EXHIBIT 4-A
FORM OF
RIGHTS AGREEMENT
by and between
USW-C, INC.
(to be renamed "U S WEST, INC.")
and
STATE STREET BANK AND TRUST COMPANY
as Rights Agent
---------------
Dated as of
_________, 1998
TABLE OF CONTENTS
Section Page
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1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . 14
3. Issuance of Right Certificates . . . . . . . . . . . . . . . . . . . . . 15
4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . 19
5. Countersignature and Registration. . . . . . . . . . . . . . . . . . . . 20
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates . . . . . . 21
7. Exercise of Rights; Exercise Price; Expiration Date of Rights. . . . . . 23
8. Cancellation and Destruction of Right Certificates . . . . . . . . . . . 29
9. Reservation and Availability of Shares of Preferred Stock. . . . . . . . 30
10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . 33
11. Adjustment of Exercise Price or Number of Shares. . . . . . . . . . . . 34
12. Certification of Adjusted Exercise Price or Number of Shares. . . . . . 44
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . 53
15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16. Agreement of Right Holders. . . . . . . . . . . . . . . . . . . . . . . 56
17. Right Certificate Holder Not Deemed a Stockholder . . . . . . . . . . . 57
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . 58
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19. Merger or Consolidation of, or Change in Name of, the Rights Agent. . . 59
20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . 61
21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . 65
22. Issuance of New Right Certificates. . . . . . . . . . . . . . . . . . . 67
23. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
24. Notice of Proposed Actions. . . . . . . . . . . . . . . . . . . . . . . 70
25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
26. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . . . 73
27. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
29. Benefits of this Rights Agreement . . . . . . . . . . . . . . . . . . . 77
30. Delaware Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
31. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
32. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 78
33. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
Exhibit C -- Provisions of the Restated Certificate of
Incorporation Relating to the Terms of the
Series A Junior Preferred Stock
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RIGHTS AGREEMENT
Agreement, dated as of ___________, 1998, by and between USW-C, Inc.,
a Delaware corporation (to be renamed "U S WEST, Inc.") (the "Company"), and
State Street Bank and Trust Company (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on __________ __, 1998, the Board of Directors of the
Company authorized the issuance of, and declared a dividend payable in, one
right (a "Right") for each share of Common Stock, $0.01 par value per share, of
the Company outstanding as of the close of business on ___________ __, 1998
(the "Record Date"), each such Right representing the right to purchase one
one-hundredth of a share of Series A Junior Preferred Stock of the Company
("Preferred Stock") having the rights and preferences set forth in Article V
Section 3.1 of the Restated Certificate of Incorporation of the Company, the
form of which is attached hereto as Exhibit C, authorized by the Board of
Directors on __________ __, 1998, upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further authorized the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which
may be issued between the Record Date and the earlier to occur of the
Distribution Date, the Expiration Date or the Final Expiration Date (as such
terms are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the Voting Stock
of the Company then outstanding; PROVIDED, that, an Acquiring Person
shall not include (i) an Exempt Person (as such term is hereinafter
defined) or (ii) any Person, together with all Affiliates and
Associates of such Person, who or which would be an Acquiring Person
solely by reason of (A) being the Beneficial Owner of shares
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of Voting Stock of the Company, the Beneficial Ownership of which was
acquired by such Person pursuant to any action or transaction or
series of related actions or transactions approved by the Board of
Directors before such Person otherwise became an Acquiring Person or
(B) a reduction in the number of issued and outstanding shares of
Voting Stock of the Company pursuant to a transaction or a series of
related transactions approved by the Board of Directors of the
Company; 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 1% of the Voting Stock
of the Company, 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 Company determines in good
faith (but only if at the time of such determination by
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the Board of Directors there are then in office not less than two
Continuing Directors and such action is approved by a majority of the
Continuing Directors then in office) 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 paragraph (a), then such Person shall not be
deemed an "Acquiring Person" for any purposes of this Rights
Agreement.
(b) "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), as in effect on
the date of this Rights Agreement.
(c) "Associate" of a Person (as such term is hereinafter defined)
shall mean (i) with respect to a corporation, any officer or director
thereof or of any Subsidiary (as such term is hereinafter
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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 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 15% 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.
(d) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have
correlative meanings):
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(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 hereof; 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, or upon the exercise of conversion
rights, exchange rights, other rights (other than these Rights),
warrants or options, or otherwise; PROVIDED, HOWEVER, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered
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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
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Person's Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except as described in clause (B) of
subparagraph (ii) of this paragraph (d)) or disposing of any
securities of the Company; PROVIDED, HOWEVER, that for purposes
of determining Beneficial Ownership of securities under this
Rights Agreement, officers and directors of the Company solely by
reason of their status as such shall not constitute a group
(notwithstanding that they may be Associates of one another or
may be deemed to constitute a group for purposes of Section 13(d)
the Exchange Act) and shall not be deemed to own shares owned by
another officer or director of the Company.
Notwithstanding anything in this paragraph (d) 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
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the expiration of forty days after the date of such acquisition.
(e) "BOOK-ENTRY" shall mean an uncertificated book-entry in the
Company's Direct Registration System.
(f) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New
York or Colorado are authorized or obligated by law or executive order
to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
Colorado time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 P.M., Colorado time, on the next
succeeding Business Day.
(h) "Common Stock" when used with reference to the Company shall
collectively mean the Common Stock, $0.01 par value, of the Company.
"Common Stock" when used with reference to any Person other than the
Company which shall be organized in corporate form shall mean the
capital stock or other equity security with the greatest per share
voting power of such Person. "Common Stock" when used with reference
to any Person other than the Company which shall not be organ-
9
ized in corporate form shall mean units of beneficial interest which
shall represent the right to participate in profits, losses,
deductions and credits of such Person and which shall be entitled to
exercise the greatest voting power per unit of such Person.
(i) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors,
who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an Acquiring
Person or of any such Affiliate or Associate, and who either (i) was a
member of the Board of Directors prior to the time that any Person
became an Acquiring Person (ii) subsequently became a member of the
Board of Directors, and whose nomination for election or election to
the Board of Directors was recommended or approved by a majority of
the Continuing Directors then on the Board of Directors.
