SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 1, 2001
SHOP AT HOME, INC.
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(Exact name of registrant as specified in its charter)
Tennessee 0-25596 62-1282758
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
5388 Hickory Hollow Parkway, Antioch, Tennessee 37013
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(Address, including zip code, of principal executive office)
(615) 263-8000
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(Registrant's telephone number, including area code)
Item 5. Other Events
On May 15, 2001 the Board of Directors of Shop At Home, Inc. (the
"Company") adopted a shareholder rights plan, as set forth in the Rights
Agreement, dated June 1, 2001, between the Company and Computershare Trust
Company, Inc., as Rights Agent (the "Rights Agreement"). The following
description of the terms of the Rights Agreement does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement which is
attached hereto as an exhibit and is incorporated herein by reference.
On May 15, 2001, the Board of Directors of the Company declared a
dividend of one Right for each outstanding share of common stock, par value
$.0025 per share (the "Common Stock"), to shareholders of record at the close of
business on June 1, 2001, and for each share of Company Common Stock issued
thereafter and prior to the earliest of the Distribution Date, the Redemption
Date or the Expiration Date (as hereinafter defined) subject to certain matters.
Each Right entitles the registered holder, subject to the terms of the Rights
Agreement, to purchase from the Company one ten-thousandth (1/10,000th) of a
share (a "Unit") of Series C Preferred Stock, $10.00 par value per share (the
"Preferred Stock"), at a Purchase Price of $20.00 per Unit, subject to
adjustment.
Prior to the Distribution Date, the Rights will be represented by the
certificates for shares of Common Stock. Separate Right Certificates will be
distributed to shareholders as soon as practicable after the Distribution Date.
Prior to the Distribution Date, the Rights shall be transferable only with the
related shares of Common Stock and shall automatically be transferred with such
shares. After the Distribution Date, the Rights shall be separately transferable
and the Company will provide Right Certificates to all holders of Common Stock.
Until a Right is exercised, the holder thereof, as such, will have no rights as
a shareholder of the Company, including, without limitation, the right to vote
or to receive dividends. The Rights will expire on the tenth anniversary of the
effective date of the Rights Agreement (the "Expiration Date") unless earlier
redeemed or canceled by the Company as provided below.
Initially, the Rights will not be exercisable. The Rights will become
exercisable upon the earlier of (a) the tenth business day (or such later date
as may be determined by the Board) after such time as the Company learns that a
person or group (including any affiliate or associate of such person or group)
has acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding Common Stock (such person or group being called an
"Acquiring Person") unless provisions intended to prevent accidental triggering
of the Rights apply, and (b) such date, if any, as may be designated by the
Board of Directors of the Company following the commencement of, or first public
disclosure of an intention to commence, a tender or exchange offer for
outstanding Common Stock which could result in such person or group becoming the
beneficial owner of 15% or more of the outstanding Common Stock (the earlier of
such dates being called the "Distribution Date"). Each Right shall be
exercisable for 1/10,000 of a share of the Series C Preferred Stock (as
described below), subject to adjustment.
The terms of the Preferred Stock have been designed so that each
1/10,000 of a share of Preferred Stock is entitled to participate in dividends
and other distributions, and to vote, on an equivalent basis with one whole
share of the presently constituted Common Stock of the Company. In addition, the
Preferred Stock has certain minimum dividend and liquidation rights. The amount
of Preferred Stock issuable upon exercise of the Rights is subject to adjustment
by the Board of Directors of the Company in the event of any change in the
Common Stock or Preferred Stock, whether by reason of share dividends, share
splits, recapitalizations, mergers, consolidations, combinations or exchanges of
securities, split-ups, split-offs, spin-offs, liquidations, other similar
changes in capitalization, any distribution or issuance of assets, evidences of
indebtedness or subscription rights, options or warrants to holders of Common
Stock or Preferred Stock or otherwise.
Subject to an election by the Board of Directors to exchange the Rights
as described below, at such time as there is an Acquiring Person, proper
provision shall be made so that the holder of each Right will thereafter have
the right to receive, upon exercise thereof, for the Purchase Price, that number
of ten-thousandths of a share of Preferred Stock equal to the number of shares
of Common Stock which at the time of such transactions would have a market value
of twice the Purchase Price (the "flip-in" provision). Any Rights that are or
were beneficially owned by an Acquiring Person on or after the Distribution Date
shall become null and void.
In the event the Company is acquired in a merger or other business
combination by an Acquiring Person that is a publicly traded corporation or 50%
or more of the Company's assets or assets representing 50% or more of the
Company's earning power are sold, leased, exchanged or otherwise transferred (in
one or more transactions) to an Acquiring Person that is a publicly traded
corporation, each Right will entitle its holder to purchase, for the Purchase
Price, that number of common shares of such corporation which at the time of the
transaction would have a market value of twice the Purchase Price (the
"flip-over" provision). In the event the Company is acquired in a merger or
other business combination by an Acquiring Person that is not a publicly traded
entity or 50% or more of the Company's assets or assets representing 50% or more
of the earning power of the Company are sold, leased, exchanged or otherwise
transferred (in one or more transactions) to an Acquiring Person that is not a
publicly traded entity, each Right will entitle its holder to purchase, for the
Purchase Price, at such holder's option, (a) that number of shares of the
surviving corporation in the transaction with such entity (or, at such holder's
option, of the surviving corporation in such acquisition, which could be the
Company) which at the time of the transaction would have an aggregate book value
of twice the Purchase Price or (b) that number of shares of such entity which at
the time of the transaction would have a book value of twice the Purchase Price
or (c) if such entity has affiliates which have publicly traded common shares,
that number of common shares of the affiliate with the greatest aggregate market
value on the transaction date, which at the time of the transaction would have a
market value of twice the Purchase Price.
The Rights are redeemable by the Board of Directors at a redemption
price of $.001 per Right (the "Redemption Price") any time prior to the earlier
of (a) the tenth business day (or such later date as may be determined by the
Board) after such time as there becomes an Acquiring Person and (b) the
Expiration Date. Immediately upon the action of the board electing to redeem the
Rights, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
At any time prior to the Distribution Date, the Company may, without
the approval of any holder of the Rights, supplement or amend any provision of
the Rights Agreement (including the date on which the Distribution Date shall
occur and the definition of an "Acquiring Person"), except that no supplement or
amendment shall be made which reduces the Redemption Price of the Rights or
provides for an earlier date of expiration of the Rights.
The Rights may have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by a majority of the Directors unless the offer is
conditioned on a substantial number of Rights being acquired. However, the
Rights should not interfere with any merger or other business combination
approved by a majority of the Directors, or in certain circumstances, at the
request of a majority of the then outstanding shares of Company Common Stock
voting at a specially called stockholders meeting, since the Rights may be
redeemed by the Company at $.001 per Right at any time on or prior to the tenth
business day following the date on which any Person becomes an Acquiring Person
(subject to extension by a majority of the Directors). Thus, the Rights are
intended to encourage persons who may seek to acquire control of the Company to
initiate such an acquisition through negotiations with the Board of Directors.
However, the effect of the Rights may be to discourage a third party from making
a partial tender offer or otherwise attempting to obtain a substantial position
in the equity securities of, or seeking to obtain control of, the Company. To
the extent any potential acquirers are deterred by the Rights, the Rights may
have the effect of preserving incumbent management in office.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B the form of
Rights Certificate, is attached hereto as Exhibit 4.1 and is incorporated herein
by reference. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to such Exhibit.
Item 7. Exhibits
Exhibit 3.1 Amendment to Amended and Restated Charter of Shop At Home,
Inc.
Exhibit 4.1 Rights Agreement, dated June 1, 2001, between Shop At
Home, Inc. and Computershare Trust Company, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHOP AT HOME, INC.
(Registrant)
By: /s/ George J. Phillips
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George J. Phillips
Executive Vice President,
General Counsel & Secretary
Date: June 1, 2001
Exhibit 3.1
ARTICLES OF AMENDMENT
TO THE AMENDED AND RESTATED CHARTER
OF
SHOP AT HOME, INC.
Pursuant to the provisions of Section 48-16-102 of the Tennessee Code
Annotated, the undersigned Corporation adopts the following Articles of
Amendment to its Amended and Restated Charter:
1. The name of the Corporation is
Shop At Home, Inc.
2. The purpose of this amendment is to set forth the designations, limitations
and relative rights of the Corporation's Series C Preferred Stock, a new series
of the Corporation's previously authorized preferred stock, par value $10.00 per
share.
3. The Amended and Restated Charter of the Corporation is amended by inserting
therein as Section 7.5 the following text determining the terms of the Series C
Preferred Stock:
(1) Designation and Amount. The shares of such series shall be
designated as Series C Preferred Stock ("Series C Preferred Stock") and the
number of shares constituting such series shall be 10,000. Such number of
shares may be adjusted by appropriate action of the Board of Directors.
