Exhibit 4.2
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COSI, INC.
and
[_______________]
as Rights Agent
_______________
Rights Agreement
Dated as of [_________] 2002
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions............................................................................ 1
Section 2. Appointment of Rights Agent.................................................................... 6
Section 3. Issuance of Right Certificates................................................................. 6
Section 4. Form of Right Certificates..................................................................... 8
Section 5. Countersignature and Registration.............................................................. 8
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates.............................................................. 9
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.................................. 10
Section 8. Cancellation and Destruction of Right Certificates............................................. 12
Section 9. Reservation and Availability of Shares of Preferred Stock...................................... 12
Section 10. Preferred Stock Record Date.................................................................... 13
Section 11. Adjustment of Exercise Price or Number of Shares............................................... 14
Section 12. Certification of Adjusted Exercise Price or Number of Shares................................... 17
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power........................... 17
Section 14. Fractional Rights and Fractional Shares........................................................ 20
Section 15. Rights of Action............................................................................... 21
Section 16. Agreement of Right Holders..................................................................... 21
Section 17. Right Certificate Holder Not Deemed a Stockholder.............................................. 22
Section 18. Concerning the Rights Agent.................................................................... 22
Section 19. Merger or Consolidation of, or Change in Name of, the Rights Agent............................. 23
Section 20. Duties of the Rights Agent..................................................................... 24
Section 21. Change of Rights Agent......................................................................... 25
Section 22. Issuance of New Right Certificates............................................................. 26
Section 23. Redemption or Exchange......................................................................... 26
Section 24. Notice of Proposed Actions..................................................................... 27
Section 25. Supplements and Amendments..................................................................... 28
Section 26. Determination and Actions by the Board of Directors of the Corporation, etc.................... 28
Section 27. Benefits of this Rights Agreement.............................................................. 29
Section 28. Miscellaneous.................................................................................. 29
Exhibit A -- Form of Attachment IV to the Amended and Restated Certificate of Incorporation
Exhibit B -- Summary of Rights
Exhibit C -- Form of Right Certificate
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RIGHTS AGREEMENT
Agreement, dated as of [______________], 2002, between Cosi,
Inc., a Delaware corporation (the "Corporation"), and [__________], as Rights
Agent (the "Rights Agent").
RECITALS
WHEREAS, the Board of Directors of the Corporation has
authorized the issuance of, and declared a dividend of one right for each share
of common has stock (as defined below), $0.01 par value per share, of the
Corporation outstanding as of the close of business on [the date of the
Corporation's initial public offering], each such right representing the right
to purchase one one-hundredth of a share of Preferred Stock of the Corporation
having the rights and preferences set forth in the form of Attachment IV of the
Amended and Restated Certificate of Incorporation of the Corporation attached as
Exhibit A to this Agreement; and
WHEREAS, the Board of Directors of the Corporation further
authorized the issuance of one right (subject to adjustment) with respect to
each share of common stock which may be issued between the [date of the
Corporation's initial public offering] and the date the rights expire;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
(a) For purposes of this Agreement, the following terms
have the meanings indicated:
"Acquiring Person" means any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, is the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the Voting Stock (as such term is hereinafter defined) of the
Corporation then outstanding; provided that, an Acquiring Person shall not
include (i) an Exempt Person (as such term is hereinafter defined) or (ii) any
Person, together with all Affiliates and Associates of such Person, who or which
would be an Acquiring Person solely by reason of (A) being the Beneficial Owner
of shares of Voting Stock of the Corporation, the Beneficial Ownership of which
was acquired by such Person pursuant to any action or transaction or series of
related actions or transactions approved by the Board of Directors before such
Person otherwise became an Acquiring Person or (B) a reduction in the number of
issued and outstanding shares of Voting Stock of the Corporation pursuant to a
transaction or a series of related transactions approved by the Board of
Directors of the Corporation; provided further, that in the event such Person
described in this clause (ii) does not become an Acquiring Person by reason of
subclause (A) or (B) of this clause (ii), such Person nonetheless shall become
an Acquiring Person in the event such Person thereafter acquires Beneficial
Ownership of an additional 2% or more of the Voting Stock of the Corporation
then outstanding, unless the acquisition of such additional Voting Stock would
not result in such Person becoming an
Acquiring Person by reason of subclause (A) or (B) of this clause (ii).
Notwithstanding the foregoing, if the Board of Directors of the Corporation
determines in good faith that a Person who would otherwise be an "Acquiring
Person" as defined pursuant to the foregoing provisions of this paragraph (a)
has become such inadvertently, and such Person divests as promptly as
practicable (as determined in good faith by the Board of Directors) a sufficient
number of shares of Common Stock so that such Person would no longer be an
"Acquiring Person" as defined pursuant to the foregoing provisions of this
definition, then such Person shall not be deemed an "Acquiring Person" for any
purposes of this Rights Agreement. In determining what is "as promptly as
practicable" the Board may take into account such factors as the impact of the
divestment on the market price of the Corporation's Common Stock, the average
volume of trading in its shares, and other factors that may affect its
stockholders or the price of its common stock.
"Affiliate" has the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date of this Agreement.
"Associate" of a Person means (i) with respect to a
Corporation, any officer or director thereof or of any Subsidiary (as such term
is hereinafter defined) thereof, or any Beneficial Owner (as such term is
hereinafter defined) of 10% or more of any class of equity security thereof,
(ii) with respect to an association, any officer or director thereof or of a
Subsidiary thereof, (iii) with respect to a partnership, any general partner
thereof or any limited partner thereof who is, directly or indirectly, the
Beneficial Owner of a 10% ownership interest therein, (iv) with respect to a
limited liability Corporation, any officer, director or manager thereof or of a
Subsidiary thereof or any member thereof who is, directly or indirectly, the
Beneficial Owner of a 10% or greater ownership interest therein, with respect to
a business trust, any officer or trustee thereof or of any Subsidiary thereof,
(v) with respect to any other trust or an estate, any trustee, executor or
similar fiduciary or any Person who has a 10% or greater interest as a
beneficiary in the income from or principal of such trust or estate, (vi) with
respect to a natural person, any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person, and (vii) any
Affiliate of such Person.
A person is deemed the "Beneficial Owner" of, or to
"Beneficially Own," any securities (and correlative terms shall have correlative
meanings):
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly, for purposes
of Section 13(d) of the Exchange Act and Regulations 13D and 13G
thereunder (or any comparable or successor law or regulation), in each
case as in effect on the date; or
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or the
fulfillment of a condition or both) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, other rights (other
than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "Beneficially Own," securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates
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or Associates until such tendered securities are accepted for purchase
or exchange or (B) the right to vote, alone or in concert with others,
pursuant to any agreement, arrangement or understanding (whether or not
in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own," any securities if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given in response to a
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Exchange Act and (2) is
not at the time reportable by such Person on a Schedule 13D report
under the Exchange Act (or any comparable or successor report), other
than by reference to a proxy or consent solicitation being conducted by
such Person; or
(iii) which are Beneficially Owned, directly or indirectly,
by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring,
holding, voting (except as described in clause (B) of subparagraph (ii)
of this definition) or disposing of any securities of the Corporation;
provided, however, that for purposes of determining Beneficial
Ownership of securities under this Rights Agreement, officers and
directors of the Corporation solely by reason of their status as such
shall not constitute a group (notwithstanding that they may be
Associates of one another or may be deemed to constitute a group for
purposes of Section 13(d) of the Exchange Act) and shall not be deemed
to own shares owned by another officer or director of the Corporation.
Notwithstanding anything in this definition to the contrary, a Person
engaged in the business of underwriting securities shall not be deemed
the "Beneficial Owner" of, or to "Beneficially Own," any securities
acquired in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
"Book Entry" means an uncertificated book entry for the
Corporation's Common Stock.
"Business Day" means any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Close of Business" on any given date means 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
"Common Stock" when used with reference to the Corporation,
means the common stock, $0.01 par value per share, of the Corporation.
Collectively "Common Stock" when used with reference to any Person other than
the Corporation which shall be organized in corporate form shall mean the
capital stock or other equity security with the greatest per share voting power
of such Person or, if such other Person is a subsidiary of another Person, the
Person or Persons which ultimately control such first mentioned Person. "Common
Stock" when used with reference to any Person other than the Corporation which
shall not be organized in corporate form shall mean units of beneficial interest
which shall represent the right to
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participate in profits, losses, deductions and credits of such Person and which
shall be entitled to exercise the greatest voting power of such Person per unit
of such Person.
"Corporation" is defined in the introductory paragraph.
"Distribution Date" has the meaning set forth in Section
3(b)(ii).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Ratio" has the meaning set forth in Section 23(d).
"Exempt Person" means (i) the Corporation, (ii) any Subsidiary
of the Corporation, (iii) any employee benefit plan or employee stock plan of
the Corporation or any Subsidiary of the Corporation, or any trust or other
entity organized, appointed, established or holding Common Stock for or pursuant
to the terms of any such plan and (iv) any existing shareholder of the
Corporation as of the day immediately preceding the Record Date.
"Exercise Price" has the meaning set forth in Sections 4(a)
and 7(b).
"Expiration Date" has the meaning set forth in Section 7(a).
"Fair Market Value" of any property means the fair market
value of such property as determined in accordance with Section 11(b).
"Invalidation Time" is defined in Section 7(e).
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System or any successor thereto or other comparable
quotation system.
"Person" means any individual, firm, Corporation or other
entity.
"Principal Party" has the meaning set forth in Section 13(b).
"Record Date" has the meaning set forth in the recitals.
"Qualifying Tender Offer" means a tender or exchange offer for
all outstanding shares of Common Stock of the Corporation approved by a majority
of the Board of Directors, after taking into account the potential long-term
value of the Corporation and all other factors that they consider relevant.
"Record Date" means [the date of the Corporation's initial
public offering] [___________, 2002].
"Redemption Price" has the meaning set forth in Section 23(a).
"Right" is defined in Section 3(d).
"Right Certificate" has the meaning set forth in Section 3(d).
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"Rights Agent" is defined in the introductory paragraph.
"Securities Act" means the Securities Act of 1933, as amended.
"Preferred Stock" means Series D Preferred Stock, par value
$.01 per share, of the Corporation having the terms set forth in the Attachment
IV to the Amended and Restated Certificate of Incorporation of the Corporation.
"Stock Acquisition Date" means the first date on which there
shall be a public announcement by the Corporation or an Acquiring Person that an
Acquiring Person has become such (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) or such earlier date as a majority of the Board of Directors shall
become aware of the existence of an Acquiring Person.
"Subsidiary" of a Person means any corporation or other entity
of which securities or other ownership interests having voting power sufficient
to elect a majority of the Board of Directors or other persons performing
similar functions are Beneficially Owned, directly or indirectly, by such Person
or by any corporation or other entity that is otherwise controlled by such
Person.