(j) "Distribution Date" shall have the meaning set forth in
Section 3(b) hereof.
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(k) "Exchange Act" shall have the meaning set forth in Section
1(b) hereof.
(l) "Exempt Person" shall mean (i) prior to the date (the
"Separation Date") on which USW redeems its shares of Communications
Group Common Stock, par value $0.01 per share for shares of Common
Stock of the Company, USW, (ii) the Company, (iii) any Subsidiary of
the Company or (iv) any employee benefit plan or employee stock plan
of the Company or any Subsidiary of the Company, or any trust or other
entity organized, appointed, established or holding Common Stock for
or pursuant to the terms of any such plan.
(m) "Exercise Price" shall have the meaning set forth in Sections
4 and 7(b) hereof.
(n) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(o) "Fair Market Value" of any property shall mean the fair
market value of such property as determined in accordance with Section
11(b) hereof.
(p) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
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(q) "Person" shall mean any individual, firm, corporation or
other entity.
(r) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(s) "Record Date" shall have the meaning set forth in the first
Recital.
(t) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(u)"Right Certificate" shall have the meaning set forth in
Section 3(d) hereof.
(v) "Stock Acquisition Date" shall mean the first date on which
there shall be a public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such (which, for purposes
of this definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) or such earlier date as
a majority of the Continuing Directors shall become aware of the
existence of an Acquiring Person.
(w) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having voting
power sufficient to elect a majority of the
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board of directors or other persons performing similar functions are
beneficially owned, directly or indirectly, by such Person or by any
corporation or other entity that is otherwise controlled by such
Person.
(x) "Summary of Rights" shall have the meaning set forth in
Section 3(a) hereof.
(y) "Trading Day" shall have the meaning set forth in Section
11(b) hereof.
(z) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of any transfer of any security,
instrument or right, including Rights, shares of Common Stock and
shares of Preferred Stock.
(aa) "USW" shall mean U S WEST, Inc., a Delaware corporation
which, prior to the Separation Date, was the owner of all of the
outstanding Voting Stock of the Company and the name of which, upon
the Separation Date, will be changed to MediaOne Group, Inc.
(bb) "Voting Stock" shall mean (i) the Common Stock of the Company
and (ii) any other
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shares of capital stock of the Company entitled to vote generally in
the election of directors or entitled to vote together with the
Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or
winding up. For purposes of this Agreement, a stated percentage of
the Voting Stock shall mean a number of shares of the Voting Stock as
shall equal in voting power that stated percentage of the total voting
power of the then outstanding shares of Voting Stock in the election
of a majority of the Board of Directors or in respect of any merger,
consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of Directors of the Company
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 Company hereby appoints
the Rights Agent to act as agent for
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the Company and the holders of the Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) On the Record Date (or as soon as practicable thereafter), the
Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit A (the "Summary of Rights"),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Record Date, at the address of such holder
shown on the records of the Company.
(b) Until the close of business on the day which is the earlier of (i)
the tenth day after the Stock Acquisition Date or (ii) the tenth business day
(or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person, together
15
with its Affiliates and Associates, would be the Beneficial Owner of 15% or
more of the then outstanding shares of Voting Stock of the Company
(irrespective of whether any shares are actually purchased pursuant to any such
offer) (the earlier of such dates being herein referred to as the "Distribution
Date"), (x) the Rights shall be evidenced by the Book-Entries representing, or
the certificates for, the Common Stock registered in the name of the holders of
Common Stock (together with, in the case of Book-Entries representing, or the
certificates for, Common Stock outstanding as of the Record Date, the Summary
of Rights) and not by separate Book-Entries or Right certificates and the
record holders of the Common Stock represented by such Book-Entries or
certificates shall be the record holders of the Rights represented thereby and
(y) each Right shall be transferable only simultaneously and together with the
transfer of a share of Common Stock (subject to adjustment as hereinafter
provided). Until the Distribution Date (or, if earlier, the Expiration Date or
Final Expiration Date), transfer on the Company's Direct Registration System of
any Common Stock represented by a Book-Entry or the surrender for transfer of
any Common Stock represented by a certificate 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.
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(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, the Expiration Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect
of shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Company's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earliest of the Distribution Date, the Expiration Date, or the Final Expiration
Date (or, in certain circumstances as provided in Section 22 hereof, after the
Distribution Date) shall have impressed, printed, written or stamped thereon or
otherwise affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof to
the same number of Rights (subject to adjustment) as the number of
shares of Common Stock represented by this certificate, such Rights
being on the terms provided under the Rights Agreement between USW-C,
Inc. (to be renamed "U S WEST, Inc.") (the "Company") and State Street
Bank and Trust Company (the "Rights Agent"), dated as of ____________
__, 1998, 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
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights shall be evidenced
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by separate certificates and shall no longer be evidenced by this
certificate. The Company shall mail to the registered holder of this
certificate a copy of the Rights Agreement without charge within five
days after receipt of a written request therefor. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN SECTION 7(e) OF THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE
TRANSFERRED TO ANY PERSON.
(d) As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Distribution Date, as shown by the records
of the Company, at the address of such holder shown on such records, a
certificate in the form provided by Section 4 hereof (a "Right Certificate"),
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. As of and after the Distribution Date, the Rights
shall be evidenced solely by SUCH 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.
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Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates
(and the forms of election to purchase shares, certificate and assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Stock or the Rights may from time to time be
listed or as the Company may deem appropriate to conform to usage or otherwise
and as are not inconsistent with the provisions of this Rights Agreement.
Subject to the provisions of Section 22 hereof, Right Certificates evidencing
Rights whenever issued, (i) shall be dated as of the date of issuance of the
Rights they represent and (ii) subject to adjustment from time to time as
provided herein, on their face shall entitle the holders thereof to purchase
such number of shares (including fractional shares which are integral multiples
of one-hundredth of a share) of Preferred Stock as shall be set forth therein
at the price payable upon exercise of a Right provided by Section 7(b) hereof
as the same may from time to time be adjusted as provided herein (the "Exercise
Price").