(2) Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of
any shares of any other series of Preferred Stock or any other shares of
preferred stock of the Corporation ranking prior and superior to the shares
of Series C Preferred Stock with respect to dividends, each holder of one
ten-thousandth (1/10,000) of a share (a "Unit") of Series C Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for that purpose, (i) dividends
payable in cash on the 1st day of January, April, July and October in each
year (each such date being a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance of
such Unit of Series C Preferred Stock, in an amount per Unit (rounded to
the nearest cent) equal to the greater of (x) $.01 or (y) subject to the
provision for adjustment hereinafter set forth, the aggregate per share
amount of all cash dividends declared on shares of the common stock of the
Corporation, par value $.0025 per share, (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 a
Unit of Series C Preferred Stock, and (ii) subject to the provision for
adjustment hereinafter set forth, quarterly distributions (payable in kind)
on each Quarterly Dividend Payment Date in an amount per Unit equal to the
aggregate per share amount of all non-cash dividends or other distributions
(other than a dividend payable in shares of Common Stock or a subdivision
of the outstanding share of Common Stock, by reclassification or otherwise)
declared on shares of 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 a Unit of Series C
Preferred Stock. In the event that the Corporation shall at any time after
June 1, 2001 (the "Rights Declaration Date") (i) declare or pay any
dividend on outstanding shares of Common Stock payable in shares of Common
Stock, or (ii) subdivide outstanding shares of Common Stock or (iii)
combine outstanding shares of Common Stock into a smaller number of shares,
then in each such case the amount to which the holder of a Unit of Series C
Preferred Stock was entitled immediately prior to such event pursuant to
the preceding sentence shall be adjusted by multiplying such amount of a
fraction the numerator of which shall be the number of shares of Common
Stock that are outstanding immediately after such event and the denominator
of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution
on Units of Series C Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the shares of
Common Stock (other than a dividend payable in shares of Common Stock);
provided, however 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 $.01 per Unit on the Series C Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and shall be cumulative on
each outstanding Unit of Series C Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issuance of such Unit of
Series C Preferred Stock, unless the date of issuance of such Unit is prior
to the record date for the First Quarterly Dividend Payment Date, in which
case, dividends on such Unit shall begin to accrue from the date of
issuance of such Unit, or unless the date of issuance is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of Units of Series C 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 Units of Series C
Preferred Stock in an amount less than the aggregate amount of all such
dividends at the time accrued and payable on such Units shall be allocated
pro rata on a unit-by-unit basis amount all Units of Series C Preferred
Stock at the time outstanding. The Board of Directors may fix a record date
for the determination of holders of Units of Series C 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.
(3) Voting Rights. The holders of Units of Series C Preferred Stock
shall have the following voting rights.
(a) Subject to the provision for adjustment hereinafter set
forth, each Unit of Series C Preferred Stock shall entitle the holder
thereof to one vote on all matters submitted to a vote of the shareholders
of the Corporation. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock or (iii) combine the outstanding shares
of Common Stock into a smaller number of shares, then in each such case the
number of votes per Unit to which holders of Units of Series C Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which shall be 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 Units of Series C Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote
of shareholders of the Corporation.
(c) Except as set forth herein or required by law, holders of
Units of Series C 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 shares of Common Stock as set forth herein) for the
taking of any corporate action.
(4) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on Units of Series C Preferred Stock as provided in
paragraph 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding Units
of Series C Preferred Stock shall have been paid (or set aside for payment)
in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions
or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior to the Series C Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to dividends
with the Series C Preferred Stock, except for dividends paid ratably on
Units of Series C Preferred Stock and shares of all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of such Units and all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series C
Preferred Stock, provided, however, that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock ranking junior (both as to dividends and
upon liquidation, dissolution or winding up) to the Series C Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any Units
of Series C Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors)
to all holders of such Units.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(a) of this paragraph 4, purchase or otherwise acquire such shares at such
time and in such manner.
(5) Reacquired Shares. Any Units of Series C Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such Units
shall, upon their cancellation, become authorized but unissued Units 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 Board of Directors,
subject to the conditions and restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, no distribution shall be made (i) to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred Stock
unless the holders of Units of Series C Preferred Stock shall have
received, subject to adjustment as hereinafter provided in paragraph (b),
the greater of either (y) $10.00 per Unit plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, or (z) the amount equal to the
aggregate per share amount to be distributed to holders of shares of Common
Stock, or (ii) to the holders of shares of stock ranking on a parity upon
liquidation, dissolution or winding up with the Series C Preferred Stock,
unless simultaneously therewith distributions are made ratably on Units of
Series C Preferred Stock and all other shares of such parity stock in
proportion to the total amounts to which the holders of Units of Series C
Preferred Stock are entitled under Clause (i)(y) of this sentence and to
which the holders of such shares of such parity stock are entitled, in each
case upon such liquidation dissolution or winding up.
(b) in the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on outstanding shares of
Common Stock payable in shares of Common Stock, or (ii) subdivide
outstanding shares of Common Stock, or (iii) combine outstanding shares of
Common Stock into a smaller number of shares, then in each such case the
aggregate amount to which holders of Units of Series C Preferred Stock were
entitled immediately prior to such event pursuant to clause (i)(z) of
paragraph (1) of this paragraph 6 shall be adjusted by multiplying such
amount by a fraction the numerator of which shall be the number of shares
of Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event.
(7) Share Exchange, Merger, Etc. In case the Corporation shall enter
into any share exchange, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or converted into other stock
or securities, cash and/or any other property, then in any such case Units
of Series C Preferred Stock shall at the same time be similarly exchanged
for or converted into an amount per Unit (subject to the provision for
adjustment hereinafter set forth) equal to 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 converted or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common
Stock payable in shares of Common Stock, or (ii) subdivide outstanding
shares of Common Stock, or (iii) combine outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth in
the immediately preceding sentence with respect to the exchange or
conversion of shares of Series C Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after
such event and the denominator of which shall be the number of shares of
Common Stock that were outstanding immediately prior to such event.
(8) Redemption. The Units of Series C Preferred Stock shall not be
redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire Units of Series C Preferred Stock in any other manner permitted by
law and the Charter or Bylaws of the Corporation.
(9) Ranking. The Units of Series C Preferred Stock shall rank junior to
all other series of the Preferred Stock and to any other class of preferred
stock that hereafter may be issued by the Corporation as to the payment of
dividends and the distribution of assets, unless the terms of any such
series or class shall provide otherwise.
(10) Amendment. The Charter, including without limitation the
provisions hereof, shall not hereafter be amended, either directly or
indirectly, or through merger or share exchange with another corporation,
in any manner that would alter or change the powers, preferences or special
rights of the Series C Preferred Stock so as to affect the holders thereof
adversely without the affirmative vote of the holders of a majority or more
of the outstanding Units of Series C Preferred Stock, voting separately as
a class.
(11) Fractional Shares. The Series C Preferred Stock may be issued in
Units or other fractions of a share, which Units or fractions shall entitle
the holder, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series C Preferred Stock.
4. This amendment was duly adopted by the Board of Directors of the
Corporation on May 15, 2001. Under Section 48-16-102 of the Tennessee
Code Annotated shareholder approval of this amendment is not required.
June 1, 2001 Shop At Home, Inc.
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Signature Date
Executive VP, General Counsel and Sec. /s/ George J. Phillips
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Signer's Capacity Signature
George J. Phillips Name ------------------- (typed or printed)
Exhibit 4.1
RIGHTS AGREEMENT dated as of June 1, 2001, between SHOP AT HOME, INC., a
Tennessee corporation (the "Company"), and COMPUTERSHARE TRUST COMPANY, INC., a
Colorado corporation as Rights Agent (the "Rights Agent")
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as hereinafter defined) for each share of Common Stock,
$.0025 par value per share, of the Company (the "Common Stock") outstanding at
the Close of Business (as hereinafter defined) on June 1, 2001 (the "Record
Date"), and has authorized the issuance of one Right (as such number may
hereafter be adjusted pursuant to the provisions of this Rights Agreement) with
respect to each share of Common Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date or
the Expiration Date (as such terms are hereinafter defined); provided, however,
that Rights may be issued with respect to shares of Common Stock that shall
become outstanding after the Distribution Date and prior to the earlier of the
Redemption Date or the Expiration Date in accordance with the provisions of
Section 23. Each Right shall initially represent the right to purchase
one-ten-thousandth (1/10,000) of a share of Series C Preferred Stock, $10.00 par
value per share, of the Company (the "Preferred Shares"), having the powers,
rights and preferences set forth in the Articles of Amendment attached as
Exhibit A.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Rights Agreement, the
following terms have the meanings indicated: -------------------
11
"Acquiring Person" shall mean any Person who or which, alone
or together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding but shall
not include (a) the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any of its Subsidiaries, or any Person holding Common
Shares for or pursuant to the terms of any such employee benefit plan, or (b)
any such Person who has become and is such a Beneficial Owner solely because (i)
of a change in the aggregate number of Common Shares outstanding since the last
date on which such Person acquired Beneficial Ownership of any Common Shares or
(ii) it acquired such Beneficial Ownership in the good faith belief that such
acquisition would not (A) cause such Beneficial Ownership to equal or exceed 15%
of the Common Shares then outstanding and such Person relied in good faith in
computing the percentage of its Beneficial Ownership on publicly filed reports
or documents of the Company which are inaccurate or out-of-date or (B) otherwise
cause a Distribution Date or the adjustment provided for in Section 11(a) to
occur. Notwithstanding clause (b)(ii) of the prior sentence, if any Person that
is not an Acquiring Person due to such clause (b)(ii) does not reduce its
percentage of Beneficial Ownership of Common Shares to less than 15% by the
Close of Business on the fifth Business Day after notice from the Company (the
date of notice being the first day) that such Person's Beneficial Ownership of
Common Shares so equals or exceeds 15%, such Person shall, at the end of such
five Business Day period, become an Acquiring Person (and such clause (b)(ii)
shall no longer apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of the Company.
