<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ONYX ACCEPTANCE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
DELAWARE 000-28050 33-0577635
- --------------------------------------------------------------------------------
(State of incorporation (Commission (IRS Employer
or organization) File Number) Identification No.)
8001 IRVINE CENTER DRIVE, 5TH FLOOR, IRVINE, CA 92618
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (714) 450-5500
---------------
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
- --------------------------------------------------------------------------------
(Title of Class)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
PREFERRED STOCK PURCHASE RIGHTS
- --------------------------------------------------------------------------------
(Title of Class)
<PAGE> 2
Item 5. Other Events.
On July 8, 1997, the Board of Directors of Onyx Acceptance Corporation,
a Delaware corporation (the "Company"), declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of Common Stock (the
"Common Stock"), par value $0.01 per share (the "Common Stock"), of the Company.
The dividend is payable on July 21, 1997 (the "Record Date") to the stockholders
of record on that date. Each Right entitles the registered holder to purchase
from the Company one one-thousandth of a share (a "Unit") of Series A
Participating Preferred Stock, par value $0.01 per share (the "Preferred
Stock"), of the Company at a price of $50.00 per Unit (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement dated as of July 8, 1997 (the "Rights Agreement") between the
Company and American Stock Transfer and Trust Company, a New York banking
corporation, as Rights Agent (the "Rights Agent").
Initially, the Rights will attach to all certificates representing
shares of outstanding Common Stock, and no separate certificates evidencing the
Rights will be distributed. The Rights will separate from the Common Stock and
the distribution date (the "Distribution Date") will occur upon the earlier of
(i) 10 days following a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") have acquired beneficial ownership
of 15% or more of the outstanding Common Stock or (ii) 10 business days (or such
later date as may be determined by action of the Continuing Directors prior to
such time as any Person becomes an Acquiring Person) following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
or group of 15% or more of such outstanding Common Stock.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights 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 Rights Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on July 20, 2007 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Units of Preferred Stock
of certain rights or warrants to subscribe for or purchase Units of Preferred
Stock at a price, or securities convertible into Units of Preferred Stock with a
conversion price, less than the then current market price of the Units of
Preferred Stock or (iii) upon the distribution to holders of the Units of
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Units of Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of Units of Preferred
Stock issuable upon exercise of each Right also is subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in Common Stock or subdivisions, consolidations or combinations of
the Common Stock occurring, in any such case, prior to the Distribution Date.
2.
<PAGE> 3
Units of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each Unit of Preferred Stock will be entitled to an aggregate
dividend of 1,000 times the dividend declared per share of Common Stock. In the
event of liquidation, the holders of the Units of Preferred Stock will be
entitled to an aggregate payment of 1,000 times the payment made per share of
Common Stock. Each Unit of Preferred Stock will have 1,000 votes, voting
together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
exchanged, each Unit of Preferred Stock will be entitled to receive 1,000 times
the amount received per share of Common Stock. These rights are protected by
customary antidilution provisions.
Because of the nature of the dividend, liquidation and voting rights,
the value of the Preferred Stock, the Units of Preferred Stock purchasable upon
exercise of each Rights should approximate the value of one share of Common
Stock.
In the event that, after the Rights become exercisable, the Company is
acquired in a merger or other business combination transaction with an Acquiring
Person or an affiliate thereof, or 50% or more of its consolidated assets or
earning power are sold to an Acquiring Person or an affiliate thereof, proper
provision will be made so that each holder of a Rights will thereafter have the
right to receive, upon exercise thereof at the then current exercise price of
the Rights, that number of shares of common stock of the acquiring company which
at the time of such transaction will have a market value of two times the
exercise price of the Rights.
In the event that any person or group of affiliated or associated
persons becomes the beneficial owner of 15% or more of the outstanding shares of
Common Stock proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of Units of Preferred Stock (or Common Stock, cash, other securities
or property) having a market value of two times the exercise price of the
Rights.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
shares of Common Stock and prior to the acquisition by such person or group of
50% or more of the outstanding Common Stock, the directors not affiliated with
an Acquiring Person (the "Continuing Directors") may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole or
in part, for Units of Preferred Stock at an exchange ratio equal to the number
obtained by dividing the Purchase Price by the then current market price per
Unit of Preferred Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash
will be made based on the market price of the Units of Preferred Stock on the
last trading day prior to the date of exercise.
At any time within ten (10) business days after a person or group of
affiliated or associated persons acquire beneficial ownership of 15% or more of
the outstanding Common Stock (unless the Continuing Directors extend such
ten-day period), the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price"),
upon the approval of a majority of the Continuing Directors. The redemption of
the rights may be made effective at such time on such basis and with such
conditions as the Board of Directors, upon the approval of the Continuing
Directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price. The
Rights are also redeemable under other circumstances as specified in the Rights
Agreement.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights upon the approval of a
majority of the Continuing Directors except that
3.
<PAGE> 4
from and after a Distribution Date no such amendment may adversely affect the
interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since the Rights may be redeemed by the Company at the
Redemption Price prior to the occurrence of a Distribution Date.
The Rights Agreement, dated as of July 8, 1997, between the Company and
the Rights Agent, specifying the terms of the Rights, is attached hereto as an
exhibit and is incorporated herein by reference. The foregoing description of
the Rights is qualified in its entirety by reference to such exhibit.
Item 2. Exhibits.
1. Rights Agreement, dated as of July 8, 1997, between the Company and American
Stock Transfer and Trust Company, a New York banking corporation, which
includes the form of Certificate of Designation for the Series A
Participating Preferred Stock as Exhibit A, the form of Rights Certificate
as Exhibit B and the Summary of Rights to Purchase Preferred Stock as
Exhibit C. Pursuant to the Rights Agreement, printed Right Certificates
will not be mailed until as soon as practicable after the earlier of (i) the
tenth (10th) business day after public announcement that a person or group
has acquired beneficial ownership of 15% or more of the shares of Common
Stock or (ii) the tenth (10th) business day (or such later date as may be
determined by action of the Board of Directors) after a person commences, or
announces its intention to commence, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person
or group of 15% or more of the shares of Common Stock.
4.
<PAGE> 5
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
ONYX ACCEPTANCE CORPORATION
DATE: July 8, 1997 By: /s/ John W. Hall
-------------------------
Name: John W. Hall
Title: President
5.
<PAGE> 6
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------ --------------------
1. Rights Agreement dated as of July 8, 1997, between the Company and
American Stock Transfer and Trust Company, a New York banking
corporation, which includes the form of Certificate of Designation
for the Series A Participating Preferred Stock as Exhibit A, the
form of Rights Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Stock as Exhibit C. Pursuant to the Rights
Agreement, printed Right Certificates will not be mailed until as
soon as practicable after the earlier of (i) the tenth (10th)
business day after public announcement that a person or group has
acquired beneficial ownership of 15% or more of the shares of Common
Stock or (ii) the tenth (10th) business day (or such later date as
may be determined by action of the Board of Directors) after a
person commences, or announces its intention to commence, a tender
offer or exchange offer the consummation of which would result in
the beneficial ownership by a person or group of 15% or more of the
shares of Common Stock.
6.
<PAGE> 1
EXHIBIT 1
ONYX ACCEPTANCE CORPORATION
AND
AMERICAN STOCK TRANSFER AND TRUST COMPANY
(RIGHTS AGENT)
RIGHTS AGREEMENT
DATED AS OF JULY 8, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions........................................................................... 1
Section 2. Appointment of Rights Agent................................................................... 6
Section 3. Issue of Rights Certificates.................................................................. 6
Section 4. Form of Rights Certificates................................................................... 8
Section 5. Countersignature and Registration............................................................. 9
Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates................................................. 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights................................. 10
Section 8. Cancellation and Destruction of Rights Certificates........................................... 12
Section 9. Reservation and Availability of Preferred Stock............................................... 12
Section 10. Preferred Stock Record Date................................................................... 13
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights............................ 14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.................................... 22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.......................... 23
Section 14. Fractional Rights and Fractional Shares....................................................... 26
Section 15. Rights of Action.............................................................................. 27
Section 16. Agreement of Rights Holders................................................................... 27
Section 17. Rights Certificate Holder Not Deemed a Stockholder............................................ 28
Section 18. Concerning the Rights Agent................................................................... 28
Section 19. Merger or Consolidation or Change of Name of Rights Agent..................................... 29
Section 20. Duties of Rights Agent........................................................................ 29
Section 21. Change of Rights Agent........................................................................ 31
Section 22. Issuance of New Rights Certificates........................................................... 32
Section 23. Redemption and Termination.................................................................... 33
Section 24. Exchange...................................................................................... 34
</TABLE>
i.