"Summary of Rights" has the meaning set forth in Section 3(a).
"Trading Day" has the meaning set forth in Section 11(b).
"Transfer Tax" means any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or regulatory
authority in respect of any transfer of any security, instrument or right,
including Rights, shares of Common Stock and shares of Preferred Stock.
"Voting Stock" means (i) the Common Stock of the Corporation
and (ii) any other shares of capital stock of the Corporation entitled to vote
generally in the election of directors or entitled to vote together with the
Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Corporation's assets, liquidation, dissolution or
winding up. For purposes of this Agreement, Voting Stock shall include
securities of the type referred to in clauses (i) and (ii) above that trade on a
"when issued" basis on a national securities exchange or on the NASDAQ. For
purposes of this Agreement, a stated percentage of the Voting Stock shall mean a
number of shares of the Voting Stock as shall equal in voting power that stated
percentage of the total voting power of the then outstanding shares of Voting
Stock in the election of a majority of the Board of Directors or in respect of
any merger, consolidation, sale of all or substantially all of the Corporation's
assets, liquidation, dissolution or winding up.
(b) Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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(c) Any determination required to be made by the Board of
Directors of the Corporation for purposes of applying the definitions contained
in this Section 1 shall be made by the Board of Directors in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Corporation hereby
appoints the Rights Agent to act as agent for the Corporation and the holders of
the Rights in accordance with the terms and conditions, and the Rights Agent
hereby accepts such appointment. The Corporation may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable. If the Corporation
appoints one or more co-Rights Agents, then the respective duties of the Rights
Agent and any co-Rights Agents shall be as the Corporation shall determine.
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) On the Record Date (or as soon as practicable
thereafter), the Corporation or the Rights Agent shall send a copy of a Summary
of Rights, in substantially the form attached hereto as Exhibit B (the "Summary
of Rights"), by first class mail, postage prepaid, to each record holder of the
Common Stock, as of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Corporation.
(b) (i) Until the Close of Business on the
Distribution Date (defined below), then (A) the Rights shall be evidenced by the
certificates for Common Stock registered in the name of the holders of Common
Stock, (together with, in the case of certificates for Common Stock, outstanding
as of the Record Date, the Summary of Rights) and not by separate Right
certificates and the record holders of such certificates for Common Stock, shall
be the record holders of the Rights represented thereby and (B) each Right shall
be transferable only simultaneously and together with the transfer of a share of
Common Stock, (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Expiration Date), transfer on the
Corporation's Direct Registration System of any Common Stock, represented by a
Book Entry or the surrender for transfer of any certificate for Common Stock,
shall constitute the surrender for transfer of the Right or Rights associated
with the Common Stock, evidenced thereby, whether or not accompanied by a copy
of the Summary of Rights.
(ii) The "Distribution Date" is the day which is
the earlier of:
(A) the tenth day after the Stock
Acquisition Date or such earlier or later date (not beyond the thirtieth day
after the Stock Acquisition Date) as the Board of Directors may from time to
time fix by resolution adopted prior to the Distribution Date that otherwise
would have occurred or
(B) the tenth Business Day (or such
later date as may be determined by action of the Board of Directors prior to
such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or the first public
announcement (by public filing or otherwise) of the intent of any Person (other
than an Exempt Person) to commence or engage in, a tender or exchange offer upon
the successful consummation of which such Person, together with its Affiliates
and Associates, would be the Beneficial Owner of 15% or more of the then
outstanding shares of
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Voting Stock of the Corporation (irrespective of whether any shares are actually
purchased pursuant to any such offer).
(c) Rights shall be issued in respect of all shares of
Common Stock that become outstanding after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date and, in certain
circumstances provided in Section 3(e) and Section 22, may be issued in respect
of shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Corporation's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date (or, in certain
circumstances as provided in Section 3(e) and Section 22, after the Distribution
Date) shall have impressed, printed, written or stamped thereon or otherwise
affixed thereto the following legend:
This certificate also evidences and entitles the holder to the
same number of Rights (subject to adjustment) as the number of
shares of Common Stock represented by this certificate, such
Rights being on the terms provided under the Rights Agreement
between Cosi, Inc. and [____________] (the "Rights Agent"),
dated as of [___________], 2002, as it may be amended from
time to time (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on
file at the principal executive offices of Cosi, Inc. Under
certain circumstances, as set forth in the Rights Agreement,
such Rights shall be evidenced by separate certificates and
shall no longer be evidenced by this certificate. Cosi, Inc.
shall mail to the registered holder of this certificate a copy
of the Rights Agreement without charge within five days after
receipt of a written request therefor. Under certain
circumstances as provided in Section 7(e) of the Rights
Agreement, Rights issued to or Beneficially Owned by Acquiring
Persons or their Affiliates or Associates (as such terms are
defined in the Rights Agreement) or any subsequent holder of
such Rights shall be null and void and may not be transferred
to any Person.
(d) As soon as practicable after the Distribution Date,
the Corporation will prepare and execute, the Rights Agent will countersign, and
the Corporation will send or cause to be sent (and the Rights Agent will, if
requested, send), by first class mail, postage prepaid, to each record holder of
the Common Stock as of the close of business on the Distribution Date, as shown
by the records of the Corporation, at the address of such holder shown on such
records, a certificate in the form provided by Section 4 (a "Right"), evidencing
one Right (subject to adjustment as provided herein) for each share of Common
Stock so held. As of and after the Distribution Date, the Rights shall be
evidenced solely by Right Certificates and may be transferred by the transfer of
the Right Certificate as permitted hereby, separately and apart from any
transfer of one or more shares of Common Stock.
(e) In addition, in connection with the issuance or sale
of shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Corporation (i) shall,
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with respect to shares of Common Stock so issued or sold (i) pursuant to the
exercise of stock options or under any employee plan or arrangement or (ii) upon
the exercise, conversion or exchange of other securities issued by the
Corporation prior to the Distribution Date and (ii) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the Corporation,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided that no such Right Certificate
shall be issued if, and to the extent that, (A) the Corporation shall be advised
by counsel that such issuance would create a significant risk of material
adverse tax consequences to the Corporation or the Person to whom such Right
Certificate would be issued or (B) appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to
purchase shares, certificate and assignment to be printed on the reverse
thereof), when, as and if issued, shall be substantially in the form set forth
in Exhibit C hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Common Stock or the
Rights may from time to time be listed or as the Corporation may deem
appropriate to conform to usage or otherwise and as are not inconsistent with
the provisions of this Rights Agreement. Subject to the provisions of Section
22, Right Certificates evidencing Rights whenever issued, (i) shall be dated as
of the date of issuance of the Rights they represent and (ii) subject to
adjustment from time to time as provided herein, on their face shall entitle the
holders thereof to purchase such number of shares (including fractional shares
which are integral multiples of one one-hundredths of a share) of Preferred
Stock as shall be set forth therein at the price payable upon exercise of a
Right provided by Section 7(b) as the same may from time to time be adjusted as
provided herein (the "Exercise Price").
(b) Notwithstanding any other provision of this Rights
Agreement, any Rights Certificate that represents Rights Beneficially Owned by
an Acquiring Person or any Affiliate or Associate thereof or any other Person
whose Rights shall become void pursuant to Section 7(e) shall have impressed on,
printed on, written on or otherwise affixed to it (if the Corporation or the
Rights Agent has knowledge that such Person is an Acquiring Person or an
Associate or Affiliate or a nominee of any of the foregoing) the following
legend;
The Beneficial Owner of the Rights represented by this Rights
Certificate is an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person. Accordingly, this Rights
Certificate and the Rights represented hereby shall become
void in the circumstances specified in Section 7(e) of the
Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) Each Right Certificate shall be executed on behalf of
the Corporation by its President or any Vice President, either manually or by
facsimile signature, and have affixed
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thereto the Corporation's seal or a facsimile thereof which shall be attested by
the Secretary or an Assistant Secretary of the Corporation, either manually or
by facsimile signature. Each Right Certificate shall be countersigned by the
Rights Agent either manually or by facsimile signature and shall not be valid
for any purpose unless so countersigned. In case any officer of the Corporation
who shall have signed any Right Certificate shall cease to be such officer of
the Corporation before countersignature by the Rights Agent and issuance and
delivery of the certificate by the Corporation, such Right Certificate,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Corporation. Any Right
Certificate may be signed on behalf of the Corporation by any person who, on the
date of the execution of such Right Certificate, shall be a proper officer of
the Corporation to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(a) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office or one or more offices
designated as the appropriate place for surrender of Right Certificates upon
exercise or transfer, and in such other locations as may be required by law,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 7(e), 7(f) and
14, at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Right Certificate,
may be (i) transferred or (ii) split up, combined or exchanged for one or more
other Right Certificates, entitling the registered holder to purchase a like
number of shares of Preferred Stock as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer any Right Certificate shall surrender the Right
Certificate at the office of the Rights Agent designated for the surrender of
Right Certificates with the form of certificate and assignment on the reverse
side thereof duly endorsed (or enclosed with such Right Certificate a written
instrument of transfer in form satisfactory to the Corporation and the Rights
Agent), duly executed by the registered holder thereof or his attorney duly
authorized in writing, and with such signature duly guaranteed. Any registered
holder desiring to split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate to be split up, combined or exchanged at the office of the
Rights Agent designated therefor. Thereupon, the Rights Agent shall countersign
and deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Corporation may require
payment of a sum sufficient to cover any Transfer Tax that may be imposed in
connection with any transfer, split up, combination or exchange of any Right
Certificates.
(b) Subject to the provisions of Section 7(e), 7(f) and
14, upon receipt by the Corporation and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft,
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destruction or mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them and, if
requested by the Corporation, reimbursement to the Corporation and the Rights
Agent of all reasonable expenses incidental thereto, or upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Corporation shall issue and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE
OF RIGHTS.
(a) The Rights shall not be exercisable until, and shall
become exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e) and 23(a)). Except as otherwise provided in this Agreement, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent designated for such purpose, together with payment of the
Exercise Price for each Right exercised, subject to adjustment as hereinafter
provided, at or prior to the Close of Business on the earlier of: (i)
[_________], 2012 (or if the Distribution Date shall have occurred before
[__________], 2012, at the close of business on the 90th day following the
Distribution Date) and (ii) the date on which the rights are redeemed or
exchanged as provided in Section 23 (the "Expiration Date").
(b) The Exercise Price shall initially be $[100.00] for
each one [one-hundredth (1/100)] of a share of Preferred Stock issued pursuant
to the exercise of a Right. The Exercise Price and the number of shares of
Preferred Stock or other securities to be acquired upon exercise of a Right
shall be subject to adjustment from time to time as provided in Sections 11 and
13. The Exercise Price shall be payable in lawful money of the United States of
America, in accordance with Section 7(c) below.