"Affiliate" and "Associate", when used with reference to any
Person, 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 Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own", and shall be deemed to have "Beneficial
Ownership" of, any securities:
(a) which such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of Rule
13d-3 of the General Rules and Regulations under the Exchange Act, as
in effect on the date of this Rights Agreement;
(b) which such Person or any of such Person's Affiliates or
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (written or oral), or upon
the exercise of conversion rights, exchange rights (other than the
Company's rights under Section 11(b)(i)), rights (other than the
Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, or to have Beneficial Ownership of, 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 thereunder, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding (written or oral); provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, or to
have Beneficial Ownership of, any security if (A) the agreement,
arrangement or understanding (written or oral) to vote such security
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 under the
Exchange Act and (B) the beneficial ownership of such security is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(c) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (written or oral) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or consent as described in
clause (b)(ii) of this definition) or disposing of any securities of
the Company.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own", or to have "Beneficial
Ownership" of, any securities acquired in a bona fide firm commitment
underwriting pursuant to an underwriting agreement with the Company.
"Articles of Amendment" shall mean the Articles of Amendment
of the Company designating and establishing the Series C Preferred Stock and
setting forth the preferences, limitations and relative rights of such series of
Preferred Stock of the Company, a copy of which is attached as Exhibit A.
"Book Value", when used with reference to Common Shares issued
by any Person, shall mean the amount of equity of such Person applicable to each
Common Share, determined (a) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (b) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (c) after giving effect
to (i) the exercise of all rights, options and warrants to purchase such Common
Shares (other than the Rights), and the conversion of all securities convertible
into such Common Shares, at an exercise or conversion price, per Common Share,
which is less than such Book Value before giving effect to such exercise or
conversion (whether or not exercisability or convertibility is conditioned upon
occurrence of a future event), (ii) all dividends and other distributions on the
capital stock of such Person declared prior to the date as of which such Book
Value is to be determined and to be paid or made after such date, and (iii) any
other agreement, arrangement or understanding (written or oral), or transaction
or other action prior to the date as of which such Book Value is to be
determined which would have the effect of thereafter reducing such Book Value.
"Business Combination" shall have the meaning set forth in
Section 11(c)(i).
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in
Nashville, Tennessee are authorized or obligated by law or executive order to
close.
"Close of Business" on any given date shall mean 5:00 p.m.,
Nashville, Tennessee time, on such date; provided, however, that, if such date
is not a Business Day, "Close of Business" shall mean 5:00 p.m., Nashville,
Tennessee time, on the next succeeding Business Day.
"Common Shares", when used with reference to the Company prior
to a Business Combination, shall mean the shares of Common Stock of the Company
or any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares", when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not limit (as a
maximum amount and not merely in proportional terms) the amount of dividends or
income payable or distributable on such class or series or the amount of assets
distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that, if at any
time there shall be more than one such class or series of capital stock or
equity interests of such Person, "Common Shares" of such Person shall include
all such classes and series substantially in the proportion of the total number
of shares or other units of each such class or series outstanding at such time.
"Common Stock" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the heading of
this Rights Agreement; provided, however, that if there is a Business
Combination, "Company" shall have the meaning set forth in Section 11(c)(iii).
The term "control" with respect to any Person shall mean the
power to direct the management and policies of such Person, directly or
indirectly, by or through stock ownership, agency or otherwise, or pursuant to
or in connection with an agreement, arrangement or understanding (written or
oral) with one or more other Persons by or through stock ownership, agency or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Distribution Date" shall have the meaning set forth in
Section 3(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as in effect on the date in question, unless otherwise specifically provided.
"Exchange Consideration" shall have the meaning set forth in
Section 11(b)(i).
"Expiration Date" shall have the meaning set forth in Section
7(a).
"Formula Number" shall mean 10,000; provided, however, that,
if at any time after June 1, 2001, the Company shall (x) declare or pay any
dividend on the Common Stock payable in shares of Common Stock or make any
distribution on the Common Stock in shares of Common Stock, (y) subdivide (by a
stock split or otherwise) the outstanding shares of Common Stock into a larger
number of shares of Common Stock or (z) combine (by a reverse stock split or
otherwise) the outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then, in each such event, the Formula Number shall be
adjusted to a number determined by multiplying the Formula Number in effect
immediately prior to such event by a fraction, the numerator of which is the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
are outstanding immediately prior to such event (and rounding the result to the
nearest whole number); and provided further, that, if at any time after June 1,
2001, the Company shall issue any shares of its capital stock in a merger, share
exchange, reclassification, or change of the outstanding shares of Common Stock,
then, in each such event, the Formula Number shall be appropriately adjusted to
reflect such merger, share exchange, reclassification or change so that each
share of Preferred Stock continues to be the economic equivalent of a Formula
Number of shares of Common Stock prior to such merger, share exchange,
reclassification or change.
"Major Part", when used with reference to the assets of the
Company and its Subsidiaries as of any date, shall mean assets (a) having a fair
market value aggregating 50% or more of the total fair market value of all the
assets of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (b) accounting for 50% or more of the total value (net of depreciation
and amortization) of all the assets of the Company and its Subsidiaries (taken
as a whole) as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with generally accepted accounting principles then in effect, or (c) accounting
for 50% or more of the total amount of earnings before interest, taxes,
depreciation and amortization or of the revenues of the Company and its
Subsidiaries (taken as a whole) as would be shown on, or derived from, a
consolidated or combined statement of income or operations of the Company and
its Subsidiaries for the period of 12 months ending on the last day of the
Company's monthly accounting period next preceding the date in question,
prepared in accordance with generally accepted accounting principles then in
effect.
"Market Value", when used with reference to Common Shares on
any date, shall be deemed to be the average of the daily closing prices, per
share, of such Common Shares for the period which is the shorter of (a) 30
consecutive Trading Days immediately prior to the date in question or (b) the
number of consecutive Trading Days beginning on the Trading Day immediately
after the date of the first public announcement of the event requiring a
determination of the Market Value and ending on the Trading Day immediately
prior to the record date of such event; provided, however, that, in the event
that the Market Value of such Common Shares is to be determined in whole or in
part during a period following the announcement by the issuer of such Common
Shares of any action of the type described in Section 12(a) that would require
an adjustment thereunder, then, and in each such case, the Market Value of such
Common Shares shall be appropriately adjusted to reflect the effect of such
action on the market price of such Common Shares. The closing price for each
Trading Day shall be the closing price quoted on the principal United States
securities exchange registered under the Exchange Act (or any recognized foreign
stock exchange) on which such securities are listed, or, if such securities are
not listed on any such exchange, the average of the closing bid and asked
quotations with respect to a share of such securities on any National
Association of Securities Dealers, Inc. quotations system, or if no such
quotations are available, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such securities
selected by the Board of Directors of the Company. If on any such Trading Day no
market maker is making a market in such securities, the closing price of such
securities on such Trading Day shall be deemed to be the fair value of such
securities as determined in good faith by the Board of Directors of the Company
(whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent, the holders of Rights and all
other Persons); provided, however, that for the purpose of determining the
closing price of the Preferred Shares for any Trading Day on which there is no
such market maker for the Preferred Shares the closing price on such Trading Day
shall be deemed to be the Formula Number times the closing price of the Common
Shares of the Company on such Trading Day.
"Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Preferred Shares" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement. Any reference in this Rights
Agreement to Preferred Shares shall be deemed to include any authorized fraction
of a Preferred Share, unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person in a
Business Combination; provided, however, that, if such Surviving Person is a
direct or indirect Subsidiary of any other Person, "Principal Party" shall mean
the Person which is the ultimate parent of such Surviving Person and which is
not itself a Subsidiary of another Person. In the event ultimate control of such
Surviving Person is shared by two or more Persons, "Principal Party" shall mean
that Person that is immediately controlled by such two or more Persons.
"Purchase Price" with respect to each Right shall mean $20.00
, as such amount may from time to time be adjusted as provided herein. All
references herein to the Purchase Price shall mean the Purchase Price as in
effect at the time in question.
"Record Date" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section
24(a).
"Redemption Price" with respect to each Right shall mean
$.001, as such amount may from time to time be adjusted in accordance with
Section 12. All references herein to the Redemption Price shall mean the
Redemption Price as in effect at the time in question.
"Registered Common Shares" shall mean Common Shares which are,
as of the date of consummation of a Business Combination, and have continuously
been for the 12 months immediately preceding such date, registered under Section
12 of the Exchange Act.
"Right Certificate" shall mean a certificate evidencing a
Right or Rights in substantially the form attached as Exhibit B.
"Rights" shall mean the rights to purchase Preferred Shares
(or other securities) as provided in this Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as in
effect on the date in question, unless otherwise specifically provided.
"Subsidiary" shall mean a Person, at least a majority of the
total outstanding voting power (being the power under ordinary circumstances
(and not merely upon the happening of a contingency) to vote in the election of
directors of such Person (if such Person is a corporation) or to participate in
the management and control of such Person (if such Person is not a corporation))
of which is owned, directly or indirectly, by another Person or by one or more
other Subsidiaries of such other Person or by such other Person and one or more
other Subsidiaries of such other Person.