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 25. Notice of Certain Events...................................................................... 35
Section 26. Notices....................................................................................... 36
Section 27. Supplements and Amendments.................................................................... 37
Section 28. Successors.................................................................................... 37
Section 29. Determinations and Actions by the Board of Directors.......................................... 37
Section 30. Benefits of this Agreement.................................................................... 38
Section 31. Severability.................................................................................. 38
Section 32. Governing Law................................................................................. 38
Section 33. Counterparts.................................................................................. 39
Section 34. Descriptive Headings.......................................................................... 39
EXHIBITS
Exhibit A - Form of Certificate of Designation for Series A Participating Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights to Purchase Preferred Stock
</TABLE>
ii.
<PAGE> 4
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (the "Agreement") is made and entered into as of
July 8, 1997, between Onyx Acceptance Corporation, a Delaware corporation (the
"Company"), and American Stock Transfer and Trust Company, a New York banking
corporation (the "Rights Agent").
WHEREAS, effective July 8, 1997 (the "Rights Dividend Declaration
Date"), the Board of Directors authorized and declared a distribution of one
Right (each, a "Right") for each share of Common Stock (as hereinafter defined)
of the Company outstanding as of the Close of Business (as hereinafter defined)
on July 21, 1997 (the "Record Date"), each Right initially representing the
right to purchase one one-thousandth of a share (a "Unit") of Preferred Stock
(as hereinafter defined) upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right with
respect to each share of Common Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date or
the 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 have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the shares of
Common Stock of the Company then outstanding, but shall not include the Company,
any Subsidiary (as such term is hereinafter defined) of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
entity holding shares of Common Stock for or pursuant to the terms of any such
plan. Notwithstanding the foregoing:
(i) No Person shall become an "Acquiring Person" as the result of an
acquisition of shares of Common Stock by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the shares of Common
Stock of the Company then outstanding; provided, however, that if a Person
shall become the Beneficial Owner of 15% or more of the shares of Common
Stock of the Company then outstanding by reason of share purchases by the
Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional shares of Common Stock of the Company,
then such Person shall be deemed to be an "Acquiring Person" thereunder;
and
(ii) if the Board of Directors of the Company determines (upon approval
by a majority of the Continuing Directors (as such term is hereinafter
defined)) in good faith that a Person who would otherwise be an "Acquiring
Person" as defined pursuant to the foregoing provisions of this paragraph
(a), has become such inadvertently, and such Person divests as promptly as
practicable 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 to be an "Acquiring Person" for any purpose of this Agreement.
(b) "Adjustment Shares" has the meaning set forth in Section 11(a)(ii).
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act (as such term is hereinafter defined).
1.
<PAGE> 5
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, for purposes of Section 13(d) of
the Exchange Act and Rule 13d-3 thereunder (or any comparable or successor
law or regulation); or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing, other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided further, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
any security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (x) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the Exchange Act
and the Exchange Act Regulations, and (y) is not reportable by such Person
on Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding, (whether or not in writing, other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), for the
purpose of acquiring, holding, voting (except to the extent contemplated by
the proviso to subparagraph (i) of this paragraph (e)) or disposing of any
securities of the Company; provided, however, that in no case shall an
officer or director of the Company be deemed (A) the Beneficial Owner of
any securities beneficially owned by another officer or director of the
Company solely by reason of actions undertaken by such persons in their
capacity as officers or directors of the Company or (B) the Beneficial
Owner of securities held of record by the trustee of any employee benefit
plan of the Company or any Subsidiary of the Company for the benefit of any
employee of the Company or any Subsidiary of the Company, other than the
officer or director, by reason of any influence that such officer or
director may have over the voting of the securities held in the plan;
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of California or the state
in which the principal office of the Rights Agent is located are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
California time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., California time, on the next succeeding
Business Day.
2.
<PAGE> 6
(g) "Common Stock" when used with reference to the Company shall mean
the shares of common stock, par value $0.01, of the Company. "Common Stock" when
used with reference to any Person other than the Company shall mean the capital
stock (or other equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(h) "Company" shall have the meaning set forth in the recitals to this
Agreement.
(i) "Continuing Director" shall mean a member of the Board of Directors
of the Company who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a representative or agent of an Acquiring Person or of
any such Affiliate or Associate, and who was either (i) a member of the Board of
Directors prior to the date of this Agreement, or (ii) subsequently became a
member of the Board of Directors and whose election or nomination for election
is recommended or approved by a majority of the Continuing Directors then on the
Board of Directors.
(j) "current per share market price" shall have the meaning set forth
in Section 11(d)(i) hereof.
(k) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(l) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(m) "equivalent preferred shares" shall have the meaning set forth in
Section 11(b) hereof.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(o) "Exchange Act Regulations" shall mean the General Rules and
Regulations under the Exchange Act, as amended.
(p) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(q) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(r) "Nasdaq" shall have the meaning set forth in Section 11(d).
(s) "Person" shall mean any individual, firm, corporation, joint
venture, limited liability company, partnership or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(t) "Preferred Stock" shall mean shares of Series A Participating
Preferred Stock, par value $0.01 per share, of the Company having the rights and
preferences set forth in substantially the Form of Certificate of Designation
attached to this Agreement as Exhibit A.
(u) "preferred stock equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereto.
(v) "Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.
(w) "Record Date" shall have the meaning set forth in the recitals to
this Agreement.
(x) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(y) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
3.
<PAGE> 7
(z) "Right" shall have the meaning set forth in the recitals to this
Agreement.
(aa) "Rights Agent" shall have the meaning set forth in the recitals to
this Agreement.
(ab) "Rights Certificate" shall have the meaning set forth in Section
3(a) hereof.
(ac) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals to this Agreement.
(ad) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A), (B) or (C).
(ae) "Section 11(a)(iii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(af) "Section 13 Event" shall mean any event described in clause (i),
(ii) or (iii) of Section 13(a) hereof.
(ag) "Section 24(a) Exchange Ratio" has the meaning set forth in
Section 24(a) hereof.
(ah) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(ai) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become an Acquiring
Person.
(aj) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(ak) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(al) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(am) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
(an) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(ao) "Unit" shall have the meaning set forth in the recitals to this
Agreement.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates. (a) Until the earlier of (i)
the Close of Business on the Shares Acquisition Date and (ii) the Close of
Business on the tenth Business Day (or such later date as may be determined by
action of the Company's Board of Directors upon approval by a majority of the
Continuing Directors prior to such time as any Person becomes an Acquiring
Person and of which the Company will give the Rights Agent prompt written
notice) after the date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any
4.
<PAGE> 8
Subsidiary of the Company or any entity holding shares of Common Stock for or
pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any
successor rule or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Company Common
Stock then outstanding (the earlier of (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for shares of Common
Stock registered in the names of the holders thereof (which certificates shall
also be deemed to be Rights Certificates) and not by separate Rights
Certificates, and (y) the right to receive Rights Certificates will be
transferable only in connection with the transfer of shares of Common Stock. As
soon as practicable after the Distribution Date, the Company will notify the
Rights Agent thereof and 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, insured, postage-prepaid mail,
to each record holder of shares of Common Stock as of the Close of Business on
the Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate, in substantially the form of Exhibit B hereto (a
"Rights Certificate"), evidencing one Right for each share of Common Stock so
held. As of the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of shares of 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. With respect to certificates for
shares of Common Stock outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates registered in the names
of the holders thereof together with a copy of the Summary of Rights attached
thereto. Until the Distribution Date (or the Expiration Date), the surrender for
transfer of any certificate for shares of Common Stock outstanding on the Record
Date, with or without a copy of the Summary of Rights attached thereto, shall
also constitute the transfer of the Rights associated with the shares of Common
Stock represented thereby.
