or any stockholder or stockholders owning in
the aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice-President or the Secretary of the
Company. Notice of such meeting and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall
be given to each holder of record of Preferred Stock by mailing a copy of such
notice to him at his last address as the same appears on the books of the
Company. Such meeting shall be called for a time not earlier than 20 days and
not later than 60 days after such order or request or in default of the calling
of such meeting within 60 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Company if applicable, shall continue to be
entitled to elect the whole number
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of Trustees until the holders of Preferred Stock shall have exercised their
right to elect two (2) Trustees voting as a class, after the exercise of which
right (x) the Trustees so elected by the holders of Preferred Stock shall
continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy in
the Trustees may (except as provided in paragraph (C) (ii) of this Section 3) be
filled by vote of a majority of the remaining Trustees theretofore elected by
the holders of the class of stock which elected the Trustee whose office shall
have become vacant, or if no such Trustees are in office, by the holders of the
Preferred Stock. References in this paragraph (C) to Trustees elected by the
holders of a particular class of stock shall include Trustees elected by such
Trustees to fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect Trustees shall
cease, (y) the term of any Trustees elected by the holders of Preferred Stock as
a class, shall terminate, and (z) the number of Trustees shall be such number as
may be provided for in the Declaration of Trust or Trustees' Regulations
irrespective of any increase made pursuant to the provisions of paragraph (C)
(ii) of this Section 3 (such number being subject, however, to change thereafter
in any manner provided by law or in the Declaration of Trust or the Trustees'
Regulations). Any vacancies in the Trustees effected by the provisions of
clauses (y) and (z) in the preceding sentence may be filled by a majority of the
remaining Trustees.
(D) Except as set forth herein or otherwise required by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. CERTAIN RESTRICTIONS.
---------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred Stock and all
such parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares or any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or
A-4
winding up) with the Series A Preferred Stock, provided that the Company may at
any time redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Company ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock;
(B) The Company shall not permit any subsidiary of the Company on
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
------------------
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Trustees, subject to the conditions
and restrictions on issuance set forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
------------------------------------------
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$100 per share plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Preferred Stock and Common Stock, respectively,
holders of Series A Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ration of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
A-5
(C) In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Company shall enter
---------------------------
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Company shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8. NO REDEMPTION. The shares of Series A Preferred Stock shall
-------------
not be redeemable.
Section 9. RANKING. The Series A Preferred Stock shall rank junior to
-------
all other series of the Company's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such series shall
provide otherwise.
Section 10. AMENDMENT. The Restated Declaration of Trust Company shall
---------
not be further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of two-thirds
or more of the outstanding shares of Series A Preferred Stock, voting separately
as a class.
Section 11. FRACTIONAL SHARES. Series A Preferred stock may be issued
-----------------
in fractions of a share which shall entitled the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
A-6
3. The amendment was adopted by the Trustees on July 15, 1993.
4. The amendment was duly adopted by the Trustees.
MERCER INTERNATIONAL INC.
By: /s/ Jimmy S.H. Lee
-------------------------
Name: Jimmy S.H. Lee
Title: President
DATED: August ____, 1993
A-7
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. R-____ ____________ Rights
NOT EXERCISABLE AFTER DECEMBER 31, 2005 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY, AT
$0.001 PER RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON. ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT.]*
*The portion of the Legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.
RIGHTS CERTIFICATE
MERCER INTERNATIONAL INC.
This certificate 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 December 23, 2003 (the "RIGHTS
AGREEMENT"), between Mercer International Inc., a Massachusetts trust organized
under the laws of the state of Washington (the "COMPANY"), and Computershare
Trust Company of Canada, a Canadian limited liability company (the "RIGHTS
AGENT"), unless the Rights evidenced hereby have been previously redeemed by the
Company, to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and before 4:30 p.m., Seattle,
Washington time, on December 31, 2005 at the office of the Rights Agent, or at
the office of its successor as Rights Agent, one one-hundredth of a fully paid,
nonassessable share of Series A Participating Cumulative Preferred Stock, no par
value (the "PREFERRED SHARES"), of the Company, at a purchase price of $75.00
per one one-hundredth of a Preferred Share (the "PURCHASE PRICE"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one-hundredths of a Preferred Share that may be
purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of December 31, 2003, based on
the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths of a
Preferred Share that
B-1
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Rights Certificate is subject to all 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 Rights, which limitations include
the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement
are on file at the principal executive offices of the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of Preferred Shares as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to purchase. If
this Rights Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate (a) may be redeemed by the Company at a redemption price (in cash or
shares of the Company's common stock or other securities of the Company deemed
by the Company's Board of Trustees to be at least equivalent in value) of $0.001
per Right (subject to adjustment, as provided in the Rights Agreement) or (b)
may be exchanged in whole or in part for shares of the Company's common stock or
other consideration as determined by the Company.