"Surviving Person" shall mean (a) the Person which is the
continuing or surviving Person in a consolidation or merger or share exchange
specified in Section 11(c)(i)(A) or 11(c)(i)(B) or (b) the Person to which the
Major Part of the assets of the Company and its Subsidiaries is sold, leased,
exchanged or otherwise transferred or disposed of in one or more transactions
specified in Section 11(c)(i)(C); provided, however, that, if the Major Part of
the assets of the Company and its Subsidiaries is sold, leased, exchanged or
otherwise transferred or disposed of in one or more transactions specified in
Section 11(c)(i)(C) to more than one Person, the "Surviving Person" in such case
shall mean the Person that acquired assets of the Company and/or its
Subsidiaries with the greatest fair market value in such transaction or
transactions.
"Trading Day" shall mean a day on which the principal national
securities exchange (or principal recognized foreign stock exchange, as the case
may be) on which any securities or Rights, as the case may be, are listed or
admitted to trading is open for the transaction of business or, if the
securities or Rights in question are not listed or admitted to trading on any
national securities exchange (or recognized foreign stock exchange, as the case
may be), a Business Day.
SECTION 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint one or more co-Rights Agents as it may
deem necessary or desirable upon notice to the Rights Agent (the term "Rights
Agent" being used herein to refer, collectively, to the Rights Agent together
with any such co-Rights Agents). In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be set forth in an amendment to this Rights Agreement. As soon as
practicable after the Record Date, the Rights Agent will assist the Company in
mailing a letter summarizing the terms of the Rights to each holder of record of
Common Stock as of the Record Date, at such holder's address as shown by the
records of the Company.
SECTION 3. Issue of Rights and Right Certificates. (a) One Right shall
be associated with each Common Share outstanding on the Record Date, each
additional Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the Redemption Date or the Expiration
Date and each additional Common Share with which Rights are issued after the
Distribution Date but prior to the earlier of the Redemption Date or the
Expiration Date as provided in Section 23; provided, however, that, if the
number of outstanding Rights are combined into a smaller number of outstanding
Rights pursuant to Section 12(a), the appropriate fractional Right determined
pursuant to such Section shall thereafter be associated with each such Common
Share.
(b) Until the earlier of (i) the tenth Business Day (or such
later date as may be determined by the Board of Directors of the Company) after
such time as the Company learns that a Person has become an Acquiring Person or
(ii) the Close of Business on such date, if any, as may be designated by the
Board of Directors of the Company following the commencement of, or first public
disclosure of an intent to commence, 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 of its Subsidiaries, or any Person holding Common
Shares for or pursuant to the terms of any such employee benefit plan) for
outstanding Common Shares, if upon consummation of such tender or exchange offer
such Person could be the Beneficial Owner of 15% or more of the outstanding
Common Shares (the Close of Business on the earlier of such dates being the
"Distribution Date"), (x) the Rights will be evidenced by the certificates or
other evidences of ownership of Common Shares registered in the names of the
holders thereof and not by separate Right Certificates and (y) the Rights,
including the right to receive Right Certificates, will be transferable only in
connection with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the Distribution Date, at the
address of such holder shown on the records of the Company, a Right Certificate
evidencing one whole Right for each Common Share (or for the number of Common
Shares with which one whole Right is then associated if the number of Rights per
Common Share held by such record holder has been adjusted in accordance with the
proviso in Section 3(a)). If the number of Rights associated with each Common
Share has been adjusted in accordance with the proviso in Section 3(a), at the
time of distribution of the Right Certificates the Company may make any
necessary and appropriate rounding adjustments so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Right in accordance with Section 15(a). As of and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(c) Until the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, the Rights associated with Common Shares
shall be evidenced by the evidence of ownership of such Common Shares alone, the
registered holders of the Common Shares shall also be the registered holders of
the associated Rights, and the transfer of any Common Shares shall also
constitute the transfer of the Rights associated with such Common Shares.
(d) Certificates issued for Common Shares after the Record
Date (including, without limitation, upon transfer or exchange of outstanding
Common Shares), but prior to the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, shall have printed on, written on or
otherwise affixed to or attached to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement dated as of June
1, 2001, as it may be amended from time to time (the "Rights
Agreement"), between Shop At Home, Inc. (the "Company") and
Computershare Trust Company, Inc., as Rights Agent (the "Rights
Agent"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices of
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Rights
beneficially owned by Acquiring Persons or their Affiliates or
Associates (as such terms are defined in the Rights Agreement) and by
any subsequent holder of such Rights are null and void and
nontransferable.
Notwithstanding this paragraph (d), the omission of a legend
shall not affect the enforceability of any part of this Rights Agreement or the
rights of any holder of Rights.
SECTION 4. Form of Right Certificates. The Right Certificates (and the
form of election to purchase and form of assignment to be printed on the reverse
side thereof) shall be in substantially the form set forth as Exhibit B and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Rights Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 7, 11 and 23, the Right Certificates, whenever issued,
shall be dated as of the Distribution Date, and on their face shall entitle the
holders thereof to purchase such number of Preferred Shares as shall be set
forth therein for the Purchase Price set forth therein, subject to adjustment
from time to time as herein provided.
SECTION 5. Execution, Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by the President, the
Chief Operating Officer, the Chief Financial Officer, or an Executive Vice
President of the Company, either manually or by facsimile signature, and have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid or obligatory for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such an officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such an officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of execution of such Right Certificate, shall be a proper officer of
the Company to sign such Right Certificate, although at the date of execution of
this Rights Agreement any such person was not such an officer of the Company.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office in Lakewood, Colorado, books
for registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced by each of the Right Certificates,
the certificate number of each of the Right Certificates and the date of each of
the Right Certificates.
SECTION 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates;
Uncertificated Rights. (a) Subject to the provisions of Sections 7(e) and 15, at
any time after the Distribution Date, and at or prior to the Close of Business
on the earlier of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split-up, combined or
exchanged for another Right Certificate or Right Certificates representing, in
the aggregate, the same number of Rights as the Right Certificate or Right
Certificates surrendered then represented. Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent and shall surrender the Right
Certificate or Right Certificates to be transferred, split-up, combined or
exchanged at the principal office of the Rights Agent; provided, however, that
neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate surrendered for
transfer until the registered holder shall have completed and signed the
certification contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 7(e) and 15, countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split-up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company or the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a valid Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and, at
the Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will make a
new Right Certificate of like tenor and deliver such new Right Certificate to
the Rights Agent for countersignature and delivery to the registered owner in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company
and the Rights Agent may amend this Rights Agreement to provide for
uncertificated Rights in addition to or in place of Rights evidenced by Right
Certificates.
SECTION 7. Exercise of Rights; Expiration Date of Rights. (a) Subject
to Section 7(e) and except as otherwise provided herein (including Section 11),
each Right shall entitle the registered holder thereof, upon exercise thereof as
provided herein, to purchase for the Purchase Price, at any time after the
Distribution Date and at or prior to the earlier of (i) the Close of Business on
the 10th anniversary of the date of this Rights Agreement (the Close of Business
on such date being the "Expiration Date") or (ii) the Redemption Date,
one-ten-thousandth (1/10,000) of a Preferred Share, subject to adjustment from
time to time as provided in Sections 11 and 12.
(b) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date, upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the Rights
Agent in Lakewood, Colorado, together with payment of the Purchase Price for
each one-ten-thousandth (1/10,000) of a Preferred Share as to which the Rights
are exercised, at or prior to the earlier of (i) the Expiration Date or (ii) the
Redemption Date.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the Preferred Shares to be
purchased together with an amount equal to any applicable transfer tax, in
lawful money of the United States of America, in cash or by certified check or
money order payable to the order of the Company, the Rights Agent shall
thereupon (i) either (A) promptly requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent)
certificates for the number of Preferred Shares 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 Preferred
Shares with a depositary agent under a depositary arrangement, promptly
requisition from the depositary agent depositary receipts representing the
number of one-ten-thousandth (1/10,000) of a Preferred Share to be purchased (in
which case certificates for the Preferred Shares to be represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply with all such requests,
(ii) when appropriate, promptly requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
15, (iii) promptly after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise fewer than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be countersigned by the Rights Agent and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 15.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, any Rights that are at any time beneficially owned by an Acquiring
Person or any Affiliate or Associate of an Acquiring Person shall be null and
void and nontransferable, and any holder of any such Right (including any
purported transferee or subsequent holder) shall not have any right to exercise
or transfer any such Right.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificates upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
(g) The Company may temporarily suspend, for a period of time
not to exceed 90 calendar days after the Distribution Date, the exercisability
of the Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such time
as the suspension is no longer in effect. Notwithstanding any provision herein
to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification under the blue sky or securities laws of such
jurisdiction shall not have been obtained or the exercise of the Rights shall
not be permitted under applicable law.
SECTION 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered or presented for the purpose of exercise,
transfer, split-up, combination or exchange shall, and any Right Certificate
representing Rights that have become null and void and nontransferable pursuant
to Section 7(e) surrendered or presented for any purpose shall, if surrendered
or presented to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in canceled form, or, if surrendered or presented to
the Rights Agent, shall be canceled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by this Rights Agreement.
The Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any Right Certificate purchased
or acquired by the Company. The Rights Agent shall deliver all canceled Right
Certificates to the Company so that the Company is able to maintain such
certificates for such period of time as may be required by law, or shall, at the
written request of the Company, destroy such canceled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. Reservation and Availability of Preferred Shares. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares, free from
preemptive rights or any right of first refusal, a number of Preferred Shares
sufficient to permit the exercise pursuant to Section 7 or exchange pursuant to
Section 11 in full of all outstanding Rights.