(c) Except as otherwise provided herein, upon receipt of
a Right Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable to the Corporation or the Rights Agent
of the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Right
Certificate in accordance with Section 9(e), the Rights Agent thereupon
promptly:
(i) shall requisition from any transfer agent of the
Preferred Stock of the Corporation one or more certificates representing the
number of shares of Preferred Stock to be so purchased, and the Corporation
hereby authorizes and directs such transfer agent to comply with all such
requests,
(ii) as provided in Section 14(b), at the election of
the Corporation, shall cause depositary receipts to be issued in lieu of
fractional shares of Preferred Stock,
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(iii) if the election provided for in the immediately
preceding clause (ii) has not been made, shall requisition from the Corporation
the amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with Section 14(b),
(iv) after receipt of such Preferred Stock
certificates and, if applicable, depositary receipts, shall cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder; and
(v) when appropriate, after receipt, shall promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate; provided, however, that in the case of a purchase of securities,
other than Preferred Stock, pursuant to Section 13, the Rights Agent shall
promptly take the appropriate actions corresponding in such case to that
referred to in the foregoing clauses (i) through (v) of this Section 7(c).
Notwithstanding the foregoing provisions of this
Section 7(c), the Corporation may suspend the issuance of shares of Preferred
Stock upon exercise of a Right for a reasonable period, not in excess of 90
days, during which the Corporation seeks to register under the Securities Act,
and any applicable securities law of any other jurisdiction, the shares of
Preferred Stock to be issued pursuant to the Rights; provided, however, that
nothing contained in this Section 7(c) shall relieve the Corporation of its
obligations under Section 9(c).
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Right Certificate or his assign, subject to the provisions of Section 14(b).
(e) Notwithstanding any provision of this Rights
Agreement to the contrary, from and after the time (the "Invalidation Time")
when any Person first becomes an Acquiring Person, other than pursuant to a
Qualifying Tender Offer, any Rights that are beneficially owned by (x) such
Acquiring Person (or any Associate or Affiliate of such Acquiring Person), (y) a
transferee of such Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after the invalidation time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Invalidation Time pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clause (y) and (z) above,
shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. The Corporation shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) are complied with,
but shall have no liability to any holder of Right Certificates or any other
Person as a result of its failure to make any determination with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder. No
Right Certificate shall be issued pursuant to Section 3 that represents Rights
Beneficially Owned by an Acquiring Person whose Rights would be void pursuant to
the provisions of this Section 7(e) or
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any Associate or Affiliate thereof; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the provisions of this Section 7(e) or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person whose Rights would be void pursuant to the provisions of
this Section 7(e) shall be cancelled. The Corporation shall use all reasonable
efforts to insure that the provisions of this Section 7(e) are complied with,
but shall have no liability to any holder of Right Certificates or other Person
as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates and Associates or any transferee of any of
them hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Corporation shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate following the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Corporation shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Corporation or to any
of its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Corporation shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
cancel and retire, any Right Certificate purchased or acquired by the
Corporation otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Corporation, or shall, at the
written request of the Corporation, destroy such cancelled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Corporation.
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF
PREFERRED STOCK.
(a) The Corporation covenants and agrees that it will
cause to be reserved and kept available out of its authorized and unissued
shares of Preferred Stock or out of authorized and issued shares of Preferred
Stock held in its treasury, such number of shares of Preferred Stock as will
from time to time be sufficient to permit the exercise in full of all
outstanding Rights.
(b) The Corporation shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares of
Preferred Stock issued or reserved for issuance in accordance with this Rights
Agreement to be listed, upon official notice of issuance, upon the principal
national securities exchange, if any, upon which the Common Stock is listed or,
if the principal market for the Common Stock is not on any national securities
exchange, to be eligible for quotation in the NASDAQ.
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(c) The Corporation covenants and agrees that it will
take all such action as may be necessary to insure that all shares of Preferred
Stock delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Corporation shall use its best efforts:
(i) to file, as soon as practicable following
the occurrence of the event described in Section 11(a)(ii), or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement under the Act, with respect to the shares of Preferred
Stock purchasable upon exercise of the Rights on an appropriate form;
(ii) to cause such registration statement to
become effective as soon as practicable after such filing; and
(iii) to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for Preferred Stock, or (B) the Expiration Date.
(e) The Corporation may temporarily suspend, for a period
of time not to exceed ninety days, the issuance of shares of Preferred Stock
upon exercise of a Right in order to prepare and file a registration statement
under the Act and permit it to become effective. The Corporation will also take
such action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement under the Act (if required) shall have been declared
effective.
(f) The Corporation covenants and agrees that it will pay
when due and payable any and all Transfer Taxes which may be payable in respect
of the issuance or delivery of the Right Certificates or of any shares of
Preferred Stock issued or delivered upon the exercise of Rights. The Corporation
shall not, however, be required to pay any Transfer Tax which may be payable in
respect of any transfer or delivery of a Right Certificate to a Person other
than, or the issuance or delivery of certificates for Preferred Stock upon
exercise of Rights in a name other than that of, the registered holder of the
Right Certificate, and the Corporation shall not be required to issue or deliver
a Right Certificate or certificate for Preferred Stock to a Person other than
such registered holder until any such Transfer Tax shall have been paid (any
such Transfer Tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Corporation's
satisfaction that no such Transfer Tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person in whose
name any certificate for shares of Preferred Stock is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Preferred Stock represented thereby on, and such certificate shall be
dated as of, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Exercise Price (and any
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applicable Transfer Taxes) was made; provided, however, that, if the date of
such surrender and payment is a date upon which the Preferred Stock transfer
books of the Corporation are closed, such Person shall be deemed to have become
the record holder of such shares on, and such certificate shall be dated as of,
the next succeeding Business Day on which the Preferred Stock transfer books of
the Corporation are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate, as such, shall not be entitled to any rights
of a stockholder of the Corporation with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Corporation, except as provided herein.
SECTION 11. ADJUSTMENT OF EXERCISE PRICE OR NUMBER OF SHARES.
The Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a Right are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Corporation shall at any
time after the date of this Rights Agreement (A) declare or pay any dividend on
Common Stock payable in shares of Common Stock (or other capital stock), (B)
subdivide or split the outstanding shares of Common Stock into a greater number
of shares or (C) combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares or effect a reverse split of the outstanding
shares of Common Stock or (D) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving Corporation), then and in each such event the number of
shares of Preferred Stock issuable upon the exercise of a Right after the record
date for such event (if one shall have been established or, if not, after the
date of such event) shall be the number of shares of Preferred Stock issuable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of Rights outstanding immediately prior to such event and the
denominator of which is the number of Rights outstanding immediately after such
event and the Exercise Price after such event shall be the Exercise Price in
effect immediately prior to such event multiplied by such fraction. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) In the event that any Person (other than an
Exempt Person), alone or together with its Affiliates and Associates, shall
become an Acquiring Person, except pursuant to a Qualifying Tender Offer, then,
subject to the last sentence of Section 23(a) and except as otherwise provided
in this Section 11, each holder of a Right, except as provided in Section 7(e),
shall thereafter have the right to receive upon exercise of such Right in
accordance with the terms of this Rights Agreement and payment of the Exercise
Price, the greater of (1) the number of 1/100 of a share of Preferred Stock for
which such Right was exercisable immediately prior to the first occurrence of
the event described in this Section 11(a)(ii) or (2) such number of one
one-hundredths of a share of Preferred Stock, based on the per share Fair Market
Value of the Preferred Stock (determined pursuant to Section 11(b)) on the date
of such first occurrence, having a value equal to twice the Exercise Price;
provided, however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section
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13, then only the provisions of Section 13 shall apply and no adjustment shall
be made pursuant to this Section 11(a)(ii).
(iii) In the event that the Corporation does not
have available sufficient authorized but unissued Preferred Stock to permit the
adjustments required pursuant to the foregoing subparagraph (i) or the exercise
in full of the Rights in accordance with the foregoing subparagraph (ii), the
Corporation shall take all such actions as may be necessary to authorize and
reserve for issuance such number of additional shares of Preferred Stock as may
from time to time be required to be issued upon the exercise in full of all
Rights from time to time outstanding and, if necessary, shall use its best
efforts to obtain stockholder approval thereof. In lieu of issuing shares of
Preferred Stock in accordance with the foregoing subparagraphs (i) and (ii), the
Corporation may, if the Board of Directors determines that such action is
necessary or appropriate and not contrary to the interests of holders of Rights,
elect to issue or pay, upon the exercise of the Rights, cash, property, shares
of Preferred or Common Stock, debt or other equity securities or any combination
thereof, having an aggregate Fair Market Value equal to the Fair Market Value of
the shares of Preferred Stock which otherwise would have been issuable pursuant
to Section 11(a)(ii), which Fair Market Value shall be determined by an
investment banking firm selected by the Board of Directors. For purposes of the
preceding sentence, the Fair Market Value of the Preferred Stock shall be as
determined pursuant to Section 11(b). Subject to Section 23, any such election
by the Board of Directors of the Corporation must be made and publicly announced
within thirty days after the date on which the event described in Section
11(a)(ii) occurs.
(b) For the purpose of this Rights Agreement, the "Fair
Market Value" of any share of Preferred Stock, Common Stock or any other stock
or any Right or other security or any other property on any date shall be
determined as provided in this Section 11(b). In the case of a publicly-traded
stock or other security, the Fair Market Value on any date shall be deemed to be
the average of the daily closing prices per share of such stock or per unit of
such other security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that in
the event that the Fair Market Value per share of any share of Common Stock is
determined during a period which includes any date that is within 30 Trading
Days after (i) the ex-dividend date for a dividend or distribution on such stock
payable in shares of Common Stock or securities convertible into shares of
Common Stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Corporation to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange), or, if
the securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national securities exchange on
which such security is listed or admitted to trading; or, if not listed or
admitted to trading on any national securities exchange, the last quoted price
(or, if not so quoted, the average of the high bid and low asked prices) in the
over-the-counter market, as reported by the NASDAQ or such other system then in
use; or, if no bids for such security are quoted by any such organization, the
average of the closing bid and asked prices as
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furnished by a professional market maker making a market in such security
selected by the Board of Directors of the Corporation. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
such security is listed or admitted to trading is open for the transaction of
business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day. If a security is not publicly held
or not so listed or traded, "Fair Market Value" shall mean the fair value per
share of stock or per other unit of such other security, as determined by an
independent investment banking firm experienced in the valuation of securities
selected in good faith by the Board of Directors of the Corporation, or, if no
such investment banking firm is, in the good faith judgment of the Board of
Directors, available to make such determination, in good faith by the Board of
Directors of the Corporation; provided, however, that for purposes of making the
adjustment provided for by Section 11(a)(ii), the Fair Market Value of a share
of Preferred Stock shall not be less than 100% of the product of the Fair Market
Value of a share of Common Stock multiplied by the higher of the then Dividend
Multiple or Vote Multiple applicable to the Preferred Stock (as defined in the
Certificate of Designations relating to the Preferred Stock) and shall not
exceed 105% of the product of the then Fair Market Value of a share of Common
Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple
applicable to the Preferred Stock. In the case of property other than
securities, the "Fair Market Value" thereof shall be determined in good faith by
the Board of Directors of the Corporation based upon such appraisals or
valuation reports of such independent experts as the Board of Directors of the
Corporation shall in good faith determine to be appropriate in accordance with
good business practices and the interests of the holders of Rights. Any such
determination of Fair Market Value shall be described in a statement filed with
the Rights Agent and shall be binding upon the Rights Agent.