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Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) Each Right Certificate shall be executed on behalf of the Company
by its Chairman of the Board, President or any Vice President, either manually
or by facsimile signature, and have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. Each
Right Certificate shall be countersigned by the Rights Agent either manually or
by facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
Right Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Right Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed
on behalf of the Company by any person who, on the date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date
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of the execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 7(e), 7(f) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the earlier of the Expiration Date or the Final
Expiration Date, any Right Certificate, may be (i) transferred or (ii) split
up, combined or exchanged for one or more other Right Certificates, entitling
the registered holder to purchase a like number of shares of Preferred
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Stock as the Right Certificate or Rights Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer any Right
Certificate shall surrender the Right Certificate at the office of the Rights
Agent designated for the surrender of Right Certificates with the form of
certificate and assignment on the reverse side thereof duly endorsed (or
enclosed with such Right Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature duly guaranteed. Any registered holder desiring to split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate to be
split up, combined or exchanged at the office of the Rights Agent designated
therefor. Thereupon, the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any Transfer Tax that may be imposed in connection with any transfer,
split up, combination or exchange of any Right Certificates.
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(b) Subject to the provisions of Section 7(e), 7(f) and 14 hereof,
upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company shall issue and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Section 7(e) and 23(a) hereof). Except as otherwise provided herein, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
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election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in Canton, Massachusetts, 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) __________
__, 2008 (the "Final Expiration Date") or (ii) the date on which the Rights are
redeemed as provided in Section 23 hereof (such earlier date being herein
referred to as the "Expiration Date").
(b) The Exercise Price shall initially be $_______ for each one
one-hundredth (1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the United
States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check,
24
bank draft or money order payable to the Company or the Rights Agent of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Right
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Preferred
Stock of the Company one or more certificates representing the number of shares
of Preferred Stock to be so purchased, and the Company hereby authorizes and
directs such transfer agent to comply with all such requests, (ii) as provided
in Section 14(b), at the election of the Company, cause depositary receipts to
be issued in lieu of fractional shares of Preferred Stock, (iii) if the
election provided for in the immediately preceding clause (ii) has not been
made, requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with Section 14(b) hereof, (iv)
after receipt of such Preferred Stock certificates and, if applicable,
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder and (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of
such Right Certificate;
25
PROVIDED, HOWEVER, that in the case of a purchase of securities, other than
Preferred Stock, pursuant to Section 13 hereof, the Rights Agent shall promptly
take the appropriate actions corresponding in such case to that referred to in
the foregoing clauses (i) through (v) of this Section 7(c). Notwithstanding
the foregoing provisions of this Section 7(c), the Company may suspend the
issuance of shares of Preferred Stock upon exercise of a Right for a reasonable
period, not in excess of 90 days, during which the Company seeks to register
under the Securities Act of 1933, as amended (the "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 Company of its obligations under Section
9(c) hereof.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or his assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the time (the
26
"invalidation time") when any Person first becomes an Acquiring Person, any
Rights that are beneficially owned by (x) such Acquiring Person (or any
Associate or Affiliate of such Acquiring Person), (y) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
after the invalidation time or (z) a transferee of such Acquiring Person (or
any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the invalidation time pursuant to either (I) a transfer from
the Acquiring Person to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or understanding regarding
the transferred Rights or (II) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clause (y) and (z) above,
shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) are complied with,
but shall have no liability to any holder of Right Certificates or any other
Person as a
27
result of its failure to make any determination with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. No Right
Certificate shall be issued pursuant to Section 3 hereof that represents
Rights beneficially owned by an Acquiring Person whose Rights would be void
pursuant to the provisions of this Section 7(e) or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
provisions of this Section 7(e) or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the provisions of this Section 7(e)
shall be cancelled.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) 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
28
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in 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 Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Right Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
29
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED
STOCK.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of authorized and issued shares of Preferred Stock
held in its treasury, such number of shares of Preferred Stock as will from
time to time be sufficient to permit the exercise in full of all outstanding
Rights.
(b) The Company 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 National Association of
Securities Dealers Automated Quotations ("NASDAQ") or any successor thereto
or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights
30
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 Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section
11(a)(ii), 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) cause such registration statement to become effective
as soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for Preferred Stock, and (b) the date of the
expiration of the Rights. The Company 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 Company will
also take such action as may be appropriate under, or to ensure compliance
with, the
31
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.
(e) The Company covenants and agrees that it will pay when due and
payable any and all federal and state Transfer Taxes which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
shares of Preferred Stock issued or delivered upon the exercise of Rights.
The Company shall not, however, be required to pay any Transfer Tax which may
be payable in respect of any transfer or delivery of a Right Certificate to a
Person other than, or the issuance or delivery of certificates for Preferred
Stock upon exercise of Rights in a name other than that of, the registered
holder of the Right Certificate, and the Company shall not be required to or
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
32
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such Transfer Tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose
name any certificate for shares of Preferred Stock 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
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 Company 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 Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate, as such, shall not be entitled to
any rights of a stockholder of the Company with respect to shares for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any pre-
33
emptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF EXERCISE PRICE 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 Company 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, (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, 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
34
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) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 27 of this Agreement, in the event
that any Person (other than an Exempt Person), alone or together
with its Affiliates and Associates, shall become an Acquiring
Person, 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) hereof, 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
35
Exercise Price, the greater of (1) the number of one
one-hundredths 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) hereof) 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 13 hereof, then only the
provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the Company 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 Company
shall take all such action as may be necessary to
36
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 Company may, if the
Board of Directors determines (but only if at the time of such
determination by the Board of Directors there are then in office
not less than two Continuing Directors and such action is
approved by a majority of the Continuing Directors then in
office) 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, 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
37
banking firm selected by the Board of Directors (but only if at
the time of such selection there are then in office not less
than two Continuing Directors and such selection is approved by
a majority of the Continuing Directors then in office). 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 hereof, any such election by the
Board of Directors of the Company must be made and publicly
announced within thirty (30) 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
38
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 Company to take into account ex-dividend or post-effective
date trading. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way (in either case, as reported in
the applicable transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange), or, if the securities
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the applicable transaction reporting system with respect to
securities listed on the principal national securities exchange on which such
security is listed or admitted to trading; or, if not listed or admitted to
trading on any national securities exchange, the last quoted price (or, if
not so quoted, the
39
average of the high bid and low asked prices) in the over-the-counter market,
as reported by NASDAQ or such other system then in use; or, if no bids for
such security are quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in such security selected by the Board of Directors of the Company.