The Company may, but shall not be required to, issue fractions of Preferred
Shares or distribute certificates that evidence fractions of Preferred Shares
upon the exercise of any Right or Rights evidenced hereby. In lieu of issuing
fractional shares, the Company may elect to make a cash payment as provided in
the Rights Agreement for fractions of a share other than one one-hundredth
(1/100) of a Preferred Share or any integral multiple thereof or to issue
certificates or utilize a depository arrangement as provided in the terms of the
Rights Agreement and the Preferred Shares.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company that 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 Trustees or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to
B-2
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 subscriptions rights, or otherwise, until the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal. Dated as of _______________, 20__.
MERCER INTERNATIONAL INC.
By: _________________________
Its:__________________________
COUNTERSIGNED:
COMPUTERSHARE TRUST COMPANY OF CANADA,
AS RIGHTS AGENT
By: _________________________
Its: __________________________
B-3
--FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE-
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate)
FOR VALUE RECEIVED _____________________________________________ HEREBY SELLS,
ASSIGNS AND TRANSFERS UNTO
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)
THIS RIGHTS CERTIFICATE, TOGETHER WITH ALL RIGHT, TITLE AND INTEREST THEREIN,
AND DOES HEREBY IRREVOCABLY CONSTITUTE AND APPOINT _____________ AS
ATTORNEY-IN-FACT, TO TRANSFER THIS RIGHTS CERTIFICATE ON THE BOOKS OF THE
WITHIN-NAMED COMPANY, WITH FULL POWER OF SUBSTITUTION.
The undersigned hereby certifies that (1) the Rights evidenced by this Rights
Certificate are not being sold, assigned or transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate thereof
(as such terms are defined in the Rights Agreement), (2) this Rights Certificate
is not being sold, assigned or transferred to or on behalf of any such Acquiring
Person, Affiliate or Associate, and (3) after inquiry and to the best knowledge
of the undersigned, the undersigned did not acquire the Rights evidenced by this
Rights Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate.
Dated:_________________________________________________________________
Signature:_____________________________________________________________
Signature Guarantee*
_______________________________________________________________________
* Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended. Guarantees by a notary public are not acceptable.
B-4
--Form of Reverse Side of Rights Certificate--
(continued)
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate)
To: MERCER INTERNATIONAL INC.
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the number of one-hundredths
of a Preferred Share issuable upon the exercise of such Rights and requests that
certificates for such number of one-hundredths of a Preferred Share be issued in
the name of:
Please insert social security or other identifying
number___________________________
________________________________________________________________________
(Please print name and address)______________________________________________
________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying
number___________________________
________________________________________________________________________
(Please print name and address)______________________________________________
________________________________________________________________________
The undersigned hereby certifies that (1) the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement) and (2) after inquiry and to the best knowledge of the undersigned,
the undersigned did not acquire the Rights evidenced by this Rights Certificate
from any Person who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement).
Dated__________________________________________________________________
Signature:_______________________________________________________________
Signature Guarantee*______________________________________________________
B-5
*Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended. Guarantees by a notary public are not acceptable.
B-6
--Form of Reverse Side of Rights Certificate-
(continued)
NOTICE
THE SIGNATURE IN THE FORM OF ASSIGNMENT OR FORM OF ELECTION TO PURCHASE, AS THE
CASE MAY BE, MUST CONFORM TO THE NAME AS WRITTEN ON THE FACE OF THIS RIGHTS
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATSOEVER.
IN THE EVENT THE CERTIFICATION SET FORTH ABOVE IN THE FORM OF ASSIGNMENT OR THE
FORM OF ELECTION TO PURCHASE, AS THE CASE MAY BE, IS NOT COMPLETED, THE COMPANY
AND THE RIGHTS AGENT WILL DEEM THE BENEFICIAL OWNER OF THE RIGHTS EVIDENCED BY
THIS RIGHTS CERTIFICATE TO BE AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND SUCH ASSIGNMENT
OR ELECTION TO PURCHASE WILL NOT BE HONORED.
B-7
EXHIBIT C
MERCER INTERNATIONAL INC.
SHAREHOLDER RIGHTS PLAN
SUMMARY OF RIGHTS
Distribution and Transfer of Rights; Rights Certificates
On November 11, 2003, the board of trustees (the "BOARD") of Mercer
International Inc. ("MERCER" or the "COMPANY") declared a dividend of one
preferred share purchase right (a "RIGHT") for each outstanding share of
beneficial interest of Mercer (the "COMMON STOCK"). Before the Distribution Date
described below the Rights will be evidenced by and trade with the certificates
for Common Stock. After the Distribution Date, if any, Mercer will mail Rights
certificates to its shareholders and the Rights will become transferable apart
from the Common Stock.