(c) All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one one-hundredth of a share, as the case
may be.
(d) Irrespective of any adjustment or change in the
Exercise Price or the number of shares of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Exercise Price and the number of shares to be issued
upon exercise of the Rights as in the initial Right Certificates issued
hereunder but, nevertheless, shall represent the Rights as so adjusted.
(e) Before taking any action that would cause an
adjustment reducing the purchase price per whole share of Preferred Stock upon
exercise of the Rights below the then par value, if any, of the shares of
Preferred Stock, the Corporation shall use its best efforts to take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Corporation may validly and legally issue fully paid and non-assessable
shares of such Preferred Stock at such adjusted purchase price per share.
(f) Anything in this Section 11 to the contrary
notwithstanding, in the event of any reclassification of stock of the
Corporation or any recapitalization, reorganization or partial liquidation of
the Corporation or similar transaction, the Corporation shall be entitled to
make such further adjustments in the number of shares of Preferred Stock which
may be acquired upon exercise of the Rights, and such adjustments in the
Exercise Price therefor, in addition to those adjustments expressly required by
the other paragraphs of this Section 11, as the Board of Directors of the
Corporation shall determine to be necessary or appropriate in order
-16-
for the holders of the Rights in such event to be treated equitably and in
accordance with the purpose and intent of this Rights Agreement or in order that
any such event shall not, but for such adjustment, in the opinion of counsel to
the Corporation, result in the stockholders of the Corporation being subject to
any United States federal income tax liability by reason thereof.
(g) In the event the Corporation shall at any time after
the Record Date make any distribution on the shares of Common Stock or other
capital stock of the Corporation, whether by way of a dividend or a
reclassification of stock, a recapitalization, reorganization or partial
liquidation of the Corporation or otherwise, in cash or any debt security, debt
instrument, real or personal property or any other property (other than any
shares of Common Stock or other capital stock of the Corporation and other than
any right or warrant to acquire any such shares, including any debt security
convertible into or exchangeable for any such share, at less than the Fair
Market Value of such shares) and the amount of such cash dividend or the Fair
Market Value of such debt security, debt instrument or property exceeds 150% of
the aggregate amount of the cash dividends declared or paid on the Common Stock
of the Corporation in the 15-month period immediately preceding such
distribution, then and in each such event, unless such distribution is part of
or is made in connection with a transaction to which Section 11(a)(ii) or
Section 13 applies, the Exercise Price shall be reduced by an amount equal to
the cash or the Fair Market Value of such distribution, as the case may be, per
share of Common Stock of the Corporation. For purposes, the Fair Market Value of
any property distributed to the holders of shares of Common Stock of the
Corporation shall be the Fair Market Value of such property as determined by an
independent investment banking firm experienced in the valuation of securities
or the other property so distributed, as the case may be, selected in good faith
by the Board of Directors of the Corporation, or, if no such investment banking
firm is in the good faith judgment of the Board of Directors available to make
such determination, in good faith by the Board of Directors of the Corporation,
whose determination shall be final and binding on the Corporation, the Rights
Agent and the holders of Rights.
SECTION 12. CERTIFICATION OF ADJUSTED EXERCISE PRICE OR NUMBER
OF SHARES. Whenever an adjustment is made as provided in Section 11, 13 or
23(c), the Corporation shall (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts giving rise to such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 24.
Notwithstanding the foregoing sentence, the failure of the Corporation to make
such certification or give such notice shall not affect the validity of or the
force or effect of the requirement for such adjustment. Any adjustment to be
made pursuant to Section 11, 13 or 23(c) of this Rights Agreement shall be
effective as of the date of the event giving rise to such adjustment. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) Except for any transaction approved by the Board of
Directors, in the event that, at any time on or after any Person becomes an
Acquiring Person:
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(x) the Corporation shall, directly or indirectly,
consolidate with, or merge with and into, any other Person or Persons (other
than an Exempt Person) and the Corporation shall not be the surviving or
continuing Corporation of such consolidation or merger; or
(y) any Person or Persons (other than an Exempt Person)
shall, directly or indirectly, consolidate with, or merge with and into, the
Corporation, and the Corporation shall be the continuing or surviving
Corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person (other than an Exempt Person) or of the Corporation or cash or any other
property; or
(z) the Corporation or one or more of its Subsidiaries
shall, directly or indirectly, sell or otherwise transfer to any other Person or
any Affiliate or Associate of such Person, in one or more transactions, or the
Corporation or one or more of its Subsidiaries shall sell or otherwise transfer
to any Persons in one or a series of related transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole),
then, on the first occurrence of any such event, proper provision shall be made
so that
(i) each holder of record of a Right, except as provided
in Section 7(e), shall thereafter have the right to receive, upon the exercise
thereof and payment of the Exercise Price in accordance with the terms of this
Rights Agreement, such number of shares of validly issued, fully paid,
non-assessable and freely tradable Common Stock of the Principal Party (as
defined herein), not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall, based on the Fair Market Value of the Common
Stock of the Principal Party on the date of the Consummation of such
consolidation, merger, sale or transfer, equal twice the Exercise Price;
(ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Corporation pursuant to this Rights Agreement;
(iii) the term "Corporation" for all purposes of this
Rights Agreement shall thereafter be deemed to refer to such Principal Party;
(iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Stock in accordance with the provisions of Section 9 applicable to
the reservation of Preferred Stock) in connection with such consummation as may
be necessary to assure that the provisions shall thereafter be applicable, as
nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; provided, however, that,
upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants
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and other property which such holder would have been entitled to receive had it,
at the time of such transaction, owned the shares of Common Stock of the
Principal Party purchasable upon the exercise of a Right, and such Principal
Party shall take such steps (including, but not limited to, reservation of
shares of stock) as may be necessary to permit the subsequent exercise of the
Rights in accordance with the terms for such cash, shares, rights, warrants and
other property and (v) the provisions of Section 11(a)(ii) shall be of no effect
following the occurrence of any event described in clause (x), (y) or (z) above
of this Section 13(a).
(b) "Principal Party" means:
(i) in the case of any transaction described in
(x) or (y) of the first sentence of Section 13(a): (A) the Person that is the
issuer of the securities into which shares of Common Stock of the Corporation
are changed or otherwise exchanged or converted in such merger or consolidation,
or, if there is more than one such issuer, the issuer of the Common Stock of
which has the greatest market value or (B) if no securities are so issued, (x)
the Person that is the other party to the merger or consolidation and that
survives such merger or consolidation, or, if there is more than one such
Person, the Person the Common Stock of which has the greatest market value or
(y) if the Person that is the other party to the merger or consolidation does
not survive the merger or consolidation, the Person that does survive the merger
or consolidation (including the Corporation if it survives); and
(ii) in the case of any transaction described in
(z) of the first sentence in Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest portion of
the assets or earning power cannot be determined, whichever of such Persons is
the issuer of Common Stock having the greatest market value of shares
outstanding; provided, however, that in any such case, if the Common Stock of
such Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, the term "Principal Party" shall refer to such
other Person, or if such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest market value of shares
outstanding.
(c) The Corporation shall not consummate any
consolidation, merger or sale or transfer of assets or earning power referred to
in Section 13(a) unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock that have not been issued or reserved for
issuance to permit exercise in full of all Rights in accordance with this
Section 13 and unless prior thereto the Corporation and the Principal Party
involved therein shall have executed and delivered to the Rights Agent an
agreement confirming that the Principal Party shall, upon consummation of such
consolidation, merger or sale or transfer of assets or earning power, assume
this Rights Agreement in accordance with Section 13(a) and that all rights of
first refusal or preemptive rights in respect of the issuance of shares of
Common Stock of the Principal Party upon exercise of outstanding Rights have
been waived and that such transaction shall not result in a default by the
Principal Party under this Rights Agreement, and further
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providing that, as soon as practicable after the date of any consolidation,
merger or sale or transfer of assets or earning power referred to in Section
13(a), the Principal Party will:
(i) prepare and file a registration statement
under the Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, use its best efforts to cause
such registration statement to become effective as soon as practicable after
such filing and use its best efforts to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Act) until the date of expiration of the Rights, and similarly comply with
applicable state securities laws;
(ii) use its best efforts to list (or continue
the listing of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility requirements
for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under the
Exchange Act. In the event that any of the transactions described in Section
13(a) shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii), the Rights which have not theretofore been exercised shall,
subject to the provisions of Section 7(e), thereafter be exercisable in the
manner described in Section 13(a).
(d) In case the Principal Party which is to be a party to
a transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of the Corporation or By-laws or
other instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share (determined pursuant to Section 11(b)) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then Fair Market Value (other than to holders of Rights pursuant
to this Section 13) or (ii) providing for any special tax or similar payment in
connection with the issuance to any holder of a Right of Common Stock of such
Principal Party pursuant to the provisions of this Section 13, then, in such
event, the Corporation shall not consummate any such transaction unless prior
thereto the Corporation and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been cancelled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Corporation shall not be required to issue
fractions of Rights or to distribute Right Certificates which evidence
fractional Rights (i.e., Rights to acquire less than one one-hundredth of a
share of Preferred Stock), unless such fractional Rights result from a
transaction referred to in Section 11(a)(i). If the Corporation shall determine
not to issue such fractional Rights, then, in lieu of such fractional Rights,
there shall be paid to the holders of record of the Right Certificates with
regard to which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the Fair Market Value of a whole Right.