(c) Certificates for shares of Common Stock which become outstanding
(including, without limitation, reacquired shares of Common Stock referred to in
the last sentence of this paragraph (c)) after the Record Date but prior to the
earliest of the Distribution Date and the Expiration Date shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN ONYX ACCEPTANCE
CORPORATION, A DELAWARE CORPORATION AND AMERICAN STOCK TRANSFER AND TRUST
COMPANY, A NEW YORK BANKING CORPORATION, DATED AS OF JULY 8, 1997 (THE
"RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES
OF ONYX ACCEPTANCE CORPORATION. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH
IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE
CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. ONYX
ACCEPTANCE CORPORATION WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY
OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST
THEREFOR. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF
OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
5.
<PAGE> 9
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date and the Expiration Date, the Rights associated
with the shares of Common Stock represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
shares of Common Stock represented thereby. In the event that the Company
purchases or acquires any shares of Common Stock after the Record Date but prior
to the Distribution Date, any Rights associated with such shares of Common Stock
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the shares of Common Stock which are no
longer outstanding.
Section 4. Form of Rights Certificates. (a) The Rights Certificates
(and the forms of election to purchase Units of Preferred Stock and of
assignment to be printed on the reverse thereof) shall be substantially the same
as Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or transaction reporting system on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates shall entitle the holders thereof
to purchase the number of Units of Preferred Stock as shall be set forth therein
at the price per Unit of Preferred Stock set forth therein, but the number of
such Units of Preferred Stock and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that represents
Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which a majority of the
Continuing Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of Section 7(e) hereof shall contain (to the extent feasible) the following
legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT BETWEEN ONYX ACCEPTANCE CORPORATION, A DELAWARE
CORPORATION AND AMERICAN STOCK TRANSFER AND TRUST COMPANY, A NEW YORK
BANKING CORPORATION, AS RIGHTS AGENT, DATED AS OF JULY 8, 1997 (THE "RIGHTS
AGREEMENT"). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(E) OF THE RIGHTS AGREEMENT.
Section 5. Countersignature and Registration. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President, any of its Vice Presidents, or its Treasurer or Chief
Financial Officer, either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned
6.
<PAGE> 10
by the Rights Agent and shall not be valid for any purpose unless countersigned.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this 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 office designated for such purpose, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Sections 4(b), 7(e) 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 Expiration Date, any Rights Certificate or Rights
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of Units of Preferred Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) as the Rights
Certificate or Rights Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Rights Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 4(b), 7(e) and 14 hereof, countersign and
deliver to the person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Except as provided in Sections 23(c) and 7(e), the registered holder
of any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and certification on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the Purchase Price for each Unit of
Preferred Stock as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on the tenth anniversary hereof (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the
7.
<PAGE> 11
"Redemption Date"), or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof (the earlier of (i), (ii) and (iii) being the
"Expiration Date").
(b) The "Purchase Price" for each Unit of Preferred Stock pursuant to
the exercise of a Right shall initially be $50.00 shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be payable
in lawful money of the United States of America in accordance with paragraph (c)
below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the number of Units of Preferred Stock (or
other securities or property, as the case may be) to be purchased and an amount
equal to any applicable transfer tax required hereunder to be paid by the holder
of such Rights Certificate in cash, or by certified check or cashier's check
payable to the order of the Company, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock (or make available, if the Rights Agent is the transfer
agent for the Preferred Stock) a certificate or certificates for the number of
Units of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests or (B) if the
Company shall have elected to deposit the total number of Units of Preferred
Stock issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent of depositary receipts representing such
number of Units of Preferred Stock as are to be purchased (in which case
certificates for the Units of Preferred Stock represented by such receipts shall
be deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Rights Certificate. The payment
of the Purchase Price (as such amount may be reduced (including to zero)
pursuant to Section 11(a)(iii) hereof) may be made in cash or by certified bank
check or bank draft payable to the order of the Company. In the event that the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Rights Certificate or to
his duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Triggering Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such,
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the a majority of the
Continuing Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e) or (iv) any subsequent transferee shall become
null and void without any further action and no holder of such Rights shall have
any rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder
8.
<PAGE> 12
of Rights Certificates or to any other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or any of such Acquiring
Person's Affiliates, Associates or transferees hereunder.
(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 contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock. (a) The
Company covenants and agrees that it will use its best efforts to cause to be
reserved and kept available out of and to the extent of its authorized and
unissued Units of Preferred Stock not reserved for another purpose that will be
sufficient to permit the exercise in full of all outstanding Rights. Upon the
occurrence of any events resulting in an increase in the aggregate number of
shares of Preferred Stock (or other equity securities of the Company) issuable
upon exercise of all outstanding Rights above the number then reserved, the
Company shall make appropriate increases in the number of shares so reserved.
(b) If the Units of Preferred Stock to be issued and delivered upon the
exercise of the Rights are at any time listed on a national securities exchange
or included for quotation on any transaction reporting system, the Company shall
during the period from the Distribution Date to the Expiration Date use its best
efforts to cause all shares reserved for such issuance to be listed on such
exchange or included for quotation on any such transaction reporting system upon
official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act, with respect to
the securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities or (B) the Expiration Date. The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction, unless the requisite qualification in such jurisdiction shall have
been obtained, or an exemption therefrom shall be available and until a
registration statement has been declared effective.
9.
<PAGE> 13
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Units of Preferred Stock (and, following
the occurrence of a Triggering Event, any other securities that may be delivered
upon exercise of rights) shall, at the time of delivery of the certificates for
such Units of Preferred Stock (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates or
of any Units of Preferred Stock upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a person other
than, or the issuance or delivery of certificates or depositary receipts for
Units of Preferred Stock in a name other than that of, the registered holder of
the Rights Certificate evidencing Rights surrendered for exercise or to issue or
to deliver any certificates or depositary receipts for Units of Preferred Stock
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Units of
Preferred Stock (or, following the occurrence of a Triggering Event, other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (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 (or, following the occurrence
of a Triggering Event, other securities) transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are open and further
provided, however, that if delivery of Units of Preferred Stock is delayed
pursuant to Section 9(c), such Persons shall be deemed to have become the record
holders of such Units of Preferred Stock only when such Units first become
deliverable. Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any rights of a stockholder of
the Company with respect to securities for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a holder
of a Unit of Preferred Stock for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kinds of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding shares of
Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares Preferred Stock or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Rights
10.
<PAGE> 14
exercised after such time shall be entitled to receive the aggregate number
and kind of shares of capital stock which, if such Rights had been
exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior, to any adjustment required pursuant
to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event that (A) any
Acquiring person or any Associate or Affiliate of any Acquiring Person, at
any time after the date of this Agreement, directly or indirectly, shall
(1) merge into the Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of such merger or
combination and shares of Company Common Stock shall remain outstanding and
unchanged, (2) in one transaction or a series of transactions, transfer any
assets to the Company or any of its Subsidiaries in exchange (in whole or
in part) for shares of Company Common Stock, for other equity securities of
the Company or any such Subsidiary, or for securities exercisable for or
convertible into shares of equity securities of the Company or any of its
Subsidiaries (whether shares of Company Common Stock or otherwise) or
otherwise obtain from the Company or any of its Subsidiaries, with or
without consideration, any additional shares of such equity securities or
securities exercisable for or convertible into such equity securities other
than pursuant to a pro rata distribution to all holders of shares of
Company Common Stock), (3) sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one transaction or
a series of transactions, to, from or with the Company or any of its
Subsidiaries or any employee benefit plan maintained by the Company or any
of its Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity, assets (including securities) on terms and
conditions less favorable to the Company or such Subsidiary or plan than
those that could have been obtained in arm's-length negotiations with an
unaffiliated third party, other than pursuant to a transaction set forth in
Section 13(a) hereof, (4) sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one transaction or
a series of transactions, to, from or with the Company or any of its
Subsidiaries or any employee benefit plan maintained by the Company or any
of its Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity (other than transactions, if any, consistent with
those engaged in, as of the date hereof, by the Company and such Acquiring
Person or such Associate or Affiliate), assets (including securities or
intangible assets) having an aggregate fair market value of more than
$5,000,000, other than pursuant to a transaction set forth in Section 13(a)
hereof, (5) receive, or any designee, agent or representative of such
Acquiring Person or any Affiliate or Associate of such Acquiring Person
shall receive, any compensation from the Company or any of its Subsidiaries
other than compensation for full-time employment as a regular employee at
rates in accordance with the Company's (or its Subsidiaries') past
practices, or (6) receive the benefit, directly or indirectly (except
proportionately as a holder of shares of Company Common Stock or as
required by law or governmental regulation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or
other tax advantages provided by the Company or any of its Subsidiaries or
any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting
in such capacity; or (B) any Person shall become an Acquiring Person,
unless the event causing the Person to become an Acquiring Person is a
transaction set forth in Section 13(a); or (C) during such time as there is
an Acquiring Person, there shall be any reclassification of securities
(including any reverse stock split), or recapitalization of the Company, or
any merger or consolidation of the Company with any of its Subsidiaries or
any other transaction or series of transactions involving the Company or
any of its Subsidiaries, other than a transaction or transactions to which
the provisions of Section 13(a) apply (whether or not with or into or
otherwise involving an Acquiring Person), which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities of
11.