(b) In the event that there shall not be sufficient authorized
but unissued Preferred Shares to permit the exercise or exchange of Rights in
accordance with Section 11, the Company covenants and agrees that it will take
all such action as may be necessary to authorize additional Preferred Shares for
issuance upon the exercise or exchange of Rights pursuant to Section 11;
provided, however, that if the Company is unable to cause the authorization of
additional Preferred Shares, then the Company shall, or in lieu of seeking any
such authorization, the Company may, to the extent necessary and permitted by
applicable law and any agreements or instruments in effect prior to the
Distribution Date to which it is a party, (i) upon surrender of a Right, pay
cash equal to the Purchase Price in lieu of issuing Preferred Shares and
requiring payment therefor, (ii) upon due exercise of a Right and payment of the
Purchase Price for each Preferred Share as to which such Right is exercised,
issue equity securities having a value equal to the value of the Preferred
Shares which otherwise would have been issuable pursuant to Section 11, which
value shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors of the Company or (iii) upon due exercise of
a Right and payment of the Purchase Price for each Preferred Share as to which
such Right is exercised, distribute a combination of Preferred Shares, cash
and/or other equity and/or debt securities having an aggregate value equal to
the value of the Preferred Shares which otherwise would have been issuable
pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company. To the extent that any legal or contractual restrictions (pursuant to
agreements or instruments in effect prior to the Distribution Date to which it
is party) prevent the Company from paying the full amount payable in accordance
with the foregoing sentence, the Company shall pay to holders of the Rights as
to which such payments are being made all amounts which are not then restricted
on a pro rata basis as such payments become permissible under such legal or
contractual restrictions until such payments have been paid in full.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares delivered
upon exercise or exchange 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.
(d) So long as the Preferred Shares issuable upon the exercise
or exchange of Rights are to be listed on any national securities exchange, the
Company covenants and agrees to use its best efforts to cause, from and after
such time as the Rights become exercisable or exchangeable, all Preferred Shares
reserved for such issuance to be listed on such securities exchange upon
official notice of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all Federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of Right
Certificates or of any Preferred Shares or Common Shares or other securities
upon the exercise or exchange of the Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a Person other than, or in respect of the
issuance or delivery of certificates or other evidences of ownership of the
Preferred Shares or Common Shares or other securities, as the case may be, in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or exchange or to issue or deliver
any certificates or other evidences of ownership of Preferred Shares or Common
Shares or other securities, as the case may be, upon the exercise or exchange of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax is due.
SECTION 10. Preferred Shares Record Date. Each Person in whose name any
certificate or other evidence of ownership of Preferred Shares or Common Shares
or other securities is issued upon the exercise or exchange of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares or Common Shares or other securities, as the case may be, represented
thereby on, and such certificate or other evidence of ownership shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of any Purchase Price (and any applicable transfer
taxes) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the transfer books of the Company for the Preferred
Shares or Common Shares or other securities, as the case may be, are closed,
such Person shall be deemed to have become the record holder of such Preferred
Shares or Common Shares or other securities, as the case may be, on, and such
certificate or other evidence of ownership shall be dated as of, the next
succeeding Business Day on which the transfer books of the Company for the
Preferred Shares or Common Shares or other securities, as the case may be, are
open.
SECTION 11. Adjustments in Rights After There Is an Acquiring Person;
Exchange of Rights for Shares; Business Combinations. (a) Upon a Person becoming
an Acquiring Person, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have a right to
receive, upon exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, such number of ten-thousandths (1/10,000s) of a
Preferred Share as shall equal the result obtained by multiplying the Purchase
Price by a fraction, the numerator of which is the number of ten-thousandths
(1/10,000s) of a Preferred Share for which a Right is then exercisable and the
denominator of which is 50% of the Market Value of the Common Shares on the date
on which a Person becomes an Acquiring Person. As soon as practicable after a
Person becomes an Acquiring Person (provided the Company shall not have elected
to make the exchange permitted by Section 11(b)(i) for all outstanding Rights),
the Company covenants and agrees to use its best efforts to:
(i) prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights;
(ii) cause such registration statement to become
effective as soon as practicable after such filing;
(iii) 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
(iv) qualify or register the Preferred Shares purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
(b)(i) The Board of Directors of the Company may, at its
option, at any time after a Person becomes an Acquiring Person, mandatorily
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that shall have become null and void and nontransferable
pursuant to the provisions of Section 7(e)) for consideration per Right
consisting of either (x) one-half of the securities that would be issuable at
such time upon the exercise of one Right in accordance with Section 11(a) or, if
applicable, Section 9(b)(ii) or (iii) or, (y) if applicable, the cash
consideration specified in Section 9(b)(i) (the consideration issuable per Right
pursuant to this Section 11(b)(i) being the "Exchange Consideration"). The Board
of Directors of the Company may, at its option, issue, in substitution for
Preferred Shares, Common Shares in an amount per Preferred Share equal to the
Formula Number if there are sufficient authorized but unissued Common Shares. If
the Board of Directors of the Company elects to exchange all or part of the
Rights for the Exchange Consideration pursuant to this Section 11(b)(i) prior to
the physical distribution of the Rights Certificates, the Corporation may
distribute the Exchange Consideration in lieu of distributing Right
Certificates, in which case for purposes of this Rights Agreement holders of
Rights shall be deemed to have simultaneously received and surrendered for
exchange Right Certificates on the date of such distribution.
(ii) Any action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to Section 11(b)(i) shall be
irrevocable and, immediately upon the taking of such action and without any
further action and without any notice, the right to exercise any such Right
pursuant to Section 11(a) shall terminate and the only right thereafter of a
holder of such Right shall be to receive the Exchange Consideration in exchange
for each such Right held by such holder or, if the Exchange Consideration shall
not have been paid or issued, to exercise any such Right pursuant to Section
11(c)(i). The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for 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
exchange will state the method by which the exchange of the Rights for the
Exchange Consideration 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 shall have become null and void and nontransferable pursuant to the
provisions of Section 7(e)) held by each holder of Rights.
(c)(i) In the event that, following a Distribution Date,
directly or indirectly, any transactions specified in the following clause (A),
(B) or (C) of this Section 11(c) (each such transaction being a "Business
Combination") shall be consummated:
(A) the Company shall consolidate with, merge with
and into, or enter into a share exchange with any Acquiring Person or
any Affiliate or Associate of an Acquiring Person;
(B) any Acquiring Person or any Affiliate or
Associate of an Acquiring Person shall merge with and into or enter
into a share exchange with the Company and, in connection with such
merger or share exchange, all or part of the Common Shares shall be
changed into or exchanged for capital stock or other securities of the
Company or of any Acquiring Person or Affiliate or Associate of an
Acquiring Person or cash or any other property; or
(C) the Company shall sell, lease, exchange or
otherwise transfer or dispose of (or one or more of its Subsidiaries
shall sell, lease, exchange or otherwise transfer or dispose of), in
one or more transactions, the Major Part of the assets of the Company
and its Subsidiaries (taken as a whole) to any Acquiring Person or any
Affiliate or Associate of an Acquiring Person;
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a)):
(x) if the Principal Party in such Business Combination has Registered
Common Shares outstanding, each Right shall thereafter represent the
right to receive, upon the exercise thereof for the Purchase Price in
accordance with the terms of this Rights Agreement, such number of
Registered Common Shares of such Principal Party, free and clear of all
liens, encumbrances or other adverse claims, as shall have an aggregate
Market Value equal to the result obtained by multiplying the Purchase
Price by two; or
(y) if the Principal Party involved in such Business Combination does
not have Registered Common Shares outstanding, each Right shall
thereafter represent the right to receive, upon the exercise thereof
for the Purchase Price in accordance with the terms of this Rights
Agreement, at the election of the holder of such Right at the time of
the exercise thereof, any of:
(1) such number of Common Shares of the Surviving Person in
such Business Combination as shall have an aggregate Book Value
immediately after giving effect to such Business Combination equal to
the result obtained by multiplying the Purchase Price by two;
(2) such number of Common Shares of the Principal Party in
such Business Combination (if the Principal Party is not also the
Surviving Person in such Business Combination) as shall have an
aggregate Book Value immediately after giving effect to such Business
Combination equal to the result obtained by multiplying the Purchase
Price by two; or
(3) if the Principal Party in such Business Combination is an
Affiliate of one or more Persons which has Registered Common Shares
outstanding, such number of Registered Common Shares of whichever of
such Affiliates of the Principal Party has Registered Common Shares
with the greatest aggregate Market Value on the date of consummation of
such Business Combination as shall have an aggregate Market Value on
the date of such Business Combination equal to the result obtained by
multiplying the Purchase Price by two.