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(b) The Corporation shall not be required to issue
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share) upon exercise of the Rights or to
distribute certificates which evidence fractional shares (other than fractions
which are integral multiples of one one-hundredth of a share). In lieu of
issuing fractions of shares of Preferred Stock, the Corporation may, at its
election, issue depositary receipts evidencing fractions of shares pursuant to
an appropriate agreement between the Corporation and a depositary selected by
it, provided that such agreement shall provide that the holders of such
depositary receipts shall have all of the rights, privileges and preferences to
which they would be entitled as owners of the Preferred Stock. With respect to
fractional shares that are not integral multiples of one one-hundredth of a
share, if the Corporation does not issue such fractional shares or depositary
receipts in lieu thereof, there shall be paid to the holders of record of Right
Certificates at the time such Right Certificates are exercised as herein
provided an amount in cash equal to the same fraction of the Fair Market Value
of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share) upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect
of this Rights Agreement, except the rights of action given to the Rights Agent
in Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock; and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Rights
Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Each holder of a
Right, by accepting the same, consents and agrees with the Corporation and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
evidenced by the certificates for Common Stock registered in the name of the
holders of Common Stock together, as applicable, with the Summary of Rights),
which certificates for Common Stock shall also constitute certificates for
Rights, and not by separate Right Certificates, and each Right shall be
transferable only simultaneously and together with the transfer of shares of
Common Stock;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer; and
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(c) the Corporation and the Rights Agent may deem and
treat the Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Book Entry representing, or certificate for,
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificates or the associated Common Stock certificate made by
anyone other than the Corporation or the Rights Agent) for all purposes
whatsoever, and neither the Corporation nor the Rights Agent shall be affected
by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Corporation nor the Rights Agent shall have any liability
to any holder of a Right or a beneficial interest in a Right or other Person as
a result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Corporation must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible; and
(e) Rights Beneficially Owned by certain Persons will
under certain circumstances set forth in this Agreement become null and void
pursuant to Section 7(e); and
(f) this Agreement may be supplemented or amended from
time to time pursuant to Section 25.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Corporation or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof (except as provided in Section 7(f)), or to give or withhold
consent to any corporate action (except as provided in Section 7(f)) or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 24), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Corporation agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Rights Agreement and the exercise and performance of its duties hereunder. The
Corporation also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Rights Agent, for anything
done or failed to be done by the Rights Agent in connection with the acceptance
and administration of this Rights Agreement, including
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the cost and expenses of defending against any claim of liability relating to
the Rights or this Rights Agreement.
(b) The Rights Agent shall be protected against, and
shall incur no liability for or in respect of, any action taken, suffered or
omitted by it in connection with its administration of this Rights Agreement in
reliance upon any Right Certificate or certificate for Preferred Stock or for
other securities of the Corporation, 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. In addition, anything in this Rights Agreement to
the contrary notwithstanding, in no event shall the Rights Agent be liable for
special, indirect or consequential damages of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
SECTION 19. MERGER OR CONSOLIDATION OF, OR CHANGE IN NAME OF,
THE RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any Person succeeding to the
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 Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. 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; in case at
that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or
in its changed name; in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
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SECTION 20. DUTIES OF THE 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 Corporation and the holders
of Right Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may also be legal counsel for the Corporation), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Corporation prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board, the President or any Vice President and by the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent. Any such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Rights Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for
its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Rights Agreement
or in the Right Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Corporation 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 (except the due execution 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
Corporation of any covenant or condition contained in this Rights Agreement or
in any Right Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11 or 13 or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after receipt of a
certificate describing any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock to be issued pursuant to this
Rights Agreement or any Right Certificate or as to whether any shares of
Preferred Stock will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of the Rights Agreement.
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(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President or any Vice President or the Secretary
or the Treasurer of the Corporation, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Corporation or become pecuniarily interested
in any transaction in which the Corporation may be interested, or contract with
or lend money to the Corporation 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 Corporation
or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
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 Corporation resulting from any
such act, default, neglect or misconduct, provided reasonable care was exercised
in the selection and continued employment thereof.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days notice in writing mailed to the Corporation and to
each transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Corporation may remove the Rights Agent or any successor
Rights Agent (with or without cause) upon 30 days notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Corporation shall appoint a successor
to the Rights Agent. Notwithstanding the foregoing provisions of this Section
21, in no event shall the resignation or removal of a Rights Agent be effective
until a successor Rights Agent shall have been appointed and have accepted such
appointment. If the Corporation shall fail to make such appointment within a
period of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Corporation), then the incumbent Rights
Agent or the holder of record of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Corporation or by such a court, shall be
(a) a Person organized and doing business under the laws of the United States or
of any state thereof, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination in the conduct of its corporate trust or stock transfer business
by federal or state authorities and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $5,000,000 or (b) an
Affiliate controlled by a Person described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed, but the predecessor Rights Agent shall
deliver and transfer to the
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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
Corporation shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and Preferred Stock, and mail
a notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be. Notwithstanding the foregoing provisions, in the event of
resignation, removal or incapacity of the Rights Agent, the Corporation shall
have the authority to act as the Rights Agent until a successor Rights Agent
shall have assumed the duties of the Rights Agent hereunder.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Corporation may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Exercise Price per share
and the number or kind or class of shares of stock or other securities or
property purchasable under the Right Certificates made in accordance with the
provisions of this Rights Agreement.
SECTION 23. REDEMPTION OR EXCHANGE.
(a) The Corporation may, at its option, but only by the
vote of a majority of the Board of Directors, redeem all but not less than all
of the then outstanding Rights, at any time prior to the Close of Business on
the tenth day following the Stock Acquisition Date (subject to extension by the
Corporation as provided in Section 25) at a redemption price of $0.01 per Right,
subject to adjustments as provided in subsection (c) below (the "Redemption
Price"). Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable pursuant to Section 11(a)(ii) prior to the
expiration of the Corporation's right of redemption hereunder.
(b) Without any further action and without any notice,
the right to exercise the Rights will terminate effective at the time of the
action of the Board of Directors ordering the redemption of the Rights and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within ten days after the effective time of the action of the
Board of Directors ordering the redemption of the Rights, the Corporation shall
give notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each notice of redemption will state the
method by which the payment of the Redemption Price will be made. At the option
of the Board of Directors, the Redemption Price may be paid in cash to each
Rights holder or by the issuance of shares (and, at the Corporation's election
pursuant to Section 14(b), cash or depositary receipts in lieu of fractions of
shares other than fractions which are integral multiples of one one-thousandth
(1/100) of a share) of Preferred Stock having a Fair Market Value equal to such
cash payment.
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(c) In the event the Corporation shall at any time after
the date of this Rights Agreement (A) pay any dividend on Common Stock in shares
of Common Stock, (B) subdivide or split the outstanding shares of Common Stock
into a greater number of shares, (C) combine or consolidate the outstanding
shares of Common Stock into a smaller number of shares or effect a reverse split
of the outstanding shares of Common Stock or (D) issue any shares of its capital
stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving Corporation), then, and in each such
event, the Redemption Price shall be adjusted so that the Redemption Price after
such event shall equal the Redemption Price immediately prior to such event
multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock outstanding immediately prior to
such event; provided, however, that in each case such adjustment to the
Redemption Price shall be made only if the amount of the Redemption Price shall
be reduced or increased by at least more or less than $0.01 per Right.
(d) The Board of Directors of the Corporation may, at its
option, at any time after the tenth day following a Stock Acquisition Date and
prior to the time that an Acquiring Person becomes the Beneficial Owner of more
than 50% of the outstanding Voting Stock of the Corporation, elect to exchange
all (but not less than all) of the then outstanding Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e))
for shares of Common Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted in order to protect the interests of holders of
Rights generally in the event that an event of a type analogous to any of the
events described in Section 11 shall have occurred with respect to the Common
Stock (such exchange ratio, as adjusted from time to time, being hereinafter
referred to as the "Exchange Ratio").
(e) Immediately upon the action of the Board of Directors
of the Corporation electing to exchange the Rights, without any further action
and without any notice, the right to exercise the Rights will terminate and each
Right will thereafter represent only the right to receive a number of shares of
Common Stock equal to the Exchange Ratio. Promptly after the action of the Board
of Directors electing to exchange the Rights, the Corporation shall give notice
thereof (specifying the steps to be taken to receive shares of Common Stock in
exchange for Rights) to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice in accordance with Section 28(a).
SECTION 24. NOTICE OF PROPOSED ACTIONS.
(a) In case the Corporation, after the Distribution Date,
shall propose (i) to effect any of the transactions referred to in Section
11(a)(i) or 11(g) or (ii) to offer to the holders of record of its Common Stock
options, warrants, or other rights to subscribe for or to purchase shares of
Common Stock (including any security convertible into or exchangeable for Common
Stock) or shares of stock of any class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, or (iii) to
effect any reclassification of its Preferred Stock or Common Stock or any
recapitalization or reorganization of the Corporation, or (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of
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more than 50% of the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Corporation, then, in
each such case, the Corporation shall give to each holder of record of a Right
Certificate, in accordance with Section 28(a), notice of such proposed action,
which shall specify the record date for the purposes of such transaction
referred to in Section 11(a)(i) or such dividend or distribution, or the date on
which such reclassification, recapitalization, reorganization, consolidation,
merger, sale or transfer of assets, liquidation, dissolution, or winding up is
to take place and the record date for determining participation therein by the
holders of record of Common Stock or Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least ten days prior to the record date for
determining holders of record of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least ten days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of record of Common Stock or Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Corporation or the vote upon any such action.
(b) In case any of the transactions referred to in
Section 11(a)(i), 11(g) or 13 of this Rights Agreement are proposed, then, in
any such case, the Corporation shall give to each holder of Rights, in
accordance with Section 28(a), notice of the proposal of such transaction at
least ten days prior to consummating such transaction, which notice shall
specify the proposed event and the consequences of the event to holders of
Rights under Section 11(a)(i), 11(g) or 13, as the case may be, and, upon
consummating such transaction, shall similarly give notice thereof to each
holder of Rights.
SECTION 25. SUPPLEMENTS AND AMENDMENTS. For as long as the
Rights are then redeemable, the Corporation may in its sole and absolute
discretion, and the Rights Agent shall if the Corporation so directs, supplement
or amend any provision of this Agreement without the approval of any holders of
the Rights. At any time when the Rights are not then redeemable, the Corporation
may, and the Rights Agent shall if the Corporation so directs, supplement or
amend this Rights Agreement without the approval of any holders of Right
Certificates (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein or (iii) to change or supplement the provisions hereunder in
any manner which the Corporation may deem necessary or desirable, provided that
no such supplement or amendment pursuant to this clause (iii) shall materially
adversely affect the interest of the holders of Right Certificates. Upon the
delivery of a certificate from an appropriate officer of the Corporation which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 25, the Rights Agent shall execute such supplement or amendment.
SECTION 26. DETERMINATION AND ACTIONS BY THE BOARD OF
DIRECTORS OF THE CORPORATION, ETC. The Board of Directors of the Corporation
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board, or the
Corporation, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including,
without limitation, a determination
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to redeem or not redeem the Rights or to amend the Agreement and whether any
proposed amendment materially adversely affects the interests of the holders of
Right Certificates). For all purposes of this Agreement, any calculation of the
number of shares of Common Stock or other securities outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock or any other securities of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board in good faith, shall (x) be final, conclusive and binding on
the Corporation, the Rights Agent, the holders of the Rights and all other
parties, and (y) not subject the Board to any liability to the holders of the
Rights.