<PAGE> 15
the Company or any of its Subsidiaries that is directly or indirectly
beneficially owned by any Acquiring Person or any Person or any Associate
or Affiliate of any Acquiring Person;
then promptly following the occurrence of an event described in Section
11(a)(ii)(A), (B) or (C) (a "Section 11(a)(ii) Event"), proper provision shall
be made so that each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive for each Right, upon exercise
thereof in accordance with the terms of this Agreement and payment of the
then-current total Exercise Price, in lieu of the number of Units of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, such number of Units of Preferred Stock
as shall equal the result obtained by multiplying the then-current Purchase
Price by the then number of Units of Preferred Stock for which a Right was
exercisable (or would have been exercisable if the Distribution Date had
occurred) immediately prior to the first occurrence of a Triggering Event, and
dividing that product by 50% of the current per share market price (determined
pursuant to Section 11(d) hereof) for shares of Common Stock on the date of
occurrence of the Triggering Event (such number of Units of Preferred Stock
being hereinafter referred to as the "Adjustment Shares").
(iii) In lieu of issuing Units of Preferred Stock in accordance with
Section 11(a)(ii) hereof, the Company may, if the Board of Directors of the
Company, upon approval by a majority of the Continuing Directors,
determines that such action is necessary or appropriate and not contrary to
the interest of holders of Rights (and, in the event that the number of
Units of Preferred Stock which are authorized by the Company's Certificate
of Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights, or if any necessary regulatory approval for
such issuance has not been obtained by the Company, the Company shall): (A)
determine the excess of (1) the value of the Units of Preferred Stock
issuable upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess being referred to as the "Spread") and (B) with
respect to each Right, make adequate provision to substitute for such Units
of Preferred Stock, upon exercise of the Rights, (1) cash, (2) a reduction
in the Purchase Price, (3) other equity securities of the Company
(including, without limitation, Common Stock or shares or units of shares
of any series of preferred stock which the Board of Directors of the
Company, upon approval by a majority of the Continuing Directors, has
deemed to have the same value as the Units of Preferred Stock (such shares
or Units of preferred stock are herein called "preferred stock
equivalents")), except to the extent that the Company has not obtained any
necessary regulatory approval for such issuance, (4) debt securities of the
Company, except to the extent that the Company has not obtained any
necessary regulatory approval for such issuance, (5) other assets, or (6)
any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Board
of Directors of the Company, upon approval by a majority of the Continuing
Directors, based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company, upon
approval by a majority of the Continuing Directors; provided, however, if
the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the later of
(x) occurrence of a Section 11(a)(ii) Event, or (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later
of (x) or (y) being referred to herein as the "Section 11(a)(iii) Trigger
Date"), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase
Price, Units of Preferred Stock (to the extent available), except to the
extent that the Company has not obtained any necessary regulatory approval
for such issuance, and then, if necessary, cash, which Units and/or cash
have an aggregate value equal to the Spread.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Units of Preferred
Stock entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Units of Preferred Stock (or shares
having the same rights, privileges and preferences as the Preferred Stock
("equivalent preferred shares")) or securities convertible
12.
<PAGE> 16
into Units of Preferred Stock or equivalent preferred shares at a price per Unit
of Preferred Stock or equivalent preferred share (or having a conversion price
per share, if a security convertible into Units of Preferred Stock or equivalent
preferred shares) less than the then current per share market price of the
Preferred Stock (as determined pursuant to Section 11(d)) on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Units of Preferred
Stock outstanding on such record date plus the number of Units of Preferred
Stock which the aggregate offering price of the total number of Units of
Preferred Stock and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Units of Preferred Stock outstanding on such record
date plus the number of additional Units of Preferred Stock and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by a majority of the Continuing Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Units of Preferred Stock owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Units of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend) assets (other than a dividend payable in Units
of Preferred Stock but including any dividend payable in equity securities other
than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price (as determined pursuant to
Section 11(d)) of the Preferred Stock on such record date, less the fair market
value (as determined in good faith by a majority of the Continuing Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holder of
rights) of the cash, assets or evidences of indebtedness to be distributed or of
such subscription rights or warrants distributable in respect of a share of
Preferred Stock and the denominator of which shall be such current per share
market price (as determined pursuant to Section 11(d)) of a share of Preferred
Stock. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the "current
per share market price" of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend
or distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security and prior to the
expiration of thirty (30) Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "current
per share market price" shall be appropriately adjusted to reflect the
"current market price" per share equivalent of such Security. The closing
price for each day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as
13.
<PAGE> 17
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the Nasdaq National
Market ("Nasdaq") or, if the Security is not listed or admitted to trading
on the Nasdaq, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the Nasdaq or such other system then in use, or, if
on any such date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of
Directors of the Company upon approval by a majority of the Continuing
Directors. If on any such date no market maker is making a market in the
Security, the "current per share market price" of such Security on such
date as determined in good faith by the Continuing Directors of the Company
as provided for above shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i). If the "current
per share market price" of the Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of this Section 11(d),
the "current per share market price" of the Preferred Stock shall be
conclusively deemed to be an amount equal to $1,000 (as such amount may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to shares of Company Common Stock occurring
after the date of this Agreement) multiplied by the current market price
per share of Company Common Stock. If shares of neither the Company Common
Stock nor Preferred Stock is publicly held or so listed or traded, "current
per share market price" of the Preferred Stock shall mean the fair value
per share as determined in good faith by the Board of Directors of the
Company, upon approval by a majority of the Continuing Directors, whose
determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the holders of the Rights.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one one-thousandth of a
share of Preferred Stock or one one-hundredth of any other share or security as
the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
hereof, the holder of any Rights thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Units of Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Rights and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11(a), (b),
(c), (d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of
14.
<PAGE> 18
Units of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Units of Preferred
Stock (calculated to the nearest one-millionth of a share of Preferred Stock)
obtained by dividing (i) the product obtained by multiplying (x) the number of
Units of Preferred Stock covered by a Right immediately prior to this adjustment
by (y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price by, (ii) the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Units of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of Units of Preferred Stock
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one one-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Units of Preferred Stock issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per Unit and the number of Units of Preferred Stock
which were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of Units of Preferred
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable number of
Units of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Rights exercised after such record date
of that number of Units of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the Units of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing
15.
<PAGE> 19
such holder's right to receive such additional shares (fractional or otherwise)
upon the occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the contrary, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any Unit of Preferred Stock at less than the current
market price, (iii) issuance wholly for cash of Preferred Stock or securities
which by their terms are convertible into or exchangeable for Preferred Stock,
(iv) dividends on Preferred Stock payable in Preferred Stock or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of Units of its Preferred Stock shall not be taxable to
such stockholders.