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 Company, 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 Company;
PROVIDED, HOWEVER, that for purposes of making the adjustment provided for by
Section 11(a)(ii) hereof, the Fair Market Value of a share of Preferred Stock
shall not be less than 100% of the
40
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 provisions of the Restated Certificate of
Incorporation of the Company 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 Company based upon such appraisals or
valuation reports of such independent experts as the Board of Directors of
the Company 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
41
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 Company shall use its best efforts to take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and non-assessable shares of such
Preferred Stock at such adjusted purchase price per share.
f) Anything in this Section 11 to the contrary notwithstanding, in
the event of any reclassification of stock of the Company or any
recapitalization, reorganization or partial liquidation of the Company or
similar transaction, the Company 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
42
paragraphs of this Section 11, as the Board of Directors of the Company shall
determine to be necessary or appropriate in order 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 Company,
result in the stockholders of the Company being subject to any United States
federal income tax liability by reason thereof.
g) In the event the Company shall at any time after the Record Date
make any distribution on the shares of Common Stock of the Company, whether
by way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Company 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
Company 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
43
Stock of the Company 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 hereof 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 Company. For purposes hereof, the
Fair Market Value of any property distributed to the holders of shares of
Common Stock of the Company 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 Company, 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 Company, whose determination shall be final and binding on
the Company, 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 Company shall (a) promptly prepare a certificate setting forth
such
44
adjustment, and a brief statement of the facts giving rise to such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with
Section 25. Notwithstanding the foregoing sentence, the failure of the
Company to make such certification or give such notice shall not affect the
validity of or the force or effect of the requirement for such adjustment.
Any adjustment to be made pursuant to Section 11, 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) In the event that, at any time after the time that any Person
becomes an Acquiring Person, (x) the Company shall, directly or indirectly,
consolidate with, or merge with and into, any other Person or Persons (other
than an Exempt Person) and the Company shall not be the surviving or
continuing corporation of such consolidation or merger,
45
or (y) any Person or Persons (other than an Exempt Person) shall, directly or
indirectly, consolidate with, or merge with and into, the Company, and the
Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other Person (other than an
Exempt Person) or of the Company or cash or any other property, or (z) the
Company or one or more of its Subsidiaries shall, directly or indirectly,
sell or otherwise transfer to any other Person or any Affiliate or Associate
of such Person, in one or more transactions, or the Company or one or more of
its Subsidiaries shall sell or otherwise transfer to any Persons in one or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken
as a whole), then, on the first occurrence of any such event, proper
provision shall be made so that (i) each holder of record of a Right, except
as provided in Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof and payment of the Exercise Price in
accordance with the terms of this Rights Agreement, such number of shares of
validly issued, fully paid,
46
non-assessable and freely tradeable Common Stock of the Principal Party (as
defined herein), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall, based on the Fair Market Value of
the Common Stock of the Principal Party on the date of the consummation of
such consolidation, merger, sale or transfer, equal twice the Exercise Price;
(ii) such Principal Party shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Rights Agreement;
(iii) the term "Company" for all purposes of this Rights Agreement shall
thereafter be deemed to refer to such Principal Party; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation
of a sufficient number of shares of its Common Stock in accordance with the
provisions of Section 9 hereof applicable to the reservation of Preferred
Stock) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; PROVIDED, HOWEVER, that, upon
the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the
47
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 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 hereof for such cash, shares, rights, warrants
and other property and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the occurrence of any event described in clause (x),
(y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which shares of Common Stock of the Company are
changed or otherwise exchanged or converted in such merger or consolidation,
or, if there is more than one such issuer,
48
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 Company
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 as 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
49
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, the term
"Principal Party" shall refer to such other Person, or if such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common
Stocks of all of which are and have been so registered, the term "Principal
Party" shall refer to whichever of such Persons is the issuer of the Common
Stock having the greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation, merger or
sale or transfer of assets or earning power referred to in Section 13(a)
unless the Principal Party shall have a sufficient number of authorized
shares of its Common Stock that have not been issued or reserved for issuance
to permit exercise in full of all Rights in accordance with this Section 13
and unless prior thereto the Company and the Principal Party involved therein
shall have executed and delivered to the Rights Agent an agreement confirming
that the Principal Party shall, upon consummation of such consolidation,
merger or sale or transfer of assets or earning power, assume this Rights
Agreement in accordance with Section 13(a) hereof and that all rights of
first refusal or preemptive rights in respect of the issuance of
50
shares of Common Stock of the Principal Party upon exercise of outstanding
Rights have been waived and that such transaction shall not result in a
default by the Principal Party under this Rights Agreement, and further
providing that, as soon as practicable after the date of any consolidation,
merger or sale or transfer of assets or earning power referred to in
Section 13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under the 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
51
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) hereof shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof,
the Rights which have not theretofore been exercised shall, subject to
the provisions of Section 7(e) hereof, thereafter be exercisable in
the manner described in Section 13(a).
(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 Incorporation 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
52
Fair Market Value per share (determined pursuant to Section 11(b) hereof) or
securities exercisable for, or convertible into, Common Stock of such
Principal Party at less than such then Fair Market Value (other than to
holders of Rights pursuant to this Section 13) or (ii) providing for any
special tax or similar payment in connection with the issuance to any holder
of a Right of Common Stock of such Principal Party pursuant to the provisions
of this Section 13, then, in such event, the Company shall not consummate any
such transaction unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such Principal Party
shall have been canceled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision will have no
effect in connection with, or as a consequence of, the consummation of the
proposed transaction.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights (I.E.,
Rights to acquire less than one one-hundredth of a share of Preferred Stock),
53
unless such fractional Rights result from a transaction referred to in
Section 11(a)(i) hereof. If the Company shall determine not to issue such
fractional Rights, then, in lieu of such fractional Rights, there shall be
paid to the holders of record of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable, an amount in cash equal
to the same fraction of the Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of
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-hundredth of a share). In lieu of issuing
fractions of shares of Preferred Stock, the Company may, at its election,
issue depositary receipts evidencing fractions of shares pursuant to an
appropriate agreement between the Company and a depositary selected by it,
PROVIDED that such agreement shall provide that the holders of such
depositary receipts shall have all of the rights, privileges and preferences
to which they would be entitled as owners of the Preferred Stock. With
respect to fractional shares that are not integral multiples of one-hundredth
of a share, if the Company does not issue such
54
fractional shares or depositary receipts in lieu thereof, there shall be paid
to the holders of record of Right Certificates at the time such Rights 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 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the holders of
record of the Common Stock); and any holder of record of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
55
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and,
in this Rights Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of
this Rights Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Rights Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Each holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the Book-Entries representing, or the certificates for, Common Stock
registered in the name of the holders of Common Stock (together, as
applicable, with the Summary of Rights), which Book-Entries representing,
or certificates for, Common Stock shall also constitute certificates for
Rights, and not by separate Right Certificates, and each Right shall be
56
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
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Book-Entry representing, or certificate for, Common Stock) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary.