SECTION 27. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this
Rights Agreement shall be construed to give to any Person other than the
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Corporation, the Rights Agent and the holders
of record of the Right Certificates (and, prior to the Distribution Date, the
holders of Common Stock in their capacity as holders of the Rights).
SECTION 28. MISCELLANEOUS.
(a) NOTICES. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or Right to or on the Corporation 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:
Cosi, Inc.
242 West 36th Street
New York, NY 10018
Attention: Pam Palladino
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Corporation or by the holder of
record of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Corporation) as
follows:
[___________________________]
Re: Cosi, Inc.
Notices or demands authorized by this Rights Agreement to be
given or made by the Corporation or the Rights Agent to the holder of record of
any Right Certificate or Right shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Corporation.
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(b) SUCCESSORS. All of the covenants and provisions of
this Rights Agreement by or for the benefit of the Corporation or the Rights
Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder.
(c) DELAWARE CONTRACT. This Rights Agreement and each
Right Certificate issued hereunders hall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
(d) COUNTERPARTS. This Rights Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
(e) 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.
(f) 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
COSI, INC.
By________________________________
Name:
Title:
[_____________________]
By________________________________
Name:
Title:
EXHIBIT A
FORM OF
Attachment IV
to Amended and Restated Certificate of Incorporation
of COSI, INC.
SERIES D PREFERRED STOCK
One million (1,000,000) shares of the Corporation's Preferred Stock
shall be designated as "Series D Preferred Stock", One Cent ($01) par value per
share (the "Series D Preferred Stock") and the number of shares constituting
such series shall be 1,000,000.
SECTION 1. DIVIDENDS AND DISTRIBUTIONS.
1A Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Series D Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) cash dividends in an amount per share (rounded to
the nearest cent) equal to 100 times the aggregate per share amount of all cash
dividends declared or paid on the common stock of the Corporation, $0.01 par
value per share, of the Corporation (collectively, the "Common Stock") and (ii)
a preferential cash dividend (the "Preferential Dividends"), if any, in
preference to the holders of Common Stock, on the first day of February, May,
August and November of each year (each a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series D Preferred Stock, payable in an
amount (except in the case of the first Quarterly Dividend Payment if the date
of the first issuance of Series D Preferred Stock is a date other than a
Quarterly Dividend Payment date, in which case such payment shall be a prorated
amount of such amount) equal to $0.10 per share of Series D Preferred Stock less
the per share amount of all cash dividends declared on the Series D Preferred
Stock pursuant to clause (i) of this sentence since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series D Preferred Stock. In the event the Corporation shall, at any time after
the issuance of any share or fraction of a share of Series D Preferred Stock,
make any distribution on the shares of Common Stock of the Corporation, whether
by way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Corporation or otherwise, which is
payable in cash or any debt security, debt instrument, real or personal property
or any other property (other than cash dividends subject to the immediately
preceding sentence, a distribution of shares of Common Stock or other capital
stock of the Corporation or a distribution of rights or warrants to acquire any
such share, including any debt security convertible into or exchangeable for any
such share, at a price less than the Fair Market Value (as hereinafter defined)
of such share), then, and in each such event, the Corporation shall
simultaneously pay (and not be permitted to accrue) on each then outstanding
share of Series D Preferred Stock of the Corporation a distribution, in like
kind, of 100 times such distribution paid on a share of Common Stock (subject to
the provisions for adjustment hereinafter set forth). The dividends and
distributions on the Series D Preferred Stock to which holders thereof are
entitled pursuant to clause (i) of the first sentence of this paragraph and
pursuant to the second sentence of this paragraph are hereinafter referred to as
"Dividends" and the multiple of such cash and
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non-cash dividends on the Common Stock applicable to the determination of the
Dividends, which shall be 100 initially but shall be adjusted from time to time
as hereinafter provided, is hereinafter referred to as the "Dividend Multiple."
In the event the Corporation shall at any time after [[_________]] (the "Rights
Declaration Date")(1), (i) declare or pay any dividend or make any distribution
on Common Stock payable in shares of Common Stock, (ii) effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding shares
of Common Stock into a greater or lesser number of shares of Common Stock, or
(iii) issue any shares of its capital stock in a reclassification of the Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing or surviving Corporation),
then in each such case the Dividend Multiple thereafter applicable to the
determination of the amount of Dividends which holders of shares of Series D
Preferred Stock shall be entitled to receive shall be the Dividend Multiple
applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
1B. The Corporation shall declare each Dividend at the same time
it declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash dividend
or distribution on the Common Stock in respect of which a Dividend is required
to be paid shall be paid or set aside for payment on the Common Stock unless a
Dividend in respect of such dividend or distribution on the Common Stock shall
be simultaneously paid, or set aside for payment, on the Series D Preferred
Stock.
1C. Preferential Dividends shall begin to accrue on outstanding
shares of Series D Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series D Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series D Preferred Stock
in an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
SECTION 2. VOTING RIGHTS. The holders of shares of Series D Preferred
Stock shall have the following voting rights:
2A. Subject to the provisions for adjustment hereinafter set
forth, each share of Series D Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the holders of the Common
Stock. The number of votes which a holder of Series D Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Vote Multiple." In the event the
Corporation shall at any time after the Rights Declaration Date, (i) declare or
pay any dividend on Common Stock payable in shares of Common Stock, (ii) effect
a subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, or (iii) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger
- ----------
(1) Date of the Rights Agreement
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in which the Corporation is the continuing or surviving Corporation), then in
each such case the Vote Multiple thereafter applicable to the determination of
the number of votes per share to which holders of shares of Series D Preferred
Stock shall be entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
2B. Except as otherwise provided herein, in the Amended and
Restated Certificate of Incorporation or By-laws, the holders of shares of
Series D 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.
2C. In the event that the Preferred Dividends accrued on the
Series D Preferred Stock for four or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or irrevocably set
aside for payment, the holders of record of Junior Preferred Stock of the
Corporation of all series (including the Series D Preferred Stock), other than
any series in respect of which such right is expressly withheld by the Amended
and Restated Certificate of Incorporation or the authorizing resolutions
included in any Certificate of Designations therefor, shall have the right, at
the next meeting of shareholders called for the election of directors, to elect
two members to the Board of Directors, which directors shall be in addition to
the number required by the By-laws prior to such event, to serve until the next
Annual Meeting and until their successors are elected and qualified or their
earlier resignation, removal or incapacity or until such earlier time as all
accrued and unpaid Preferential Dividends upon the outstanding shares of Series
D Preferred Stock shall have been paid (or irrevocably set aside for payment) in
full. The holders of shares of Series D Preferred Stock shall continue to have
the right to elect directors as provided by the immediately preceding sentence
until all accrued and unpaid Preferential Dividends upon the outstanding shares
of Series D Preferred Stock shall have been paid (or irrevocably set aside for
payment) in full. Such directors may be removed and replaced by such
shareholders, and vacancies in such directorships may be filled only by such
shareholders (or by the remaining director elected by such shareholders, if
there be one) in the manner permitted by law; provided, however, that any such
action by shareholders shall be taken at a meeting of shareholders and shall not
be taken by written consent thereto.
2C. Except as otherwise required by the Amended and Restated
Certificate of Incorporation or By-laws or set forth herein, holders of Series D
Preferred Stock shall have no other special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for the taking of any corporate
action.
SECTION 3. CERTAIN RESTRICTIONS.
3A. Whenever Preferential Dividends or Dividends are in arrears or
the Corporation shall be in default of payment thereof, thereafter and until all
accrued and unpaid Preferential Dividends and Dividends, whether or not
declared, on shares of Series D Preferred Stock outstanding shall have been paid
or set irrevocably aside for payment in full, and in addition to
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any and all other rights which any holder of shares of Series D Preferred Stock
may have in such circumstances, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration, any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series D 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
D Preferred Stock, unless dividends are paid ratably on the Series D
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled if the full dividends
accrued thereon were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
3A., 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 D Preferred
Stock, provided 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 of the Corporation ranking junior (both as to
dividends and upon liquidation, dissolution or winding up) to the
Series D Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series D Preferred Stock, or any shares of stock ranking on a parity
with the Series D Preferred Stock (either as to dividends or upon
liquidation, dissolution or winding up), except in accordance with a
purchase offer made to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
3B. The Corporation shall not permit any Subsidiary (as
hereinafter defined) 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 Section 3, purchase or otherwise acquire such
shares at such time and in such manner. A "Subsidiary" of the Corporation shall
mean any Corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient to elect a majority of the
board of directors of such Corporation or other entity or other persons
performing similar functions are beneficially owned, directly or indirectly, by
the Corporation or by any Corporation or other entity that is otherwise
controlled by the Corporation.
3C. The Corporation shall not issue any shares of Series D
Preferred Stock except upon exercise of Rights issued pursuant to that certain
Rights Agreement dated as of [[, 2002]], between the Corporation and
[[_______]], as Rights Agent, a copy of which is on file with the Secretary of
the Corporation at its principal executive office and shall be made available to
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shareholders of record without charge upon written request therefor addressed to
said Secretary. Notwithstanding the foregoing sentence, nothing contained in the
provisions shall prohibit or restrict the Corporation from issuing for any
purpose any series of Preferred Stock with rights and privileges similar to,
different from, or greater than, those of the Series D Preferred Stock.
SECTION 4. REACQUIRED SHARES. Any shares of Series D Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares upon their retirement and cancellation shall become authorized but
unissued shares of Preferred Stock, without designation as to series, and such
shares may be reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors.
SECTION 5. LIQUIDATION, DISSOLUTION OR WINDING UP. 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 D Preferred Stock unless the holders of shares of Series D Preferred
Stock shall have received, subject to adjustment as hereinafter provided, (A)
$100 per one one-hundredth (1/100) share plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment or, (B) if greater than the amount specified in clause (i)(A) of
this sentence, an amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, as the same may be adjusted as
hereinafter provided and (ii) to the holders of stock ranking on a parity upon
liquidation, dissolution or winding up with the Series D Preferred Stock, unless
simultaneously therewith distributions are made ratably on the Series D
Preferred Stock and all other shares of such parity stock in proportion to the
total amounts to which the holders of shares of Series D Preferred Stock are
entitled under clause (i)(A) of this sentence and to which the holders of such
parity shares are entitled, in each case upon such liquidation, dissolution or
winding up. The amount to which holders of Series D Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the Corporation pursuant
to clause (i)(B) of the foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount" and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Corporation applicable pursuant to said clause
to the determination of the Participating Liquidation Amount, as said multiple
may be adjusted from time to time as hereinafter provided, is hereinafter
referred to as the "Liquidation Multiple." In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare or pay any dividend on
Common Stock payable in shares of Common Stock, (ii) effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding shares
of Common Stock into a greater or lesser number of shares of Common Stock, or
(iii) issue any shares of its capital stock in a reclassification of the Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Corporation is continuing or surviving Corporation), then,
in each such case, the Liquidation Multiple thereafter applicable to the
determination of the Participating Liquidation Amount to which holders of Series
D Preferred Stock shall be entitled after such event shall be the Liquidation
Multiple applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
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SECTION 6. CERTAIN RECLASSIFICATION AND OTHER EVENTS.