Distribution Date
The Rights will separate from the Common Stock and become exercisable following
the earlier of the close of business on the tenth day (or such later date as may
be determined by a majority of the Board) after a person or group (i) acquires
beneficial ownership of 15% or more of the aggregate of Mercer's outstanding
Common Stock and Common Stock issuable upon conversion of Mercer's outstanding
8.5% Convertible Senior Subordinated Notes due 2010 (the "NOTES") as if the then
outstanding Notes had been fully converted (the "ISSUABLE NOTE SHARES") or (ii)
announces a tender or exchange offer for Mercer's outstanding Common Stock that
could result in the offeror becoming the beneficial owner of 15% or more of the
aggregate of the outstanding Common Stock and Issuable Note Shares (the earlier
of such dates being the "DISTRIBUTION DATE").
Preferred Stock Purchasable Upon Exercise of Rights
After the Distribution Date, each Right will entitle the holder to purchase, for
$75.00 (the "EXERCISE PRICE"), one one-hundredth (1/100) of a share of Mercer
Series A junior participating preferred stock with economic terms similar to
that of one share of Mercer Common Stock.
Flip-In
If an acquiror becomes the beneficial owner of 15% or more of the aggregate of
Mercer's outstanding Common Stock and Issuable Note Shares (thus becoming an
"ACQUIRING PERSON"), then each Right (other than Rights beneficially owned by an
Acquiring Person or its affiliates) will entitle the holder to purchase, for the
exercise price, that number of shares of Mercer Common Stock having a
then-current market value of two times the exercise price.
C-1
Flip-Over
In certain circumstances, if, after the Shares Acquisition Date (defined below),
(a) Mercer merges into another entity, (b) an acquiring entity merges into
Mercer or (c) Mercer sells more than 50% of its assets or earning power, then
each Right (other than Rights beneficially owned by an Acquiring Person or its
affiliates) will entitle the holder to purchase, for the exercise price, a
number of shares of the capital stock (with the greatest voting power) of the
person engaging in the transaction having a then-current market value of twice
the exercise price. However, such Rights will not be exercisable in the case of
a transaction described in (a) or (b) above, if (i) such transaction involves a
tender or exchange offer for all of the outstanding Common Stock at a price and
on terms determined by a majority of the Board to be fair to Mercer's
shareholders and otherwise in the best interests of Mercer, (ii) the per share
price offered in such transaction is not less than the price paid to all holders
of Common Stock purchased pursuant to such tender or exchange offer, and (iii)
the form of consideration offered to the remaining holders of Common Stock under
such transaction is the same form of consideration paid pursuant to such offer.
Exchange Provisions
After any person or group becomes an Acquiring Person but before the acquisition
of Mercer or 50% or more of its assets or earning power, the Board may elect to
exchange each Right (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the number of shares of Common Stock that would be issuable at such
time upon the exercise of one Right and without payment of the exercise price.
Redemption of Rights
The Rights will be redeemable at the Company's option for $0.001 per Right (the
"REDEMPTION PRICE") at any time on or before the tenth day (or such later date
as may be determined by a majority of the Board) after public announcement that
a person has acquired beneficial ownership of 15% or more of the aggregate of
the Company's then outstanding Common Stock and Issuable Note Shares (the
"SHARES ACQUISITION DATE").
Expiration of Rights
The Rights are not exercisable until the Distribution Date and will expire on
December 31, 2005, unless earlier redeemed or exchanged by Mercer.
Amendment of Terms of Rights
The terms of the Rights and the Rights Agreement may be amended in any respect,
without the approval of any holder of the Rights, at any time before the
Distribution Date, subject to certain restrictions.
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Voting Rights
Until a Right is exercised, the holder will have no rights as a shareholder of
Mercer, including, without limitation, the right to vote or receive dividends.
Antidilution Provisions
In order to preserve the actual or potential economic value of the Rights, the
number of shares of Series A junior participating preferred stock or other
securities issuable upon exercise of a Right, the exercise price, the Redemption
Price and the number of Rights associated with each outstanding share of Common
Stock are all subject to adjustment by the Board, pursuant to customary
antidilution provisions.
Taxes
Distribution of the Rights should not be a taxable event for federal income tax
purposes. Following an event that renders the Rights exercisable or upon
redemption of the Rights, shareholders may recognize taxable income.
The foregoing is a summary of the principal terms of Mercer's shareholder
rights plan and is qualified in its entirety by reference to the detailed terms
of the Rights Agreement. A copy of the Rights Agreement, which is on file with
the Securities and Exchange Commission as an exhibit to Mercer's Registration
Statement on Form 8-A, may be obtained from Mercer free of charge, upon request.
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