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
57
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 Company or any right to
vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof (except as provided in Section 7(f)
hereof), or to give or withhold consent to any corporate action (except as
provided in Section 7(f) hereof), or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 24 hereof), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Rights Agreement and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any
58
loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or
omitted to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this
Rights Agreement.
(b) The Rights Agent shall be protected against, and shall incur no
liability for or in respect of, any action taken, suffered or omitted by it
in connection with its administration of this Rights Agreement in reliance
upon any Right Certificate or certificate for Preferred Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
Section 19. MERGER OR CONSOLIDATION OF, OR CHANGE IN NAME OF, THE
RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any
59
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Rights Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, PROVIDED that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and
in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right
60
Certificates shall have been countersigned but not delivered, the Rights
Agent may adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its
changed name; in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders
of Right Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or
suffering any
61
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 Company and delivered to the Rights Agent. Any such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of
62
the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Right Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11 or 13 hereof or responsible for
the manner, method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
receipt of a certificate describing any such adjustment); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock to be issued
pursuant to this Rights Agreement or any Right Certificate or as to whether
any shares of Preferred Stock will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or
63
performing by the Rights Agent of the provisions of the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary
or the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Rights Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company
or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys
64
or agents, and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Rights Agreement upon 30 days' notice in writing mailed to the Company
and to each transfer agent of the Common Stock and the Preferred Stock by
registered or certified mail. The Company may remove the Rights Agent or any
successor Rights Agent (with or without cause) upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock and the Preferred
Stock by registered or certified mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the resignation or removal
of a Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to
65
make such appointment within a period of 30 days after such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the incumbent Rights Agent or the holder of
record of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States
or of any state thereof, in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination in the conduct of its corporate trust or stock
transfer business by federal or state authorities and which has at the time
of its appointment as Rights Agent a combined capital and surplus of at least
$5,000,000 or (b) an Affiliate controlled by a corporation described in
clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as
if it had been originally named as Rights Agent without further act or deed,
but the predecessor Rights Agent shall deliver and transfer to the
66
successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such appointment,
the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and Preferred Stock, and
mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be. Notwithstanding the foregoing
provisions, in the event of resignation, removal or incapacity of the Rights
Agent, the Company shall have the authority to act as the Rights Agent until
a successor Rights Agent shall have assumed the duties of the Rights Agent
hereunder.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding
any of the provisions of this Rights Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the
67
Exercise Price per share and the number or kind or class of shares of stock
or other securities or property purchasable under the Right Certificates made
in accordance with the provisions of this Rights Agreement.
Section 23. REDEMPTION.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors, redeem all but not less than all of the
then outstanding Rights, at any time prior to the Close of Business on the
earlier of (i) the tenth day following the Stock Acquisition Date (subject to
extension by the Company as provided in Section 26 hereof) or (ii) the Final
Expiration Date, at a redemption price of $.005 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 Company's right of redemption hereunder.
(b) Without any further action and without any notice, the right
to exercise the Rights will terminate effective at the time so designated by
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 10 days after the
68
effective time of the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each notice of redemption will state the method by
which the payment of the Redemption Price will be made. At the option of the
Board of Directors, the Redemption Price may be paid in cash to each Rights
holder or by the issuance of shares (and, at the Company's election pursuant
to Section 14(b) hereof, cash or depositary receipts in lieu of fractions of
shares other than fractions which are integral multiples of one one-hundredth
(1/100) of a share) of Preferred Stock or Common Stock having a Fair Market
Value equal to such cash payment.
(c) In the event the Company 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 or (C) combine or consolidate the
69
outstanding shares of Common Stock into a smaller number of shares or effect
a reverse split of the outstanding shares of Common Stock, then, and in each
such event, the Redemption Price shall be appropriately adjusted to reflect
the foregoing.
Section 24. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, 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 Company, 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 more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to,
any other Person or Persons, or (v) to effect the liquidation, dissolution or
70
winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Right Certificate, in accordance with Section 25,
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 10 days prior to the record date for determining holders
of record of the Preferred Stock for purposes of such action, and in the case
of any such other action, at least 10 days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of
record of Common Stock or Preferred Stock, whichever shall be the earlier.
The failure to give notice required by this Section 24 or any defect therein
shall not affect the legality or validity of the action taken by the Company
or the vote upon any such action.
71
(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 Company shall give to each holder of Rights, in accordance
with Section 25 hereof, notice of the proposal of such transaction at least
10 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 hereof, as the case may be, and, upon
consummating such transaction, shall similarly give notice thereof to each
holder of Rights.
Section 25. NOTICES. Notices or demands authorized by this
Rights Agreement to be given or made by the Rights Agent or by the holder of
record of any Right Certificate or Right to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent)
as follows:
USW-C, Inc.
(to be renamed "U S WEST, Inc.")