6A. In the event that holders of shares of Common Stock of the
Corporation receive after the Rights Declaration Date, in respect of their
shares of Common Stock any share of capital stock of the Corporation (other than
any share of Common Stock of the Corporation), whether by way of
reclassification, recapitalization, reorganization, dividend or other
distribution or otherwise (a "Transaction"), then, and in each such event, the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Corporation of the shares of Series D Preferred Stock shall be
adjusted so that after such event the holders of Series D Preferred Stock shall
be entitled, in respect of each share of Series D Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such adjustment, to (i) such additional dividends as equal
the Dividend Multiple in effect immediately prior to such Transaction multiplied
by the additional dividends which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the Transaction of such capital
stock, (ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such Transaction multiplied by the additional voting rights
which the holder of a share of Common Stock shall be entitled to receive by
virtue of the receipt in the Transaction of such capital stock and (iii) such
additional distributions upon liquidation, dissolution or winding up of the
Corporation as equal the Liquidation Multiple in effect immediately prior to
such Transaction multiplied by the additional amount which the holder of a share
of Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Corporation by virtue of the receipt in the Transaction of
such capital stock, as the case may be, all as provided by the terms of such
capital stock.
6B. In the event that holders of shares of Common Stock of the
Corporation receive after the Rights Declaration Date, in respect of their
shares of Common Stock any right or warrant to purchase Common Stock (including
as such a right, for all purposes of this paragraph, any security convertible
into or exchangeable for Common Stock) at a purchase price per share less than
the Fair Market Value of a share of Common Stock on the date of issuance of such
right or warrant, then and in each such event the dividend rights, voting rights
and rights upon the liquidation, dissolution or winding up of the Corporation of
the shares of Series D Preferred Stock shall each be adjusted so that after such
event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple
shall each be the product of the Dividend Multiple, the Vote Multiple and the
Liquidation Multiple, as the case may be, in effect immediately prior to such
event multiplied by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of shares
of Common Stock which could be purchased, at the Fair Market Value of the Common
Stock at the time of such issuance, by the maximum aggregate consideration
payable upon exercise in full of all such rights or warrants.
6C. In the event that holders of shares of Common Stock of the
Corporation receive after the Rights Declaration Date, in respect of their
shares of Common Stock any right or warrant to purchase capital stock of the
Corporation (other than shares of Common Stock), including as such a right, for
all purposes of this paragraph, any security convertible into or
A-6
exchangeable for capital stock of the Corporation (other than Common Stock), at
a purchase price per share less than the Fair Market Value of such shares of
capital stock on the date of issuance of such right or warrant, then and in each
such event the dividend rights, voting rights and rights upon liquidation,
dissolution or winding up of the Corporation of the shares of Series D Preferred
Stock shall each be adjusted so that after such event each holder of a share of
Series D Preferred Stock shall be entitled, in respect of each share of Series D
Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such event, to receive (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such event multiplied, first, by the additional dividends to which the holder
of a share of Common Stock shall be entitled upon exercise of such right or
warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction (as hereinafter defined)
and (ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such event multiplied, first, by the additional voting
rights to which the holder of a share of Common Stock shall be entitled upon
exercise of such right or warrant by virtue of the capital stock which could be
acquired upon such exercise and multiplied again by the Discount Fraction and
(iii) such additional distributions upon liquidation, dissolution or winding up
of the Corporation as equal the Liquidation Multiple in effect immediately prior
to such event multiplied, first, by the additional amount which the holder of a
share of Common Stock shall be entitled to receive upon liquidation, dissolution
or winding up of the Corporation upon exercise of such right or warrant by
virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction. For purposes of this paragraph, the
"Discount Fraction" shall be a fraction the numerator of which shall be the
difference between the Fair Market Value of a share of the capital stock subject
to a right or warrant distributed to holders of shares of Common Stock of the
Corporation as contemplated by this paragraph immediately after the distribution
thereof and the purchase price per share for such share of capital stock
pursuant to such right or warrant and the denominator of which shall be the Fair
Market Value of a share of such capital stock immediately after the distribution
of such right or warrant.
6D. For purposes of this Attachment IV, the "Fair Market Value" of
a share of capital stock of the Corporation (including a share of Common Stock)
on any date shall be deemed to be the average of the daily closing price per
share thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that, in the event
that such Fair Market Value of any such share of capital stock is determined
during a period which includes any date that is within 30 Trading Days after (i)
the ex-dividend date for a dividend or distribution on stock payable in shares
of such stock or securities convertible into shares of such stock, or (ii) the
effective date of any subdivision, split, combination, consolidation, reverse
stock split or reclassification of such stock, then, and in each such case, the
Fair Market Value shall be appropriately adjusted by the Board of Directors of
the Corporation to take into account ex-dividend or post-effective date trading.
The closing price for any day shall be the last sale price, regular way, or, in
case, no such sale takes place on such day, the average of the closing bid and
asked prices, regular way as reported in the applicable transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the shares are listed or admitted to trading or, if the shares
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
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or such other system then in use, or if on any such date the shares are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the shares
selected by the Board of Directors of the Corporation. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the shares are listed or admitted to trading is open for the transaction of
business or, if the shares are not listed or admitted to trading on any national
securities exchange, on which the New York Stock Exchange or such other national
securities exchange as may be selected by the Board of Directors of the
Corporation is open. If the shares are not publicly held or not so listed or
traded on any day within the period of 30 Trading Days applicable to the
determination of Fair Market Value thereof as aforesaid, "Fair Market Value"
shall mean the fair market value thereof per share as determined in good faith
by the Board of Directors of the Corporation. In either case referred to in the
foregoing sentence, the determination of Fair Market Value shall be described in
a statement filed with the Secretary of the Corporation.
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series D Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
SECTION 8. EFFECTIVE TIME OF ADJUSTMENTS.
a. Adjustments to the Series D Preferred Stock required by the provisions
shall be effective as of the time at which the event requiring such adjustments
occurs.
(B) The Corporation shall give prompt written notice to each
holder of a share of Series D Preferred Stock of the effect of any adjustment to
the voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Corporation of such shares required by the provisions.
Notwithstanding the foregoing sentence, the failure of the Corporation to give
such notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
SECTION 9. NO REDEMPTION. The shares of Series D 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 shares of Series D Preferred Stock in any other manner permitted by law,
the provisions and the Amended and Restated Certificate of Incorporation of the
Corporation.
SECTION 10. RANKING. Unless otherwise provided in the Amended and Restated
Certificate of Incorporation of the Corporation or a Certificate of Designations
relating to a subsequent series of preferred stock of the Corporation, the
Series D Preferred Stock shall rank junior to all other series of the
Corporation's preferred stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and senior to
the Common Stock.
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SECTION 11. AMENDMENT. The hereof and the Amended and Restated Certificate
of Incorporation of the Corporation shall not be amended in any manner which
would adversely affect the rights, privileges or powers of the Series D
Preferred Stock without, in addition to any other vote of shareholders required
by law, the affirmative vote of the holders of 67% or more of the outstanding
shares of Series D Preferred Stock, voting together as a single class. This
Section 11 shall not be amended in any manner without the affirmative vote of
the holders of 67% or more of the outstanding shares of Series D Preferred
Stock, voting together a size class.
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EXHIBIT B
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL
AND VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
COSI, INC.
SUMMARY OF RIGHTS TO PURCHASE
SERIES D PREFERRED STOCK
- On the Board of Directors of Cosi, Inc. (the
"Corporation") has declared a dividend distribution
of one Preferred Stock Purchase Right (a "Right") for
each outstanding share of common stock, par value
$0.01 per share (collectively, the "Common Stock"),
of the Corporation held by stockholders of record on
[the date of the Corporation's initial public
offering.
- Each Right entitles the registered holder to purchase
from the Corporation one one-hundredth (1/100) of a
share of preferred stock of the Corporation,
designated as Series D Preferred Stock (the "The
Series D Preferred Stock") at a price of $[100] per
one one-hundredth (1/100) of a share (the "Exercise
Price").
- The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement")
between the Corporation and [(2) ] as Rights Agent
(the "Rights Agent").
As discussed below, initially the Rights will not be
exercisable, certificates will not be sent to shareholders and the Rights will
automatically trade with the Common Stock.
1. Initially Rights are not Exercisable; Rights
Initially Not Represented by a Certificate. Initially, the Rights will not be
exercisable, will not be represented by a separate certificate, and will not be
transferable apart from the Common Stock. Instead, Rights will be evidenced, (i)
with respect to any of the shares of Common Stock held in uncertificated book
entry form (a "Book Entry") outstanding as of the Record Date, by such Book
Entry and (ii) with respect to the shares of Common Stock evidenced by Common
Stock certificates outstanding as of the Record Date, by such Common Stock
certificate, together with a copy of this Summary of Rights.
- ----------
(2) To be selected by the corporation's Chief Executive Officer
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The Rights Agreement provides that until the Rights
Distribution Date, the Rights will be transferred with and only with the Common
Stock. Until the Rights Distribution Date (or earlier redemption or expiration
of the Rights), Common Stock certificates will contain a legend incorporating
the Rights Agreement by reference. Until the Rights Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any of the Common Stock certificates will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
2. When Rights Become Exercisable; Rights Distribution
Date - The Rights become exercisable (unless earlier redeemed) by each record
holder of Rights, other than the Acquiring Person (as defined below), upon the
close of business on the day (the "Rights Distribution Date") which is the
earlier of:
(i) the tenth day following the first date (the "Stock
Acquisition Date") on which there is a public announcement that a person or
group of affiliated or associated persons, with certain exceptions set forth
below, has acquired beneficial ownership of 15% or more of the outstanding
voting stock of the Corporation (an "Acquiring Person") or such earlier or later
date (not beyond the thirtieth day after the Stock Acquisition Date) as the
Board of Directors may determine; and
(ii) the tenth business day (or such later date as may be
determined by the Corporation's Board of Directors prior to such time as any
person or group of affiliated or associated persons becomes an Acquiring Person)
after the date of the commencement or announcement of a person's or group's
intention to commence or engage in a tender or exchange offer the consummation
of which would result in the ownership of 15% or more of the Corporation's
outstanding voting stock (even if no shares are actually purchased pursuant to
such offer);
An Acquiring Person does not include (A) the Corporation, (B)
any subsidiary of the Corporation, (C) any employee benefit plan or employee
stock plan of the Corporation or of any subsidiary of the Corporation, or any
trust or other entity organized, appointed, established or holding Common Stock
for or pursuant to the terms of any such plan, (D) any existing shareholder of
the Corporation as of the Record Date, or (E) any person or group whose
ownership of 15% or more of the shares of voting stock of the Corporation then
outstanding results solely from (i) any action or transaction or transactions
approved by the Corporation's Board of Directors before such person or group
became an Acquiring Person or (ii) a reduction in the number of issued and
outstanding shares of voting stock of the Corporation pursuant to a transaction
or transactions approved by the Corporation's Board of Directors (provided that
any person or group that does not become an Acquiring Person by reason of clause
(i) or (ii). For purposes of the foregoing, outstanding voting stock of the
Corporation includes voting stock that trades on a "when issued" basis on a
national securities exchange (such as the NYSE), on the National Association of
Securities Dealers Automated Quotation System or otherwise.