(ii) The Company shall not consummate any Business Combination
unless each issuer of Common Shares for which Rights may be exercised, as set
forth in this Section 11(c), shall have sufficient authorized Common Shares that
have not been issued or reserved for issuance (and which shall, when issued upon
exercise thereof in accordance with this Rights Agreement, be validly issued,
fully paid and nonassessable and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof) to permit the exercise in full of the Rights in accordance with this
Section 11(c) and unless prior thereto:
(A) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights, shall be effective
under the Securities Act; and
(B) the Company and each such issuer shall have:
[1] executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such issuer of
the obligations set forth in this Section 11(c) (including the
obligation of such issuer to issue Common Shares upon the exercise of
Rights in accordance with the terms set forth in Sections 11(c)(i) and
11(c)(iii)) and further providing that such issuer, at its own expense,
will use its best efforts to:
(x) cause a registration statement under the
Securities Act on an appropriate form, with respect
to the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights, to remain
effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the
Expiration Date;
(y) qualify or register the Rights and the
Common Shares of such issuer purchasable upon
exercise of the Rights under the blue sky or
securities laws of such jurisdictions as may be
necessary or appropriate; and
(z) list the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights
on each national securities exchange on which the
Common Shares were listed prior to the consummation
of the Business Combination or, if the Common Shares
were not listed on a national securities exchange
prior to the consummation of the Business
Combination, on a national securities exchange;
[2] furnished to the Rights Agent a written opinion
of independent counsel stating that such supplemental agreement is a
valid, binding and enforceable agreement of such issuer; and
[3] filed with the Rights Agent a certificate of a
nationally recognized firm of independent accountants setting forth the
number of Common Shares of such issuer which may be purchased upon the
exercise of each Right after the consummation of such Business
Combination.
(iii) After consummation of any Business Combination and
subject to the provisions of Section 11(c)(ii), (A) each issuer of Common Shares
for which Rights may be exercised as set forth in this Section 11(c) shall be
liable for, and shall assume, by virtue of such Business Combination, all the
obligations and duties of the Company pursuant to this Rights Agreement, (B) the
term "Company" shall thereafter be deemed to refer to such issuer, (C) each such
issuer shall take such steps in connection with such consummation as may be
necessary to assure that the provisions hereof (including the provisions of
Sections 11(a) and 11(c)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights and (D) the number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12 and the provisions of
Section 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such Common Shares.
SECTION 12 Certain Adjustments. (a) To preserve the actual or potential
economic value of the Rights, if at any time after the date of this Rights
Agreement there shall be any change in the Common Shares or the Preferred Shares
(other than pursuant to the share dividend declared by the Board of Directors of
the Company as of the date of this Rights Agreement), whether by reason of share
dividends, share splits, recapitalization, mergers, consolidations, combinations
or exchanges of securities, split-ups, splitoffs, spin-offs, liquidations, other
similar changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or subscription rights, options or warrants to holders
of Common Shares or Preferred Shares, as the case may be (other than
distribution of the Rights or regular annual cash dividends) or otherwise, then,
in each such event the Board of Directors of the Company shall make such
appropriate adjustments in the number of Preferred Shares (or the number and
kind of other securities) issuable upon exercise of each Right, the Purchase
Price and Redemption Price in effect at such time and the number of Rights
outstanding at such time (including the number of Rights or fractional Rights
associated with each Common Share) such that following such adjustment such
event shall not have had the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such event.
(b) If, as a result of an adjustment made pursuant to Section
12(a), the holder of any Right thereafter exercised shall become entitled to
receive any securities other than Preferred Shares, thereafter the number of
such securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12 and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to
any adjustment made to the amount of Preferred Shares or other securities
relating to a Right shall evidence the right to purchase, for the Purchase
Price, the adjusted number and kind of securities purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(d) Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Shares or number or kind of other securities
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms which were expressed in the
initial Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section
12(a) requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Shares and/or other securities, if any, issuable upon such
exercise over and above the Preferred Shares and/or other securities, if any,
issuable before giving effect 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 securities upon the
occurrence of the event requiring such adjustment.
SECTION 13 . Certificate of Adjustment. Whenever an adjustment is made
as provided in Sections 11 or 12, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) in accordance with Section 25. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
SECTION 14 . Additional Covenants. (a) Notwithstanding any other
provision of this Rights Agreement, no adjustment to the number of Preferred
Shares (or fractions of a share) or other securities for which a Right is
exercisable or the number of Rights outstanding or associated with each Common
Share or any similar or other adjustment shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 12, unless the terms of this
Rights Agreement are amended so as to preserve such benefits.
(b) The Company covenants and agrees that, after the
Distribution Date, except as permitted by Section 26, it will not take (or
permit any Subsidiary of the Company to take) any action if at the time such
action is taken it is intended or reasonably foreseeable that such action will
reduce or otherwise limit the benefits the holders of the Rights would have had
absent such action, including, without limitation, the benefits under Sections
11 and 12. Any action taken by the Company during any period after any Person
becomes an Acquiring Person but prior to the Distribution Date shall be null and
void unless such action could be taken under this Section 14(b) from and after
the Distribution Date. The Company shall not consummate any Business Combination
if any issuer of Common Shares for which Rights may be exercised after such
Business Combination in accordance with Section 11(c) shall have taken any
action that reduces or otherwise limits the benefits the holders of the Rights
would have had absent such action, including, without limitation, the benefits
under Sections 11 and 12.
SECTION 15 . Fractional Rights and Fractional Shares. (a) The Company
may, but shall not be required to, issue fractions of Rights or distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company may pay to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 15(a), the current market value of a whole
Right shall be the closing price of the Rights (as determined pursuant to the
second and third sentences of the definition of Market Value contained in
Section 1) for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue
fractions of Preferred Shares upon exercise or exchange of the Rights or
distribute certificates which evidence fractional Preferred Shares. In lieu of
fractional Preferred Shares, the Company may elect to (i) utilize a depository
arrangement as provided by the terms of the Preferred Shares or (ii) in the case
of a fraction of a Preferred Share (other than one-ten-thousandth (1/10,000) of
a Preferred Share or any integral multiple thereof), pay to the registered
holders of Right Certificates at the time such Rights are exercised or exchanged
as herein provided an amount in cash equal to the same fraction of the current
market value of one Preferred Share, if any are outstanding and publicly traded
(or the Formula Number times the current market value of one Common Share if the
Preferred Shares are not outstanding and publicly traded). For purposes of this
Section 15(b), the current market value of a Preferred Share (or Common Share)
shall be the closing price of a Preferred Share (or Common Share) (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date of
such exercise or exchange. If, as a result of an adjustment made pursuant to
Section 12(a), the holder of any Right thereafter exercised shall become
entitled to receive any securities other than Preferred Shares, the provisions
of this Section 15(b) shall apply, as nearly as reasonably may be, on like terms
to such other securities.
(c) The Company may, but shall not be required to, issue
fractions of Common Shares upon exchange of Rights pursuant to Section 11(b), or
to distribute certificates or other evidences of ownership which evidence
fractional Common Shares. In lieu of such fractional Common Shares, the Company
may pay to the registered holders of the Right Certificates with regard to which
such fractional Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current Market Value of one Common Share as of
the effective date of the exchange under Section 11(b).
(d) The holders of Rights by the acceptance of the Right
Certificates (or, prior to the Distribution Date, of the Common Shares)
expressly waives the right to receive any fractional Rights or any fractional
shares upon exercise of a Right except as provided in this Section 15.
SECTION 16 . Rights of Action. (a) All rights of action in respect of
this Rights Agreement are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares) may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and shall be entitled to specific
performance of the obligations of any Person under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce
the provisions of this Rights Agreement shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred in such
action.
SECTION 17 . Transfer and Ownership of Rights and Right Certificates.
(a) Prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares and the Rights associated with
the Common Shares shall be automatically transferred upon the transfer of the
Common Shares.
(b) After the Distribution Date, the Right Certificates will
be transferable, subject to Section 7(e), only on the registry books of the
Rights Agent if surrendered at the principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer.
(c) The Company and the Rights Agent may deem and treat the
Person in whose name a Right Certificate (or, prior to the Distribution Date,
the associated certificate or other evidence of ownership of Common Shares) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated certificate or other evidence of ownership of Common Shares
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.
SECTION 18 . Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right 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 which may at any time be issuable on the
exercise or exchange of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a shareholder of
the Company, including, without limitation, any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders, or to receive
dividends or other distributions or subscription rights, or otherwise, until the
Right or Rights evidenced by such Right Certificate shall have been exercised or
exchanged in accordance with the provisions hereof.
SECTION 19 . Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder from time to time and its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance upon any
Right Certificate or certificate or other evidence of ownership of 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.
SECTION 20 . Merger or Consolidation or Change of Rights Agent. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Rights Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 22. In
case, at the time such successor Rights Agent shall succeed to the agency
created by this Rights Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and, in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
SECTION 21 . Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates (or, prior to the Distribution Date, of the Common Shares), by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
satisfactory to it (who may be legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken, suffered or omitted by it in good faith and
in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person) be proved or established by the Company prior to taking, refraining from
taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, a Senior Vice President, the
Treasurer or the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it have any responsibility with respect to any exercise
of Rights by an Acquiring Person in whose hands the Rights are null and void and
nontransferable unless the Company shall have given actual notice to the Rights
Agent of the identity of any such Acquiring Person; nor shall it be responsible
for any adjustment required under the provisions of Section 11 or 12 or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares or Common Shares to be issued pursuant to
this Rights Agreement or any Right Certificate or as to whether any Preferred
Shares or Common Shares will, when so issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, a Senior
Vice President, the Secretary or the Treasurer of the Company, and to apply to
such officers for advice and instructions in connection with its duties and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer,
employee or affiliate of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct provided reasonable care was exercised in
the selection and continued employment thereof.