1801 California Street
Englewood, Colorado 80202
Attention: General Counsel
Subject to the provisions of Section 21, any notice or demand authorized by
this Rights Agreement to be given or made by the Company or by the holder of
record of any Right
72
Certificate or Right to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
State Street Bank and Trust Company
c/o Boston Equiserve
150 Royal Street
Canton, MA 02021
Attention: Susan Carr
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right
Certificate or Right shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. For as long as the
Rights are then redeemable and except as provided in the last sentence of
this Section 26, the Company may in its sole and absolute discretion, and the
Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of the
Rights. At any time when the Rights are not then redeemable and except as
provided in the last sentence of this Section 26, the Company may, and the
Rights Agent shall if the Company so directs, supplement or amend this Rights
Agreement without the approval of any holders of
73
Right Certificates (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with
any other provisions herein or (iii) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable,
provided that no such supplement or amendment pursuant to this clause (iii)
shall materially adversely affect the interest of the holders of Right
Certificates. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. This Agreement may be amended or supplemented
at any time with the approval of a majority of the registered holders of the
Right Certificates (and, prior to the Distribution Date, the Common Stock).
Notwithstanding anything contained in this Rights Agreement to the contrary,
no supplement or amendment shall be made which changes the Redemption Price
or the Final Expiration Date and supplements or amendments may be made after
the time that any Person becomes an Acquiring Person only if at the time of
the action of the Board of Directors approving such supplement or amendment
there are then in office not less than two Continuing Directors and such
supplement or
74
amendment is approved by a majority of the Continuing Directors then in
office.
Section 27. EXCHANGE. The Board of Directors of the Company
may, at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one
share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered
to effect such exchange at any time after any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Voting Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 27 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of
75
shares of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; PROVIDED, HOWEVER, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 27,
the Company shall take all such action as may be necessary to
76
authorize additional shares of Common Stock for issuance upon exchange of the
Rights.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares. In lieu of such fractional shares, the Company shall pay
to the registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole share
of Common Stock. For the purposes of this paragraph (d), the current market
value of a whole share of Common Stock shall be the closing price of a share
of Common Stock for the Trading Day immediately prior to the date of exchange
pursuant to this Section 27.
Section 28. SUCCESSORS. All of the covenants and provisions of
this Rights Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this
Rights Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered holders of the
Right
77
Certificates (and, prior to the Distribution Date, the holders of Common
Stock in their capacity as holders of the Rights) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the holders of record of the Right Certificates (and, prior to the
Distribution Date, the holders of Common Stock in their capacity as holders
of the Rights).
Section 30. DELAWARE CONTRACT. This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of 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.
Section 31. COUNTERPARTS. This Rights Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 32. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only
and shall not control or
78
affect the meaning or construction of any of the provisions hereof.
Section 33. 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.
79
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.
Attest: By
---------------------------------- --------------------------
(SEAL) Name:
Title:
Attest: By
---------------------------------- --------------------------
(SEAL) Name:
Title:
EXHIBIT A
TO 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.
USW-C, INC.
(to be renamed "U S WEST, Inc.")
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PREFERRED STOCK
On __________ __, 1998, the Board of Directors of USW-C, INC. (to
be renamed "U S WEST, Inc.") (the "Company") declared a dividend distribution
of one Preferred Stock Purchase Right for each outstanding share of Common
Stock, par value $.01 per share (the "Common Stock"), of the Company. The
distribution is payable as of __________ __, 1998 to stockholders of record
on that date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth (1/100) of a share of preferred stock of the
Company, designated as Series A Junior Preferred Stock (the "Preferred
Stock") at a price of $______ 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 Company and State
Street Bank and Trust Company, as Rights Agent (the "Rights Agent").
AS DISCUSSED BELOW, INITIALLY THE RIGHTS WILL NOT BE EXERCISABLE,
CERTIFICATES WILL NOT BE SENT TO STOCKHOLDERS AND THE RIGHTS WILL AUTOMATICALLY
TRADE WITH THE COMMON STOCK.
The Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following a public
announcement that a person or group of affiliated or associated persons, with
certain exceptions set forth below, has acquired beneficial ownership of 15%
or more of the outstanding voting stock of the Company (an "Acquiring
Person") and (ii) the tenth business day (or such later date as may be
determined by the 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 a tender or
exchange offer the consummation of which would result in the ownership of 15%
or more of the Company's outstanding voting stock (even if no shares are
actually purchased pursuant to such offer); prior thereto, the Rights would
not be exercisable, would not be represented by a separate certificate, and
would not be transferable apart from the Common Stock, but will instead 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 __________
__, 1998, by such Book-Entry and (ii) with respect to the shares of Common
Stock evidenced by Common Stock certificates outstanding as of __________ __,
1998, by such Common Stock certificate, together with a copy of this Summary
of Rights. An Acquiring Person does not include (A) the Company, (B) any
subsidiary of the Company, (C) any employee benefit plan or employee stock
plan of the Company or of any subsidiary of the Company, or any trust or
other entity organized, appointed, established or holding Common Stock for or
pursuant to the terms of any such plan or (D) any person or group whose
ownership of 15% or more of the shares of voting stock of the Company then
outstanding results solely from (i) any action or transaction or transactions
approved by the 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 Company pursuant to a transaction or
transactions approved by the Board of Directors (provided that any person or
group that does not become an Acquiring Person by reason of clause (i) or
(ii) above shall become an Acquiring Person upon acquisition of an additional
1% of the Company's voting stock unless such acquisition of additional voting
stock will not result in such person or group becoming an Acquiring Person by
reason of such clause (i) or (ii)).
Until the Distribution Date (or earlier redemption or expiration of
the Rights), new Common Stock certificates issued after __________ __, 1998
will contain a legend incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights),
transfer on the Company's Direct Registration System of any Common Stock
represented by a Book-Entry or a certificate outstanding as of __________ __,
1998, and, in each case, with or without a copy of this Summary of Rights
attached thereto, will also constitute the transfer of the Rights associated
with the Common Stock represented by such Book-Entry or certificate. As soon
as practicable following the Distribution Date, separate certificates
evidencing the
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Rights ("Right Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights from and after the
Distribution Date.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on ___________ __, 2008, unless
earlier redeemed by the Company as described below.