The Rights Agreement provides that when a person or group of
affiliated or associated persons becomes an Acquiring Person (other than
pursuant to a Qualifying Tender Offer (as defined below)), such Acquiring
Person's Rights will thereupon become null and void.
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As soon as practicable following the Rights Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Stock as of the close of business on
the Rights Distribution Date and such separate certificates alone will evidence
the Rights from and after the Rights Distribution Date.
3. Characteristics of Preferred Stock Issuable upon
Exercise of Rights.
- The Series D Preferred Stock is nonredeemable and,
unless otherwise provided in connection with the
creation of a subsequent series of preferred stock,
subordinate to any other series of the Corporation's
preferred stock.
- The Series D Preferred Stock may not be issued except
upon exercise of Rights.
- Each share of Series D Preferred Stock will be
entitled to receive when, as and if declared, a
quarterly dividend in an amount equal to the greater
of $0.10 per share or 100 times the cash dividends
declared on the Common Stock.
- In addition, Series D Preferred Stock is entitled to
100 times any non-cash dividends (other than
dividends payable in equity securities) declared on
the Common Stock, in like kind.
- In the event of the liquidation of the Corporation,
the holders of Series D Preferred Stock will be
entitled to receive a payment in an amount equal to
the greater of $[100] per one one-hundredth share or
100 times the payment made per share of Common Stock.
Each share of Series D Preferred Stock will have 100
votes, voting together with the Common Stock.
- In the event of any merger, consolidation or other
transaction in which Common Stock is changed,
exchanged or converted, each share of Series D
Preferred Stock will be entitled to receive 100 times
the amount received per share of Common Stock.
- The rights of Series D Preferred Stock as to
dividends, liquidation and voting are protected by
anti-dilution provisions.
- If the dividends accrued on the Preferred Stock for
four or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and
paid or irrevocably set aside for payment, the
holders of record of Preferred Stock of the
Corporation of all series (including the Series D
Preferred Stock) will have the right to elect two
members to the Corporation's Board of Directors.
- Fractions of shares of Series D Preferred Stock
(other than fractions which are integral multiples of
one one-hundredth of a share) may, at the election of
the Corporation, be evidenced by depositary receipts.
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- The Corporation may also issue cash in lieu of
fractional shares which are not integral multiples of
one one-hundredth of a share.
4. Merger or Other Business Combination following Rights
Distribution Date.
- In the event that, at any time on or after the Rights
Distribution Date:
(i) the Corporation were to be acquired in a merger or
other business combination (in which any shares of Common Stock are changed or
converted into or exchanged for other securities or assets); or
(ii) more than 50% of the assets or earning power of the
Corporation and its subsidiaries (taken as a whole) were to be sold or
transferred in one or a series of related transactions, the Rights Agreement
provides that (unless the Rights have been redeemed) proper provision will be
made so that each holder of record of a Right, other than the Acquiring Person,
will from and after such date have the right to receive, upon payment of the
Exercise Price, that number of shares of common stock of the acquiring
Corporation having a market value at the time of such transaction equal to two
times the Exercise Price.
- In addition, unless the Rights are earlier redeemed,
in the event that a person or group becomes the
beneficial owner of 15% or more of the Corporation's
voting stock (other than pursuant to a tender or
exchange offer (a "Qualifying Tender Offer") for all
outstanding shares of Common Stock that is approved
by the Board of Directors, after taking into account
the long-term value of the Corporation and all other
factors they consider relevant), the Rights Agreement
provides that proper provision will be made so that
each holder of record of a Right, other than the
Acquiring Person, will thereafter have the right to
receive, upon payment of the Exercise Price, that
number of shares of the Series D Preferred Stock
having a market value at the time of the transaction
equal to two times the Exercise Price (such market
value to be determined with reference to the market
value of the Common Stock as provided in the Rights
Agreement).
5. Redemption or Exchange of Rights. At any time on or
prior to the close of business on the tenth day after the time that a person has
become an Acquiring Person (or such later date as may be determined by a
majority of the Board of Directors), the Corporation may redeem the Rights in
whole, but not in part, at a price of $0.0l per Right, subject to adjustment
(the "Redemption Price"). Immediately upon the effective time of the action of
the Board of Directors of the Corporation authorizing redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
In addition, the Board of Directors of the Corporation may, at
its option, at any time after the tenth day following a Stock Acquisition Date
and prior to the time that an Acquiring Person becomes the Beneficial Owner of
more than 50% of the outstanding shares of the voting stock of the Corporation,
elect to exchange all (but not less than all) of the then
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outstanding Rights (other than Rights owned by the Acquiring Person or any
affiliate or associate thereof, which Rights become void) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of the Distribution Date (the "Exchange Ratio").
Immediately upon such action by the Board of Directors (the "Exchange Time"),
the right to exercise the Rights will terminate and each Right will thereafter
represent only the right to receive a number of shares of Common Stock equal to
the Exchange Ratio.
6. Adjustment of Shares of Preferred Stock Issuable upon
Exercise of Rights. The number of shares of Series D Preferred Stock issuable
upon exercise of the Rights is subject to certain adjustments from time to time
in the event of a stock dividend on, or a subdivision, combination or issuance
of capital stock in a reclassification of, the Common Stock. The Exercise Price
for the Rights is subject to adjustment in certain circumstances, including
certain distributions of cash or other property to holders of Common Stock.
7. Amendment of Rights. For as long as the Rights are
then redeemable, the Corporation may amend the Rights in any manner, including
an amendment to extend the time period in which the Rights may be redeemed. At
any time when the Rights are not then redeemable, the Corporation may amend the
Rights in any manner that does not materially adversely affect the interests of
holders of the Rights as such.
8. No Rights as Stockholder until a Right is Exercised.
Until a Right is exercised, the holder, as such, will have no rights as a
stockholder of the Corporation, including, without limitation, the right to vote
or to receive dividends. Holders of Common Stock may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
9. Expiration of Rights - The Rights will expire (the
"Expiration Time") (unless earlier redeemed):
(i) at the close of business on [____________], 2012 or
(ii) if the Rights Distribution Date (as defined below)
shall have occurred before [__________], 2012, at the close of business on the
90th day following the Rights Distribution Date, provided that the Board of
Directors of the Corporation does not extend or otherwise modify the Rights.
There can be no assurance, however, as to whether or not the Board of Directors
will so extend, modify or redeem the Rights.
10. Copy of Rights Agreement. This summary description of
the Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement which is incorporated in this summary
description herein by reference and any differences between this summary
description and the Rights Agreement shall in all cases be interpreted by the
Rights Agreement.
B-5
EXHIBIT C
[Form of Right Certificate]
Certificate No. W- _______________Rights
NOT EXERCISABLE AFTER (I) [________], 2012, OR (II) IF THE
DISTRIBUTION DATE (AS DEFINED BELOW) SHALL HAVE OCCURRED
BEFORE THE DATE SPECIFIED IN CLAUSE (I), THE DATE WHICH IS
NINETY (90) DAYS AFTER THE DISTRIBUTION DATE, OR EARLIER IF
REDEEMED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE CORPORATION AND UNDER CERTAIN OTHER CIRCUMSTANCES, AT
$0.0l PER RIGHT (SUBJECT TO ADJUSTMENT), ON THE TERMS SET
FORTH OR REFERRED TO IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED
TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED
TO ANY PERSON.
Right Certificate
COSI, 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 2002 (the "Rights Agreement") between Cosi, Inc., a
Delaware corporation (the "Corporation"), and [ ](3) as Rights Agent (the
"Rights Agent"), to purchase from the Corporation at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M. (New York City time) on (i) [_____________], 2012 (or if the
Distribution Date shall have occurred before [__________], 2012, the date which
is 90 days after the Distribution Date) at the office of the Rights Agent
designated in the Rights Agreement for such purpose, or its successor as Rights
Agent, in New York City, one one-hundredth (1/100) of a fully paid nonassessable
share of Series D Preferred Stock (the "Preferred Stock") of the Corporation at
a purchase price of $[100] as the same may from time to time be adjusted in
accordance with the Rights Agreement (the "Exercise Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and
the number of shares of Preferred Stock which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events
- ----------
(3) To be selected by the corporation's Chief Executive Officer
C-1
and, upon the happening of certain events, securities other than shares of
Preferred Stock, or other property, may be acquired upon exercise of the Rights
evidenced by this Right Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are incorporated herein by reference and made a part and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Corporation and the holders of record of Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the
Corporation.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office of the Rights Agent designated in the
Rights Agreement for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder of record to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender, another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Corporation at its option
or under certain other circumstances at a redemption price of $0.0l per Right.
No fractional shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth (1/100) of a share) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
and in lieu thereof the Corporation may cause depository receipts to be issued
and/or a cash payment may be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
Preferred Stock or of any other securities of the Corporation which may at any
time be issuable on the exercise, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder, as such, any of the
rights of a stockholder of the Corporation or any right to vote for the election
of directors or upon any matter submitted to shareholders at a meeting thereof,
or to give or withhold consent to any corporate action or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal. Dated as of ______________________, _______.
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ATTEST: COSI, INC.
____________________________________ By:____________________________________
Secretary Title:
Countersigned:
By:_________________________________
Authorized Signature
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED ___________________________________ hereby
sells, assigns and transfers unto ______________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
[_____________] Attorney to transfer the within Right Certificate on the books
of the within-named Corporation, with full power of substitution.
Dated: _____________, _____
____________________________________
Signature
Signature Guaranteed:
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Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold,
assigned or transferred by or on behalf of a Person who is or was an Acquiring
Person or an Associate or an Affiliate thereof (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
Dated: _____________, _____
____________________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate 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.
C-4
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO COSI, INC.:
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Right Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of such Rights and requests
that certificates for such share(s) be issued in the following:
name :
Please insert social security
or other identifying number:____________________________________________________
________________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:____________________________________________________
________________________________________________________________________________
(Please print name and address)
Dated: _________________, _____
____________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the fact of this
Right Certificate)
Signature Guaranteed:
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