(j) The Company agrees to indemnify and to hold the Rights
Agent harmless against any loss, liability, damage or expense (including
reasonable fees and expenses of legal counsel) which the Rights Agent may incur
resulting from its actions as Rights Agent pursuant to this Rights Agreement;
provided, however, that the Rights Agent shall not be indemnified or held
harmless with respect to any such loss, liability, damage or expense incurred by
the Rights Agent as a result of, or arising out of, its own negligence, bad
faith or willful misconduct. The Rights Agent shall notify the Company, by
letter or by facsimile confirmed by letter, of the assertion of any action,
proceeding, suit or claim against the Rights Agent, promptly after the Rights
Agent shall have notice of any such assertion of an action, proceeding, suit or
claim or have been served with the summons or other first legal process giving
information as to the nature and basis of the action, proceeding, suit or claim.
The Company shall not be liable with respect to any such action, proceeding,
suit or claim to the extent that any failure of the Rights Agent so to notify
promptly the Company prejudices the rights of the Company with respect to such
action, proceeding, suit or claim. The Company shall at its own expense assume
the defense of any such action, proceeding, suit or claim. In the event that the
Company assumes such defense, the Company shall not thereafter be liable for the
fees and expenses of any additional counsel retained by the Rights Agent, so
long as the Company shall retain counsel satisfactory to the Rights Agent, in
the exercise of its reasonable judgment, to defend such action, proceeding, suit
or claim. In the event the Company fails so to defend, the Rights Agent agrees
not to settle any litigation in connection with any action, proceeding, suit or
claim with respect to which it may seek indemnification from the Company without
the prior written consent of the Company.
(k) The Rights Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more registered holders of Right
Certificates shall furnish the Rights Agent with security and indemnity to its
satisfaction for any costs and expenses which may be incurred.
(l) The Rights Agent shall not be liable for failure to
perform any duties except as specifically set forth herein and no implied
covenants or obligations shall be read into this Agreement against the Rights
Agent, whose duties and obligations are ministerial and shall be determined
solely by the express provisions hereof.
SECTION 22 . Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and the Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates (or, prior to the
Distribution Date, of the Common Shares) by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and the Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates (or,
prior to the Distribution Date, of the Common Shares) by first-class mail. If
the Rights Agent shall resign or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (or, prior to the Distribution Date, of the
Common Shares) who shall, with such notice, submit his Right Certificate (or,
prior to the Distribution Date, the certificate or other evidence of ownership
of his Common Shares) for inspection by the Company, then the registered holder
of any Right Certificate (or, prior to the Distribution Date, of the Common
Shares) may apply to any court of competent jurisdiction for the appointment of
a new Rights Agent. Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be a corporation organized and doing business under
the laws of the United States or of any state of the United States, in good
standing, having a principal office in the United States, which is authorized
under such laws to exercise stock transfer or corporate trust powers and is
subject to supervision or examination by Federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000; provided that the principal transfer agent for
the Common Shares shall in any event be qualified to be the Rights Agent. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and the
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates (or, prior to the Distribution Date, of the Common
Shares). Failure to give any notice provided for in this Section 22, however, or
any defect therein shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
SECTION 23 . Issuance of Additional Rights and Right Certificates.
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date, 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, notes or debentures issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by the Board of Directors
of the Company, issue Rights and distribute Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (x) no such Rights shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights would be issued, and (y) no such Rights shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 24 . Redemption and Termination. (a) The Board of Directors of
the Company may, at its option, at any time prior to the earlier of (i) the
tenth Business Day (or such later date as may be determined by the Board of
Directors of the Company) after such time as a Person becomes an Acquiring
Person and (ii) the Expiration Date, order the redemption of all, but not fewer
than all, the then outstanding Rights at the Redemption Price (the date of such
redemption being the "Redemption Date"), and the Company, at its option, may pay
the Redemption Price either in cash or Common Shares or other securities of the
Company deemed by the Board of Directors of the Company, in the exercise of its
sole discretion, to be at least equivalent in value to the Redemption Price.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, 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. Within 10 Business Days after the action of the Board of
Directors of the Company ordering the redemption of the Rights, the Company
shall give notice of such redemption to the holders of the then outstanding
Rights by mailing such notice to all such holders at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Each such notice of redemption will state the method by which payment of
the Redemption Price will be made. The notice, if mailed in the manner herein
provided, shall be conclusively presumed to have been duly given, whether or not
the holder of Rights receives such notice. In any case, failure to give such
notice by mail, or any defect in the notice, to any particular holder of Rights
shall not affect the sufficiency of the notice to other holders of Rights.
SECTION 25 . Notices. Subject to the provisions of Section 22, notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the holder of a Right Certificate (or, prior to the Distribution Date, of
the Common Shares) to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Shop at Home, Inc.
5388 Hickory Hollow Parkway
Antioch, Tennessee 37013
Attn: General Counsel
Subject to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Rights Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
Computershare Trust Company, Inc.
12039 W. Alameda Parkway, Suite Z-2
Lakewood, Colorado 80228
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the Common Shares) shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares.
28
SECTION 26 . Supplements and Amendments. At any time prior to the
Distribution Date and subject to the last sentence of this Section 26, the
Company may, and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Rights Agreement (including, without limitation, the
date on which the Distribution Date shall occur or the time during which the
Rights may be redeemed pursuant to Section 24) and the Company may amend any
provision of the Articles of Amendment without the approval of any holder of the
Rights. From and after the Distribution Date and subject to applicable law, the
Company may, and the Rights Agent shall if the Company so directs, amend this
Rights Agreement without the approval of any holders of Right Certificates (a)
to cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision of this Rights
Agreement or (b) to make any other provisions in regard to matters or questions
arising hereunder which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Right Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person). Any supplement or amendment to this Rights Agreement duly approved by
the Company that does not amend Sections 19, 20, 21 or 22 in a manner adverse to
the Rights Agent shall become effective immediately upon execution by the
Company, whether or not also executed by the Rights Agent. In addition,
notwithstanding anything to the contrary contained in this Rights Agreement, no
supplement or amendment to this Rights Agreement shall be made which (x) reduces
the Redemption Price (except as required by Section 12(a)), or (y) provides for
an earlier Expiration Date or (z) changes the rights or duties of the Rights
Agent without the consent of the Rights Agent.
SECTION 27 . Successors. All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 28 . Benefits of Rights Agreement: Determinations and Actions
by the Board of Directors, etc. (a) Nothing in this Rights Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, of the Common Shares) any legal or equitable right, remedy or claim under
this Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Common
Shares).
(b) Except as explicitly otherwise provided in this Rights
Agreement, the Board of Directors of the Company shall have the exclusive power
and authority to administer this Rights Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including, without limitation, a determination to redeem or
not redeem the Rights or to amend this Rights Agreement and whether there is an
Acquiring Person).
(c) Nothing contained in this Rights Agreement shall be deemed
to be in derogation of the obligation of the Board of Directors of the Company
to exercise its fiduciary duty. Without limiting the foregoing, nothing
contained herein shall be construed to suggest or imply that the Board of
Directors shall not be entitled to reject any tender offer, or to recommend that
holders of Common Shares reject any tender offer, or to take any other action
(including, without limitation, the commencement, prosecution, defense or
settlement of any litigation and the submission of additional or alternative
offers or other proposals) with respect to any tender offer that the Board of
Directors believes is necessary or appropriate in the exercise of such fiduciary
duty.
SECTION 29 . Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 30 . Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the law
of the State of Tennessee and for all purposes shall be governed by and
construed in accordance with the law of such State applicable to contracts to be
made and performed entirely within such State.
SECTION 31 . Counterparts; Effectiveness. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument. This Rights Agreement shall
be effective as of the Close of Business on the date hereof.
SECTION 32 . Descriptive Headings. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
SHOP AT HOME, INC.
By:/s/George J. Phillips
- ------------------------------------------------------------------------
Title: Secretary
COMPUTERSHARE TRUST COMPANY, INC.
By:/s/
Title: Vice President
By: /s/
Title: Marketing Officer
EXHIBIT A
SERIES C PREFERRED STOCK
(1) Designation and Amount. The shares of such series shall be
designated as Series C Preferred Stock ("Series C Preferred Stock") and the
number of shares constituting such series shall be 10,000. Such number of shares
may be adjusted by appropriate action of the Board of Directors.