(n) The Company shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), if (x)
at the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
Person which constitutes, or would constitute the "Principal Party" for purposes
of Section 13(a) shall have distributed or otherwise transferred to its
stockholders or other persons holding an equity interest in such Person Rights
previously owned by such Person or any of its Affiliates and Associates;
provided, however, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 26, take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) In the event that, at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on outstanding shares of Common Stock payable in shares of Common Stock
or (ii) effect a subdivision, combination or consolidation of the Common Stock
(by reclassification or otherwise than by payment of dividends in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then in
any such case the number of Units of Preferred Stock purchasable after such
event upon proper exercise of each Right shall be determined by multiplying the
number of Units of Preferred Stock so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately before such event and the denominator of which is
the number of shares of Common Stock outstanding immediately after such event.
The adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the shares of Common Stock or
Units of Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 25
hereof. Notwithstanding the foregoing sentence, the failure by the Company to
make
16.
<PAGE> 20
such certification or give such notice shall not affect the validity of or the
force or effect of the requirement for such adjustment. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
contained therein and shall not be deemed to have knowledge of such adjustment
unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) Except as provided in Section 13(b) hereof, in the event
that, following a Shares Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)), and the Company shall not be the continuing or surviving corporation of
such consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)) shall consolidate
with the Company, or merge with and into the Company and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the shares of
Common Stock shall be changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer) to any Person or Persons (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), in one or more transactions,
directly or indirectly, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole),
any such event being a "Section 13 Event," then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e), shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price, such number of validly authorized
and issued, fully paid and nonassessable shares of Common Stock of the Principal
Party (as defined in Section 13(b) herein), which shares shall not be subject to
any liens, encumbrances, rights of first refusal, transfer restrictions or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of Units of Preferred Stock for which
a Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such Units for which
a Right would be exercisable hereunder but for the occurrence of such Section
11(a)(ii) Event by the Purchase Price which would be in effect hereunder but for
such first occurrence) and (2) dividing that product (which, following the
direct occurrence of a Section 13 Event, shall be the "Purchase Price" for all
purposes of this Agreement) by 50% of the current per share market price
(determined pursuant to Section 11(d)) of the shares of Common Stock of such
Principal Party on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant to
this Agreement; (iii) the term "Company" shall, for all purposes of this
Agreement, thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (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 connection
with the consummation of any such transaction as may be necessary to ensure that
the provisions of this Agreement shall thereafter be applicable to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) shall be of no further effect following the
first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of
any securities into which shares of Company Common Stock are converted in
such merger or consolidation, or, if there is more than one such issuer,
the issuer of shares of Common Stock that has the highest aggregate current
market price (determined pursuant to Section 11(d)) and (B) if no
securities are so issued, the Person that is the other party to such merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the highest aggregate current market price
(determined pursuant to Section 11(d)); and
17.
<PAGE> 21
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
largest 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 transferred pursuant to such transaction or transactions or
if the Person receiving the largest portion of the assets or earning power
cannot be determined, whichever Person the Common Stock of which has the
highest aggregate current market price (determined pursuant to Section
11(d)); provided, however, that in any such case, (1) if the Common Stock
of such Person is not at such time and have not been continuously over the
preceding twelve-month period registered under Section 12 of the Exchange
Act ("Registered Common Stock"), or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person that has
Registered Common Stock outstanding, "Principal Party" shall refer to such
other Person; (2) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Stock
outstanding, "Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever of such other Persons is the
issuer of the Registered Common Stock having the highest aggregate current
per share market price (determined pursuant to Section 11(d)); and (4) if
the Common Stock of such Person is not Registered Common Stock or such
Person is not a corporation, and such Person is directly or indirectly
controlled by more than one Person, and none of such other Persons has
Registered Common Stock outstanding, "Principal Party" shall refer to
whichever ultimate parent entity is the corporation having the greatest
stockholders' equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable following
the execution of such agreement, a registration statement under the
Securities Act with respect to the shares of Common Stock that may be
acquired upon exercise of the Rights, (B) cause such registration statement
to remain effective (and to include a prospectus complying with the
requirements of the Securities Act) until the Expiration Date, and (C) as
soon as practicable following the execution of such agreement take such
action as may be required to ensure that any acquisition of such shares of
Common Stock upon the exercise of the Rights complies with any applicable
state securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
(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 Bylaws 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 current market price
per share (determined pursuant to Section 11(d)) or securities exercisable for,
or convertible into, shares of Common Stock of such Principal Party at less than
such then current marker price (other than to holders of
18.
<PAGE> 22
Rights pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the shares 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 cancelled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the Nasdaq or, if the Rights are not listed or
admitted to trading on the Nasdaq, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Directors. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company, upon approval by a majority
of the Continuing Directors, shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Stock (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Stock (other than fractions
which are integral multiples of one one-thousandth of a share of Preferred
Stock). Fractions of Preferred Stock in integral multiples of one one-thousandth
of a share of Preferred Stock may, at the election of the Company, be evidenced
by depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, however, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Stock represented by such depositary receipts. In lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share of Preferred Stock, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one share of Preferred Stock as determined pursuant to Section
11(d).
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
19.
<PAGE> 23
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Common Stock); and any registered holder of
any Rights Certificate (or, prior to the Distribution Date, a certificate
representing shares of Common Stock), without the consent of the Rights Agent or
of the holder of any other Rights Certificate (or, prior to the Distribution
Date, of a certificate representing shares of Common Stock), may, on such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of shares of the Company's Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common 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; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Units of Preferred
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights 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, 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 Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
20.
<PAGE> 24
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, or willful misconduct on the part of the Rights Agent, for any
action taken, suffered or omitted by the Rights Agent in connection with the
execution, acceptance and administration of this Agreement and the exercise and
performance hereunder of its duties, including the costs and expenses of
defending against and appealing any claim of liability in the premises. The
indemnity provided herein shall survive the termination of this Agreement and
the expiration of the Rights. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company.
The Rights Agent may conclusively rely upon and shall be protected and
shall incur no liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this Agreement and the
exercise and performance of its duties hereunder in reliance upon any Rights
Certificate or certificate for Units of Preferred Stock or shares of Common
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this 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 Agreement any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it may
consult with legal counsel of its choice (who may be legal counsel for the
Company), and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
opinion.
21.
<PAGE> 25
(b) Whenever in the administration, exercise and performance of its
duties under this 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, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer or the Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken, suffered or omitted
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence 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 Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any liability or responsibility
in respect of the legality, validity or enforceability of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the legality, validity or enforceability or the
execution of any Rights Certificate (except its countersignature thereof and has
actual knowledge of such change or adjustment); nor shall it be liable or
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights becoming
void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Section
3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt of the certificate
described in Section 12 hereof or has actual knowledge of such change or
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Units
of Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any 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 performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the administration, exercise and performance of its
duties hereunder from any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Secretary or the Chief Financial
Officer of the Company, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be responsible or liable for any
action taken, suffered or omitted by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date any officer of the Company actually received such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
22.
<PAGE> 26
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
the Rights Agent in good faith believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange, the
certification on the form of assignment or form of election to purchase, as the
case may be, that the Rights evidenced by the Rights Certificate are not owned
by an Acquiring Person, or an Affiliate or Associate thereof, has either not
been completed or in any manner indicates any other response thereto, the Rights
Agent shall not take any further action with respect to such requested exercise,
transfer, split up, combination or exchange, without first consulting with the
Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock or Preferred Stock (as to which the Rights
Agent has received prior written notice) by registered or certified mail, and
the Company shall mail notice thereof to the holders of the Rights Certificates
by first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock or Preferred Stock (as to which the Rights Agent has
received prior written notice) by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30) days after giving notice
of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, authorized under such laws to exercise corporate trust
or stock transfer powers, and subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $25 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of
23.