The Preferred Stock is nonredeemable and, unless otherwise provided
in connection with the creation of a subsequent series of preferred stock,
subordinate to any other series of the Company's preferred stock. The
Preferred Stock may not be issued except upon exercise of Rights. Each share
of Preferred Stock will be entitled to receive when, as and if declared, a
quarterly dividend in an amount equal to (i) 100 times the cash dividends
declared on the Company's Common Stock, and (ii) a preferential cash
dividend, if any, in preference to holders of New US WEST Common Stock in an
amount equal to $25 per share of Preferred Stock less the per share amount of
all cash dividends declared on the Preferred Stock pursuant to clause (i)
since the immediately preceding quarterly dividend payment date. In
addition, 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 Company, the
holders of Preferred Stock will be entitled to receive, for each share of
Preferred Stock, a payment in an amount equal to the greater of $100 plus
accrued and unpaid dividends and distributions thereon or 100 times the
payment made per share of Common Stock. Each share of Preferred Stock will
have 100 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is
exchanged, each share of Preferred Stock will be entitled to receive 100
times the amount received per share of Common Stock. The rights of Preferred
Stock as to dividends, liquidation and voting are protected by anti-dilution
provisions.
The number of shares of 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 or combination of, the Common Stock.
The Exercise Price for the Rights is subject to
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adjustment in the event of extraordinary distributions of cash or other
property to holders of Common Stock.
Unless the Rights are earlier redeemed, in the event that, after
the time that a Person becomes an Acquiring Person, the Company were to be
acquired in a merger or other business combination (in which any shares of
Common Stock are changed into or exchanged for other securities or assets) or
more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) were to be sold or transferred in one or a
series of related transactions, the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right will from and
after such date have the right to receive, upon payment of the Exercise
Price, that number of shares of common stock of the acquiring company having
a market value at the time of such transaction equal to two times the
Exercise Price.
In addition, unless the Rights are earlier redeemed, in the event
that a person or group becomes the beneficial owner of 15% or more of the
Company's voting stock, the Rights Agreement provides that proper provisions
will be made so that each holder of record of a Right, other than the
Acquiring Person (whose Rights will thereupon become null and void), will
thereafter have the right to receive, upon payment of the Exercise Price,
that number of shares of the 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 Company's
Common Stock as provided in the Rights Agreement).
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding voting stock, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one share of
Common Stock per Right (subject to adjustment).
Fractions of shares of Preferred Stock (other than fractions which
are integral multiples of one one-hundredth of a share) may, at the election
of the Company, be evidenced by depositary receipts. The Company may also
issue cash in lieu of fractional shares which are not integral multiples of
one one-hundredth of a share.
A-4
At any time on or prior to the close of business on the earlier of
(i) the tenth day after the time that a person has become an Acquiring Person
(or such later date as a majority of the Board of Directors may determine) or
(ii) ___________ __, 2008, the Company may redeem the Rights in whole, but
not in part, at a price of $.005 per Right (the "Redemption Price"). The
Rights may be redeemed after the time that any Person has become an Acquiring
Person only if approved by a majority of the Board of Directors. Immediately
upon the effective time of the action of the Board of Directors of the
Company authorizing redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
For as long as the Rights are then redeemable, the Company may,
except with respect to the redemption price or date of expiration of the
Rights, amend the Rights in any manner, including an amendment to extend the
time period in which the Rights may be redeemed. At any time when the Rights
are not then redeemable, the Company may amend the Rights in any manner that
does not materially adversely affect the interests of holders of the Rights
as such. Amendments to the Rights Agreement from and after the time that any
Person becomes an Acquiring Person requires the approval of a majority of the
Continuing Directors (as defined and provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to the Registration Statement on Form
S-4 of the Company dated _________, 1998. A copy of the Rights Agreement is
available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement which is incorporated in this summary
description herein by reference.
A-5
EXHIBIT B
TO RIGHTS AGREEMENT
[Form of Right Certificate]
Certificate No. W- -------- Rights
NOT EXERCISABLE AFTER _________, 2008 OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND UNDER
CERTAIN OTHER CIRCUMSTANCES, AT $.005 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
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 ___________, 1998 (the "Rights
Agreement") between USW-C, Inc., a Delaware corporation (to be renamed "U S
WEST, Inc.") (the "Company"), and State Street Bank and Trust Company, a
______________, (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Colorado time) on _____________, 2008 at
the office of
the Rights Agent designated in the Rights Agreement for such purpose, or its
successor as Rights Agent, in _________, _________, one one-hundredth (1/100)
of a fully paid nonassessable share of Series A Junior Preferred Stock (the
"Preferred Stock") of the Company at a purchase price of $________, as the
same may from time to time be adjusted in accordance with the Rights
Agreement (the "Exercise Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase attached hereto duly
executed.
As provided in the Rights Agreement, the Exercise Price and the
number of shares of Preferred Stock which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events and, upon the happening
of certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full
B-2
description of the rights, limitations of rights, obligations, duties and
immunities of the Rights Agent, the Company and the holders of record of
Right Certificates. Copies of the Rights Agreement are on file at the
principal executive office of the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office of the Rights Agent designated in the Rights
Agreement for such purpose, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the
holder of record to purchase a like aggregate number of shares of Preferred
Stock as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof, another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option or
under certain other circumstances at a redemption price of $.005 per Right.
No fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-
B-3
hundredth (1/100) of a share) are required to be issued upon the exercise of
any Right or Rights evidenced hereby, and in lieu thereof the Company may
cause depositary receipts to be issued and/or a cash payment may be made, as
provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
meeting thereof, or to give or withhold consent to any corporate action or to
receive notice of meetings or other actions affecting stockholders (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.
B-4
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________, ____.
ATTEST:
By
- ---------------------------------- -------------------------------------
Secretary Title:
Countersigned:
STATE STREET BANK AND TRUST COMPANY
By
-------------------------------
Authorized Signature
B-5
[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 Company, with full power of
substitution.
Dated: ________________, ____
-----------------------------------
Signature
Signature Guaranteed:
B-6
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.