(2) Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of
any shares of any other series of Preferred Stock or any other shares of
preferred stock of the Corporation ranking prior and superior to the shares of
Series C Preferred Stock with respect to dividends, each holder of one
ten-thousandth (1/10,000) of a share (a "Unit") of Series C Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for that purpose, (i) dividends payable in cash
on the 1st day of January, April, July and October in each year (each such date
being a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of such Unit of Series C
Preferred Stock, in an amount per Unit (rounded to the nearest cent) equal to
the greater of (x) $.01 or (y) subject to the provision for adjustment
hereinafter set forth, the aggregate per share amount of all cash dividends
declared on shares of the common stock of the Corporation, par value $.0025 per
share, (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 a Unit of Series C Preferred Stock, and (ii) subject
to the provision for adjustment hereinafter set forth, quarterly distributions
(payable in kind) on each Quarterly Dividend Payment Date in an amount per Unit
equal to the aggregate per share amount of all non-cash dividends or other
distributions (other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding share of Common Stock, by reclassification or
otherwise) declared on shares of 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 a Unit of Series C Preferred Stock. In
the event that the Corporation shall at any time after June 1, 2001 (the "Rights
Declaration Date") (i) declare or pay any dividend on outstanding shares of
Common Stock payable in shares of Common Stock, or (ii) subdivide outstanding
shares of Common Stock or (iii) combine outstanding shares of Common Stock into
a smaller number of shares, then in each such case the amount to which the
holder of a Unit of Series C Preferred Stock was entitled immediately prior to
such event pursuant to the preceding sentence shall be adjusted by multiplying
such amount of a fraction the numerator of which shall be the number of shares
of Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution
on Units of Series C Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the shares of Common
Stock (other than a dividend payable in shares of Common Stock); provided,
however 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 $.01
per Unit on the Series C Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and shall be cumulative on
each outstanding Unit of Series C Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of such Unit of Series C
Preferred Stock, unless the date of issuance of such Unit is prior to the record
date for the First Quarterly Dividend Payment Date, in which case, dividends on
such Unit shall begin to accrue from the date of issuance of such Unit, or
unless the date of issuance is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of Units of Series C
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 Units of
Series C Preferred Stock in an amount less than the aggregate amount of all such
dividends at the time accrued and payable on such Units shall be allocated pro
rata on a unit-by-unit basis amount all Units of Series C Preferred Stock at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of Units of Series C 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.
(3) Voting Rights. The holders of Units of Series C Preferred Stock
shall have the following voting rights.
(a) Subject to the provision for adjustment hereinafter set
forth, each Unit of Series C Preferred Stock shall entitle the holder thereof to
one vote on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock or (iii) combine the outstanding shares of Common Stock into a smaller
number of shares, then in each such case the number of votes per Unit to which
holders of Units of Series C Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after such event and the denominator of which shall be 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 Units of Series C Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(c) Except as set forth herein or required by law, holders of
Units of Series C 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 shares of Common Stock as set forth herein) for the taking of
any corporate action.
(4) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on Units of Series C Preferred Stock as provided in
paragraph 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding Units of
Series C Preferred Stock shall have been paid (or set aside for payment) in
full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior to the Series C
Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Series C Preferred Stock, except for dividends paid
ratably on Units of Series C Preferred Stock and shares of all such
parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of such Units and all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series C Preferred Stock, provided, however, that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock ranking junior (both
as to dividends and upon liquidation, dissolution or winding up) to the
Series C Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any Units of Series C Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such Units.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this paragraph 4, purchase or otherwise acquire such shares at such time and in
such manner.
(5) Reacquired Shares. Any Units of Series C Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such Units
shall, upon their cancellation, become authorized but unissued Units 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 Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, no distribution shall be made (i) to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred Stock unless
the holders of Units of Series C Preferred Stock shall have received, subject to
adjustment as hereinafter provided in paragraph (b), the greater of either (y)
$10.00 per Unit plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or declared, to the date of such
payment, or (z) the amount equal to the aggregate per share amount to be
distributed to holders of shares of Common Stock, or (ii) to the holders of
shares of stock ranking on a parity upon liquidation, dissolution or winding up
with the Series C Preferred Stock, unless simultaneously therewith distributions
are made ratably on Units of Series C Preferred Stock and all other shares of
such parity stock in proportion to the total amounts to which the holders of
Units of Series C Preferred Stock are entitled under Clause (i)(y) of this
sentence and to which the holders of such shares of such parity stock are
entitled, in each case upon such liquidation dissolution or winding up.
(b) in the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on outstanding shares of Common
Stock payable in shares of Common Stock, or (ii) subdivide outstanding shares of
Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, then in each such case the aggregate amount to which holders
of Units of Series C Preferred Stock were entitled immediately prior to such
event pursuant to clause (i)(z) of paragraph (1) of this paragraph 6 shall be
adjusted by multiplying such amount by a fraction the numerator of which shall
be the number of shares of Common Stock that are outstanding immediately after
such event and the denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
(7) Share Exchange, Merger, Etc. In case the Corporation shall enter
into any share exchange, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or converted into other stock or
securities, cash and/or any other property, then in any such case Units of
Series C Preferred Stock shall at the same time be similarly exchanged for or
converted into an amount per Unit (subject to the provision for adjustment
hereinafter set forth) equal to 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 converted or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on outstanding shares of Common Stock payable in shares of Common
Stock, or (ii) subdivide outstanding shares of Common Stock, or (iii) combine
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the immediately preceding sentence with respect to the
exchange or conversion of shares of Series C Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common Stock
that were outstanding immediately prior to such event.
(8) Redemption. The Units of Series C Preferred Stock shall not be
redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire Units of Series C Preferred Stock in any other manner permitted by law
and the Charter or Bylaws of the Corporation.
(9) Ranking. The Units of Series C Preferred Stock shall rank junior to
all other series of the Preferred Stock and to any other class of preferred
stock that hereafter may be issued by the Corporation as to the payment of
dividends and the distribution of assets, unless the terms of any such series or
class shall provide otherwise.
(10) Amendment. The Charter, including without limitation the
provisions hereof, shall not hereafter be amended, either directly or
indirectly, or through merger or share exchange with another corporation, in any
manner that would alter or change the powers, preferences or special rights of
the Series C Preferred Stock so as to affect the holders thereof adversely
without the affirmative vote of the holders of a majority or more of the
outstanding Units of Series C Preferred Stock, voting separately as a class.
(11) Fractional Shares. The Series C Preferred Stock may be issued in
Units or other fractions of a share, which Units or fractions shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series C Preferred Stock.
EXHIBIT B
[Form of Right Certificate]
Certificate No. [R]
RIGHTS
NOT EXERCISABLE AFTER MAY 31, 2011, OR EARLIER, IF REDEEMED OR
MANDATORILY EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER
RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 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 ARE NULL AND VOID AND NONTRANSFERABLE.
RIGHT CERTIFICATE
SHOP AT HOME, INC.
This certifies that _______________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of June 1, 2001 (the "Rights
Agreement"), between Shop at Home, Inc., a Tennessee corporation (the
"Company"), and Computershare Trust Company, Inc., as Rights Agent (the "Rights
Agent"), unless the Rights evidenced hereby shall have been previously redeemed
or mandatorily exchanged by the Company, to purchase from the Company at any
time after the Distribution Date (as defined in the Rights Agreement) and prior
to 5:00 p.m., Nashville, Tennessee time, on the 10th anniversary of the date of
the Rights Agreement (the "Expiration Date"), at the principal office of the
Rights Agent, or its successors as Rights Agent, in Lakewood, Colorado,
one-ten-thousandth (1/10,000) of a fully paid, nonassessable share of Series C
Preferred Stock, $10.00 par value per share, of the Company (the "Preferred
Shares"), at a purchase price per one-ten-thousandth (1/10,000) of a share equal
to $10.00 (the "Purchase Price"), payable in cash, upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed.
The Purchase Price and the number and kind of shares which may
be purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of May 31, 2011. As provided in the Rights Agreement, the
Purchase Price and the number and kind of shares which may be purchased upon the
exercise of each Right evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any
time beneficially owned by an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
B-38
This Right 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
reference to the Rights Agreement is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates. Copies
of the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal stock transfer or corporate trust
office of the Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number and kind of shares as the Rights evidenced
by the Right Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its option
at a redemption price (in cash or shares of Common Stock or other securities of
the Company deemed by the Board of Directors to be at least equivalent in value)
of $.001 per Right (which amount shall be subject to adjustment as provided in
the Rights Agreement) at any time prior to the earlier of (a) the tenth Business
Day (as such term is defined in the Rights Agreement) (or such later date as may
determined by the Board of Directors of the Company) after such time as a Person
becomes an Acquiring Person and (b) the Expiration Date.
The Company may, but shall not be required to, issue fractions
of Preferred Shares or distribute certificates which 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-ten-thousandth (1/10,000) of a share or any integral multiple thereof or to
issue certificates or to utilize a depositary arrangement as provided in the
terms of the Rights Agreement and the Preferred Shares.
No holder of this Right 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 which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company, including, without limitation,
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or other distributions or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised as
provided in accordance with the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of: ______________
SHOP AT HOME, INC.
By:-------------------------------------
Name:-----------------------------------
Title:----------------------------------
Attest:
Name:
---------------------------------------
Title:
--------------------------------------
Countersigned:
COMPUTERSHARE TRUST COMPANY, INC.
as Rights Agent
By:
-----------------------------------------
Authorized Officer
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Preferred Shares (or other
shares) issuable upon the exercise of such Rights and requests that certificates
for such shares 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 Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: _____________________________
_______________________________
Signature
Signature Guaranteed:
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED, __________________________ hereby sells, assigns
and transfers unto _____________________________________________________________
(Please print name and address of transferee) this Right Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Corporation, with full power of
substitution.
Dated:
--------------------------------
-----------------------------
Signature
Signature Guaranteed:
The undersigned hereby certifies that (a) the Rights evidenced by this
Right 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), (b) this Right Certificate
is not being sold, assigned or transferred to or on behalf of any such Acquiring
Person, Affiliate or Associate, and (c) after inquiry and to the best knowledge
of the undersigned, the undersigned did not acquire the Rights evidenced by this
Right 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).
-------------------------------
Signature
NOTICE
The signature on the foregoing Form of Election to Purchase or Form of
Assignment must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.