<PAGE> 27
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors upon approval by a majority of the
Continuing Directors, to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to shares of Common Stock
so issued or sold pursuant to the exercise of stock options or under any
employee benefit plan or arrangement or upon the exercise, conversion or
exchange of securities of the Company currently outstanding or issued at any
time in the future by the Company and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, upon approval
by a majority of the Continuing Directors, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued
and this sentence shall be null and void ab initio if, and to the extent that,
such issuance or this sentence would create a significant risk of or result in
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued or would create a significant risk of or
result in such options' or employee plans' or arrangements' failing to qualify
for otherwise available special tax treatment and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The Company may, at its
option, upon approval by a majority of the Continuing Directors, at any time
prior to the earlier of (i) the Shares Acquisition Date or such later date as
may be determined by a majority of the Continuing Directors and publicly
announced by the Company, or (ii) the Final Expiration Date, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"), and the Company may, at its
option, pay the Redemption Price either in cash, shares of Common Stock (based
on the current per share market price thereof (as determined pursuant to Section
11(d) hereof) at the time of redemption), or any other form of consideration
deemed appropriate by the Board of Directors; provided that, notwithstanding
anything to the contrary contained in this Section 23(a), the Company may not
take any action pursuant to this Section 23(a) unless (x) at the time of the
action of the Board of Directors of the Company approving such redemption and
the form of payment of the Redemption Price, there are then in office not less
than two Continuing Directors and (y) such action is approved by a majority of
the Continuing Directors then in office. The redemption of the Rights by the
Board of Directors may be made effective at such time on such basis and with
such conditions as a majority of the Continuing Directors in its sole discretion
may establish.
(b) Immediately upon the action of a majority of the Continuing
Directors of the Company ordering the redemption of the Rights pursuant to
paragraph (a) of this Section 23, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after such action of a
majority of the Continuing Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and shall mail
a notice of redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for 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 such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its
24.
<PAGE> 28
Affiliates or Associates may redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth in this Section 23
or in Section 24 hereof, and other than in connection with the purchase of
shares of Common Stock prior to the Distribution Date.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable pursuant to Section 7(a) at any
time when the Rights are redeemable hereunder.
Section 24. Exchange. (a) The Company, at its option, upon approval by
a majority of the Continuing Directors, at any time after any Person becomes an
Acquiring Person, may 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(f) hereof) for Units of Preferred Stock
at an exchange ratio as specified in the next sentence, such exchange ratio
being hereinafter referred to as the "Section 24(a) Exchange Ratio". The Section
24(a) Exchange Ratio shall equal, subject to adjustment to reflect stock splits,
stock dividends and similar transactions occurring after the date hereof, that
number obtained by dividing the Purchase Price by the then current per share
market price per Unit of Preferred Stock on the earlier of (i) the date on which
any Person becomes an Acquiring Person and (ii) the date on which a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting in
such capacity) is first published or sent or given within the meaning of Rule
14d-4(a) of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the shares of Company Common Stock then outstanding. Notwithstanding the
foregoing, the Company may not effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan maintained by the Company or any of its Subsidiaries, or any trustee or
fiduciary with respect to such plan acting in such capacity), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Units of Preferred Stock equal
to the number of such Rights held by such holder multiplied by the Section 24(a)
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 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(f) hereof) held by each holder of Rights.
(c) In the event that the number of shares of Preferred Stock which are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 34, the Company shall take all such action as may be necessary
to authorize additional shares of Preferred Stock for issuance upon exchange of
the Rights or make adequate provision to substitute (1) cash, (2) Company Common
Stock or other equity securities of the Company, (3) debt securities of the
Company, (4) other assets, or (5) any combination of the foregoing, having an
aggregate value equal to the Adjustment Spread, where such aggregate value has
been determined by a majority of the Continuing Directors. To the extent that
the Company determines that some action need be taken pursuant to clauses (i),
(ii) or (iii) of this Section 24(d), the Board of Directors, upon approval by a
majority of the Continuing Directors, may temporarily suspend the exercisability
of the Rights for a period of up to sixty (60) days following the date on which
the event described in Section 24(a) shall have occurred, in order to seek any
authorization of additional shares of Preferred Stock
25.
<PAGE> 29
and/or to decide the appropriate form of distribution to be made pursuant to the
above provision and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
(d) The Company shall not be required to issue fractions smaller than
or to distribute certificates which evidence fractions smaller than one
one-thousandth of a share of Preferred Stock. In lieu thereof, the Company shall
pay to the registered holders of the Rights Certificates with regard to which
such fractional Units would otherwise be issuable an amount in cash equal to the
same fraction of the current market value (as determined pursuant to Section
11(c)(i) hereof) of one Unit of Preferred Stock.
Section 25. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional Units of Preferred Stock or shares of stock of any class
or any other securities, rights or options, (iii) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding Preferred Stock), (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o)), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Stock payable in
shares of Common Stock or to effect a subdivision, combination or consolidation
of the shares of Common Stock (by reclassification or otherwise than by payment
of dividends in shares of Common Stock), then, in each such case, the Company
shall give to each holder of a Rights Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the shares of Common Stock and/or
Units of Preferred Stock, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least ten (10) days prior to the record date for determining holders of the
Units of Preferred Stock for purposes of such action, and in the case of any
such other action, at least ten (10) days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
shares of Common Stock and/or Units of Preferred Stock, whichever shall be the
earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof. In the event any Person becomes an Acquiring Person, the Company will
promptly notify the Rights Agent thereof.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Onyx Acceptance Corporation
8001 Irvine Center Drive
Irvine, CA 92618
Attention: John W. Hall
Regan E. Kelly, Esq.
26.
<PAGE> 30
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sent by registered or
certified mail and shall be deemed given upon receipt and addressed (until
another address is filed in writing with the Company) as follows:
American Stock Transfer and
Trust Company
40 Wall Street
New York, NY 10005
Attention: Isaac Kaigen
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date,
the Company may supplement or amend this Agreement in any respect, without the
approval of any holders of Rights, by action of its Board of Directors, upon
approval by a majority of the Continuing Directors, and the Rights Agent shall,
if the Company so directs, execute such supplement or amendment. From and after
the Distribution Date, the Company may from time to time supplement or amend
this Agreement without the approval of any holders of Rights, by action of its
Board of Directors, upon approval by a majority of the Continuing Directors, in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder or
(iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person), including, without
limitation, to change the Purchase Price, the Redemption Price, any time periods
herein specified, and any other term hereof, any such supplement or amendment to
be evidenced by a writing signed by the Company and the Rights Agent; provided,
however, that from and after such time as any Person becomes an Acquiring
Person, this Agreement shall not be amended in any manner which would adversely
affect the interests of the holders of Rights. Upon receipt of a certificate
from an appropriate officer of the Company that the proposed supplement or
amendment is consistent with this Section 27 and, after such time as any Person
has become an Acquiring Person, that the proposed supplement or amendment does
not adversely affect the interests of the holders of Rights, the Rights Agent
shall execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors. (a)
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d- 3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board, or the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing), which are done or made by the
Board in good faith, shall (x) be final,
27.
<PAGE> 31
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights Certificates and all other parties and (y) not subject the Board or the
Continuing Directors to any liability to the holders of the Rights.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the concurrence of a majority of the Continuing Directors then in
office shall be required to give effect to any action, calculation,
interpretation or determination made by the Board of Directors of the Company in
the administration of this Agreement and the exercise of the rights or powers
granted to the Board of Directors of the Company, to the Continuing Directors or
to the Company pursuant to this Agreement and no effect shall be given to any
such action, calculation, interpretation, determination or exercise of rights or
powers unless at least two Continuing Directors are then in office.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the registered holders of shares of Common Stock which
include the Rights) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered holders of the Common Stock
which include the Rights).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company, upon approval by a majority of the Continuing
Directors, determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the tenth business day following the date
of such determination by the Board of Directors of the Company.
Section 32. Governing Law. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of California and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
28.
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
ATTEST: ONYX ACCEPTANCE CORPORATION,
a Delaware corporation
By ______________________________ By ______________________________
Name: Name:
Title: Title:
ATTEST: AMERICAN STOCK TRANSFER AND
TRUST COMPANY, a New York banking
corporation, as Rights Agent
By _______________________________ By ______________________________
Name: Name:
Title: Title:
29.