B-7
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO :
---------------------
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:
B-8
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:
B-9
EXHIBIT C
TO RIGHTS AGREEMENT
TERMS OF THE SERIES A JUNIOR PREFERRED STOCK
3.1. SERIES A JUNIOR PREFERRED STOCK. There is hereby created a series of
Preferred Stock, designated Series A Junior Preferred Stock, par value $1.00
per share (the "Series A Preferred Stock"), of 10,000,000 shares having the
following voting powers, preferences and rights, and qualifications and
restrictions thereon provided by this subsection 3.1:
3.1.1 DIVIDENDS AND DISTRIBUTIONS.
A. Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Series A 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, 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 A 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 A 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 $25 per share of Series A Preferred Stock less the
per share amount of all cash dividends declared on the Series A 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 A Preferred Stock. In the event the Corporation shall, at
any time after the issuance of any share or fraction of a share of Series A
Preferred Stock, make any distribution on the shares of Common Stock, 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 on each then outstanding share of
Series A Preferred Stock 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 A 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 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
C-2
shall at any time after __________, 1998 (the "Effective Date") declare or
pay any dividend or make any distribution on Common Stock payable in shares
of Common Stock, or 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, then in each such case
the Dividend Multiple thereafter applicable to the determination of the
amount of Dividends which holders of shares of Series A 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.
B. 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 A Preferred Stock.
C. Preferential Dividends shall begin to accrue on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issuance of any shares of Series A Preferred
Stock. Accrued but unpaid Preferential Dividends shall cumulate but shall not
bear interest. Preferential Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
3.1.2 VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the holders of the Common Stock.
The number of votes which a holder of Series A
C-3
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
Effective Date declare or pay any dividend on Common Stock payable in shares
of Common Stock, or 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, 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 A 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.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or by-laws of the Corporation, the holders of shares of Series
A Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) In the event that the Preferential Dividends accrued on the
Series A 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 A Preferred Stock), other
than any series in respect of which such right is expressly withheld by the
Certificate of Incorporation or the authorizing resolutions included in any
Certificate of Designations therefor, shall have the right, at the next
meeting of stockholders 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 of the Corporation 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 A Preferred Stock shall have been paid (or
irrevocably set aside for payment) in full. The holders of shares of Series
A Preferred Stock shall continue to have the right to elect directors as
pro-
C-4
vided by the immediately preceding sentence until all accrued and unpaid
Preferential Dividends upon the outstanding shares of Series A Preferred
Stock shall have been paid (or set aside for payment) in full. Such directors
may be removed and replaced by such stockholders, and vacancies in such
directorships may be filled only by such stockholders (or by the remaining
director elected by such stockholders, if there be one) in the manner
permitted by law; provided, however, that any such action by stockholders
shall be taken at a meeting of stockholders and shall not be taken by written
consent thereto.
(D) Except as otherwise required by the Certificate of
Incorporation or by-laws of the Corporation or set forth herein, holders of
Series A Preferred Stock shall have no other special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for the taking of any
corporate action.
3.1.3. CERTAIN RESTRICTIONS.
(A) 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 A Preferred Stock outstanding shall have been
paid or set irrevocably aside for payment in full, and in addition to any and
all other rights which any holder of shares of Series A Preferred Stock may
have in such circumstances, the 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 A 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 A
Preferred Stock, unless dividends are paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled if the full dividends accrued thereon
were to be paid;
C-5
(iii) except as permitted by subparagraph (iv) of this paragraph
3.1.3(A), 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 A 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 A Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A 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.
(B) 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 3.1.3, 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.
(C) The Corporation shall not issue any shares of Series A
Preferred Stock except upon exercise of Rights issued pursuant to that
certain Rights Agreement dated as of _____________, 1998 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 stockholders
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of record without charge upon written request therefor addressed to said
Secretary. Notwithstanding the foregoing sentence, nothing contained in the
provisions hereof 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 A Preferred Stock.
3.1.4. REACQUIRED SHARES. Any shares of Series A 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.
3.1.5. 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 A Preferred Stock unless the holders of shares of Series A
Preferred Stock shall have received for each share of Series A Preferred
Stock, subject to adjustment as hereinafter provided, (A) $100 ($1.00 per one
one-hundredth of a 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 A Preferred
Stock, unless simultaneously therewith distributions are made ratably on the
Series A Preferred Stock and all other shares of such parity stock in
proportion to the total amounts to which the holders of shares of Series A
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 A 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
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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 Effective Date declare or pay any dividend on Common Stock payable in
shares of Common Stock, or 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, then, in each such
case, the Liquidation Multiple thereafter applicable to the determination of
the Participating Liquidation Amount to which holders of Series A 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.
3.1.6. CERTAIN RECLASSIFICATIONS AND OTHER EVENTS.
(A) In the event that holders of shares of Common Stock receive
after the Effective Date in respect of their shares of Common Stock any share
of capital stock of the Corporation (other than any share of Common Stock),
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 A Preferred Stock shall be adjusted so that after such event the
holders of Series A Preferred Stock shall be entitled, in respect of each
share of Series A 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
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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.
(B) In the event that holders of shares of Common Stock receive
after the Effective 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 A 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.
(C) In the event that holders of shares of Common Stock receive
after the Effective 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 exchangeable for capital stock of the
Corporation (other than Common
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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 A Preferred Stock shall each be adjusted so that after such event
each holder of a share of Series A Preferred Stock shall be entitled, in
respect of each share of Series A 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.
(D) For purposes of this Certificate of Designations, the "Fair
Market Value" of a share of capital stock of the Corporation (including a
share of Common Stock)
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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 (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 shares 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 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") 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
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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.
3.1.7. 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 A 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.
3.1.8. EFFECTIVE TIME OF ADJUSTMENTS.
(A) Adjustments to the Series A Preferred Stock required by the
provisions hereof 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 A 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
hereof. 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.
3.1.9. NO REDEMPTION. The shares of Series A 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 A Preferred Stock in any other
manner permitted by law, the provisions hereof and the Certificate of
Incorporation.
3.1.10. RANKING. Unless otherwise provided in the Certificate of
Incorporation or a Certificate of Designations relating to a subsequent
series of preferred
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stock of the Corporation, the Series A 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.
3.1.11. AMENDMENT. The provisions hereof and the Certificate of
Incorporation shall not be amended in any manner which would adversely affect
the rights, privileges or powers of the Series A Preferred Stock without, in
addition to any other vote of stockholders required by law, the affirmative
vote of the holders of two-thirds or more of the outstanding shares of Series
A Preferred Stock, voting together as a single class.
3.1.12. FRACTIONAL SHARES. Series A Preferred Stock may be issued
in fractions of a share (in one one-hundredths (1/100) of a share and
integral multiples thereof) that shall entitle the holder thereof, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and have the benefit of all
other rights of holders of shares of Series A Preferred Stock.
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