<PAGE> 33
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATION
of
SERIES A PARTICIPATING PREFERRED STOCK
of
ONYX ACCEPTANCE CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
----------------------------------
A-1
<PAGE> 34
CERTIFICATE OF DESIGNATION OF
RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES A PARTICIPATING PREFERRED STOCK
OF ONYX ACCEPTANCE CORPORATION
Pursuant to Section 151 of the Delaware General Corporation Law
Onyx Acceptance Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
1. The name of the Corporation is Onyx Acceptance Corporation.
2. That pursuant to the authority conferred upon the Board of Directors
of the Corporation by the Corporation's Certificate of Incorporation, the Board
of Directors adopted the following resolution creating a series of 200,000
shares of Preferred Stock designated as Series A Participating Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the
Board of Directors does hereby provide for the issue of a series of
Preferred Stock, par value $0.01 per share, of the Corporation, to be
designated "Series A Participating Preferred Stock," initially
consisting of 200,000 shares and to the extent that the designations,
powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of the Series A
Participating Preferred Stock are not stated and expressed in the
Certificate of Incorporation, does hereby fix and herein state and
express such designations, powers, preferences and relative and other
special rights and the qualifications, limitations and restrictions
thereof, as follows (all terms used herein which are defined in the
Certificate of Incorporation shall be deemed to have the meanings
provided therein):
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Participating Preferred Stock," par value $0.01 per
share, and the number of shares constituting such series shall be 200,000. Such
number of share may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of shares of
Series A Participating Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible into Series A
Participating Preferred Stock.
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior right of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Participating Preferred Stock with respect to dividends, each holder
of one one-thousandth (1/1,000) of a share (a "Unit") of Series A Participating
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, quarterly
dividends payable in cash on the last day of March, June, September and December
in each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a Unit of Series A Participating Preferred Stock, in an
amount per Unit (rounded to the nearest cent) equal to the greater of
A-2
<PAGE> 35
(a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Corporation's Common Stock, $0.01 par value (the
"Common Stock") since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of a Unit of Series A Participating Preferred Stock. In the event the
Corporation shall at any time after July 21, 1997 (the "Rights Declaration
Date") (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of Units of Series A Participating Preferred Stock
were entitled immediately prior to such event under the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on Units
of Series A Participating Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, however,
that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
Unit on the Series A Participating Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on each
outstanding Unit of Series A Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such Unit of Series A
Participating Preferred Stock, unless the date of issue of such Unit is prior to
the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such Unit shall begin to accrue from the date of issue of such
Unit, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of Units of Series A
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the Units of Series A Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
Units shall be allocated pro rata on a Unit-by-Unit basis among all such Units
at the time outstanding. The Board of Directors may fix a record date for the
determination of holders of Units of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of Units of Series A
Participating Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each
Unit of Series A Participating Preferred Stock shall entitle the holder thereof
to one vote on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the number of votes per Unit to which holders of Units of Series A Participating
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
A-3
<PAGE> 36
(b) Except as otherwise provided herein or by law, the holders of Units
of Series A Participating 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) (i) If at any time dividends on any Units of Series A Participating
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, then during the period (a "default period") from the
occurrence of such event until such time as all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all Units of Series A Participating Preferred
Stock then outstanding shall have been declared and paid or set apart for
payment, all holders of Units of Series A Participating Preferred Stock,
voting separately as a class, shall have the right to elect two members of
the Board of Directors of the Corporation (hereinafter, each member is
referred to as a "Director").
(ii) During any default period, such voting rights of the holders of
Units of Series A Participating Preferred Stock may be exercised initially
at a special meeting called pursuant to subparagraph (iii) of this Section
3(c) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting rights nor any
right of the holders of Units of Series A Participating Preferred Stock to
increase, in certain cases, the authorized number of Directors may be
exercised at any meeting unless one-third of the outstanding Units of
Series A Participating Preferred Stock shall be present at such meeting in
person or by proxy. The absence of a quorum of the holders of Common Stock
shall not affect the exercise by the holders of Units of Series A
Participating Preferred Stock of such rights. At any meeting at which the
holders of Units of Series A Participating Preferred Stock shall exercise
such voting rights initially during an existing default period, they shall
have the right, voting separately as a class, to elect Directors to fill up
to two vacancies in the Board of Directors, if any such vacancies may then
exist, or, if such right is exercised at an annual meeting, to elect two
Directors. If the number which may be so elected at any special meeting
does not amount to the required number, the holders of the Series A
Participating Preferred Stock shall have the right to make such increase in
the number of Directors as shall be necessary to permit the election by
them of the required number. After the holders of Units of Series A
Participating Preferred Stock shall have exercised their right to elect
Directors during any default period, the number of Directors shall not be
increased or decreased except as approved by a vote of the holders of Units
of Series A Participating Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to the Series A
Participating Preferred Stock.
(iii) Unless the holders of Series A Participating Preferred Stock
shall, during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than 25% of
the total number of the Units of Series A Participating Preferred Stock
outstanding may request, the calling of a special meeting of the holders of
Units of Series A Participating Preferred Stock, which meeting shall
thereupon be called by the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Units of Series A
Participating Preferred Stock are entitled to vote pursuant to this
paragraph (c)(iii) shall be given to each holder of record of Units of
Series A Participating Preferred Stock by mailing a copy of such notice to
him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 20
days and not later than 60 days after such order or request or in default
of the calling of such meeting within 60 days after such order or request,
such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than 25% of the total number
of outstanding Units of Series A Participating Preferred Stock.
Notwithstanding the provisions
A-4
<PAGE> 37
of this paragraph (c)(iii), no such special meeting shall be called
during the 60 days immediately preceding the date fixed for the next annual
meeting of the stockholders.
(iv) During any default period, the holders of shares of Common Stock
and Units of Series A Participating Preferred Stock, and other classes or
series of stock of the Corporation, if applicable, shall continue to be
entitled to elect all the Directors until holders of the Units of Series A
Participating Preferred Stock shall have exercised their right to elect two
Directors voting as a separate class, after the exercise of which right (x)
the Directors so elected by the holders of Units of Series A Participating
Preferred Stock shall continue in office until their successors shall have
been elected by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as provided in
paragraph (c)(ii) of this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class of
capital stock which elected the Director whose office shall have become
vacant. References in this paragraph (c) to Directors elected by the
holders of a particular class of capital stock shall include Directors
elected by such Directors to fill vacancies as provided in clause (y) of
the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the holders of Units of Series A Participating Preferred Stock as a
separate class to elect Directors shall cease, (y) the term of any
Directors elected by the holders of Units of Series A Participating
Preferred Stock as a separate class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the Certificate of
Incorporation or Bylaws irrespective of any increase made pursuant to the
provisions of paragraph (c)(ii) of this Section 3 (such number being
subject, however, to change thereafter in any manner provided by law or in
the Certificate or bylaws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining Directors.
(vi) The provisions of this paragraph (c) shall govern the election of
Directors by holders of Units of Series A Participating Preferred Stock
during any default period notwithstanding any provisions of the Certificate
to the contrary, including, without limitation, the provisions of Article
IV of the Certificate.
(d) Except as required by law, the holders of Series A Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a Unit of Series A
Participating Preferred Stock unless concurrently therewith it shall declare a
dividend on the Series A Participating Preferred Stock as required by Section 2
hereof.
(b) Whenever quarterly dividends or other dividends or distributions
payable on Units of Series A Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on Units of Series A Participating
Preferred Stock outstanding shall have been paid in full, 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
A-5
<PAGE> 38
to dividends or upon liquidation, dissolution or winding up) to the Series
A Participating Preferred Stock;
(ii) declare or pay dividends on, make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with Series A Participating
Preferred Stock, except dividends paid ratably on Units of Series A
Participating Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Participating
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 (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any Units of
Series A Participating Preferred Stock, or any shares of stock ranking on a
parity with the Series A Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such 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.
(c) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any Units of Series A Participating
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 Units shall upon their cancellation become authorized but
unissued Units of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock unless,
prior thereto, the holders of Units of Series A Participating Preferred Stock
shall have received $1,000 per Unit, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of Units of Series A Participating
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by (ii)
1,000 (as appropriately adjusted as set forth in subparagraph (c) below to
reflect such events as stock splits, stock dividends and recapitalization with
respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding Units of
Series A Participating Preferred Stock and shares of Common Stock, respectively,
holders of Units of Series A Participating Preferred Stock and holders of shares
of Common Stock shall receive their ratable and proportionate share of the
remaining assets
A-6
<PAGE> 39
to be distributed in the ratio of the Adjustment Number to 1 with respect to
such Units of Preferred Stock and shares of Common Stock, on a per Unit and per
share basis, respectively.
(b) In the event, however, that there are not sufficient assets
available to permit payment in full to the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of the Series
A Participating Preferred Stock and such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of Common
Stock.
(c) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event 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 event the Units
of Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per Unit (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of Units of Series A Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The Units of Series A Participating Preferred
Stock shall not be redeemable.
Section 9. Ranking. The Units of Series A Participating 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, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preference or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Units of Series A Participating Preferred Stock, voting separately as a
class.
Section 11. Fractional Shares. Series A Participating Preferred Stock
may be issued in Units or other fractions of a share which Units or fractions
shall entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Participating
Preferred Stock.
A-7
<PAGE> 40
IN WITNESS WHEREOF, this Certificate is executed on behalf of this
Corporation by its President this 8th day of July, 1997.
----------------------------
John W. Hall, President
A-8
<PAGE> 41
Exhibit B
Form of Rights Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER JULY 20, 2007 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF
THE COMPANY AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
RIGHTS CERTIFICATE
Onyx Acceptance Corporation, a Delaware corporation
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 July 8, 1997 (the "Rights Agreement"), between Onyx Acceptance
Corporation, a Delaware corporation (the "Company"), and American Stock Transfer
and Trust Company, a New York banking corporation (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., California time, on
July 20, 2007 at the office of the Rights Agent designated for such purpose, or
at the office of its successor as Rights Agent, one one-thousandth (a "Unit") of
a fully paid nonassessable share of Series A Participating Preferred Stock, par
value $0.01 per share (the "Preferred Stock") of the Company, at a purchase
price of $50.00 per Unit of Preferred Stock (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of Units of Preferred Stock which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of _______, _____ based on the Preferred
Stock as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number of Units of Preferred Stock which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have
B-1
<PAGE> 42
entitled such holder to purchase. If this Rights Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at a redemption price of $.01
per Rights.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Rights or Rights evidenced hereby (other than fractions which
are integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary receipts),
but in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Units 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 any
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 Rights or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company and its
corporate seal. Dated as of ___________ ___, _______.
ATTEST: ONYX ACCEPTANCE CORPORATION,
a Delaware corporation
______________________________ By __________________________________
Name: Name:
Title: Secretary Title: President
Countersigned:
American Stock Transfer and Trust
Company, a New York banking corporation
By ____________________________
Authorized Signatory
B-2
<PAGE> 43
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED _______________________ hereby sells, assigns and
transfers unto
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _________________ , ___
-------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in a Securities Transfer
Association Inc. recognized signature guarantee medallion program.
- --------------------------------------------------------------------------------
CERTIFICATION
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
--------------------------
Signature
Form of Reverse Side of Rights Certificate -- continued
B-3
<PAGE> 44
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate.)
To Onyx Acceptance Corporation
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the units of Preferred
Stock issuable upon the exercise of such Rights and requests that certificates
for such Preferred Stock be issued in the name of:
Please insert social security
or other identifying number ____________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number ____________________________________________________
(Please print name and address)
Dated: _____________ ,___
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in a Securities Transfer
Association Inc. recognized signature guarantee medallion program.
B-4
<PAGE> 45
Form of Reverse Side of Rights Certificate -- continued
- --------------------------------------------------------------------------------
CERTIFICATION
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------------
Signature
- --------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election to
Purchase must conform to the name as written upon the face of this Rights
Certificate in every particular, without alteration or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-5
<PAGE> 46
Exhibit C
ONYX ACCEPTANCE CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF PREFERRED STOCK
On July 8, 1997, the Board of Directors of Onyx Acceptance Corporation,
a Delaware corporation (the "Company") declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of Common Stock (the
"Common Stock"), par value $0.01 per share, of the Company. The dividend is
payable on July 21, 1997 (the "Record Date") to the stockholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share (a "Unit") of Series A Participating
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), of the
Company at a price of $50.00 per Unit (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of July 8, 1997 (the "Rights Agreement") between the Company
and American Stock Transfer and Trust Company, as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the Continuing Directors prior to such time as any
Person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of such outstanding Common Stock (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate with a copy of this Summary of Rights
attached thereto.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the
C-1
<PAGE> 47
Close of Business on the Distribution Date and thereafter such separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on July 20, 2007 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Units of Preferred Stock
of certain rights or warrants to subscribe for or purchase Units of Preferred
Stock at a price, or securities convertible into Units of Preferred Stock with a
conversion price, less than the then current market price of the Units of
Preferred Stock or (iii) upon the distribution to holders of the Units of
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Units of Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of Units of Preferred
Stock issuable upon exercise of each Rights are also subject to adjustment in
the event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in Common Stock or subdivisions, consolidations or combinations of
the Common Stock occurring, in any such case, prior to the Distribution Date.
Units of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each Unit of Preferred Stock will be entitled to an aggregate
dividend of 1,000 times the dividend declared per share of Common Stock. In the
event of liquidation, the holders of the Units of Preferred Stock will be
entitled to an aggregate payment of 1,000 times the payment made per share of
Common Stock. Each Unit of Preferred Stock will have 1,000 votes, voting
together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
exchanged, each Unit of Preferred Stock will be entitled to receive 1,000 times
the amount received per share of Common Stock. These rights are protected by
customary antidilution provisions.
Because of the nature of the dividend, liquidation and voting rights,
the value of the Preferred Stock, the Units of Preferred Stock purchasable upon
exercise of each Rights should approximate the value of one share of Common
Stock.
In the event that, after the Rights become exercisable, the Company is
acquired in a merger or other business combination transaction with an Acquiring
Person or an affiliate thereof, or 50% or more of its consolidated assets or
earning power are sold
C-2
<PAGE> 48
to an Acquiring Person or an affiliate thereof, proper provision will be made so
that each holder of a Rights will thereafter have the right to receive, upon
exercise thereof at the then current exercise price of the Rights, that number
of shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of the
Rights.
In the event that any person or group of affiliated or associated
persons becomes the beneficial owner of 15% or more of the outstanding shares of
Common Stock, proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of Units of Preferred Stock (Common Stock, cash, other securities or
property) having a market value of two times the exercise price of the Rights.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
shares of Common Stock and prior to the acquisition by such person or group of
50% or more of the outstanding Common Stock, the Continuing Directors of the
Company may exchange the Rights (other than Rights owned by such person or group
which have become void), in whole or in part, for Units of Preferred Stock at an
exchange ratio which shall equal, subject to adjustment to reflect stock splits,
stock dividends and similar transactions occurring after the date hereof, that
number obtained by dividing the Purchase Price by the then current per share
market price per Unit of Preferred Stock on the earlier of (i) the date on which
any Person becomes an Acquiring Person and (ii) the date on which a tender or
exchange offer is announced by any Person, if upon consummation thereof such
Person would be the Beneficial Owner of 15% or more of the shares of Company
Common Stock then outstanding.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash
will be made based on the market price of the Units of Preferred Stock on the
last trading day prior to the date of exercise.
At any time within ten (10) business days after a person or group of
affiliated or associated persons acquire beneficial ownership of 15% or more of
the outstanding Common Stock (unless the Continuing Directors extends such
ten-day period), the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price"),
upon the approval of a majority of the Continuing Directors. The redemption of
the rights may be made effective at such time on such basis and with such
conditions as the Board of Directors, upon the approval of the Continuing
C-3
<PAGE> 49
Directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price. The
Rights are also redeemable under other circumstances as specified in the Rights
Agreement.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights upon the approval of a
majority of the Continuing Directors, except that from and after a Distribution
Date no such amendment may adversely affect the interests of the holders of the
Rights.
Until a Right is exercised, the holder thereof, 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 a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available to stockholders free of charge from
the Company upon written request therefrom. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by
reference.
C-4
