<PAGE> 1
As filed with the Securities and Exchange Commission on December 22, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
MASTERING, INC. (F/K/A EAGLE RIVER INTERACTIVE, INC.)
(Exact name of registrant as specified in its charter)
DELAWARE 84-1320277
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11000 N. SCOTTSDALE RD., #260 85254
SCOTTSDALE, ARIZONA (Zip Code)
(Address of principal executive offices)
AMENDED AND RESTATED 1995 EXECUTIVE STOCK OPTION PLAN
AMENDED AND RESTATED 1995 EMPLOYEE STOCK OPTION PLAN
(Full title of the plans)
MARC PINTO
EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
MASTERING, INC.
11000 N. SCOTTSDALE RD., #260
SCOTTSDALE, ARIZONA 85254
(602) 998-7500
(Name, address, and telephone number,
including area code, of agent for service)
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================
Proposed Proposed
Title Of Amount Maximum Maximum Amount Of
Securities To Be To Be Offering Aggregate Registration Fee
Registered Registered Price Per Offering
Share (1) Price (1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 2,400,000 $7.27,$8.00 $18,237,130 $5,600
$.001 par value(2) shares(3)
========================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
and, pursuant to Rule 457(h) under the Securities Act of 1933, based
upon (i) as to options to purchase 1,319,000 shares of Common Stock, a
weighted average purchase price of $7.27 per share and (ii) as to
1,081,000 shares of Common Stock available for grant, the average of
the high and low sale prices of the Common Stock reported in the Nasdaq
National Market Issues on December 18, 1997, which was $8.00.
(2) Includes 2,400,000 associated rights ("Rights") to purchase 1/100 of a
share of Series B Participating Preferred Stock, par value $.001 per
share. Rights initially are attached to and trade with the Common
Stock of the Company. The value attributable to such Rights, if any,
is reflected in the market price of the Common Stock.
(3) Consists of 1,500,000 shares issuable pursuant to the Amended and
Restated 1995 Executive Stock Option Plan and 900,000 shares issuable
pursuant to the Amended and Restated 1995 Employee Stock Option Plan.
This registration statement also covers an additional and
indeterminate number of shares as may become issuable because of the
provisions of the plans relating to adjustments for changes resulting
from stock dividends, stock splits and similar changes.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed with the Securities and
Exchange Commission (the "Commission") by the Company are incorporated herein
by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) The Company's Quarterly Reports on Form 10-Q for each of the three
months ended March 31, 1997, June 30, 1997 and September 30, 1997 and the
Company's Current Report on Form 8-K filed with the Commission on October 10,
1997; and
(c) The description of the Company's Common Stock, par value $.001 per
share, which is contained in the Company's Registration Statement on Form S-1,
as amended (File No. 333-702).
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), after the date of this Registration Statement and
prior to the filing of a post-effective amendment to this Registration
Statement which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the respective dates of filing of such documents.
Any statement contained in a document incorporated by, or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's By-laws require the Company to indemnify each of its
past, present and future officers and directors against liabilities and
reasonable expenses incurred in any action or proceeding by reason of such
person's being or having been an officer or director of the Company, or of any
other corporation for which he or she serves as such at the request of the
Company, to the fullest extent permitted by Delaware law, including those
circumstances in which indemnification would otherwise be discretionary.
Indemnification, however, is limited to officers and directors who have acted
in good faith and in a manner they reasonably believed to be in the best
interests of the Company.
In addition, the Company has entered into Directorship Agreements with
each of its directors. Such agreements require the Company to indemnify the
directors to the fullest extent permitted by law against all expenses,
including attorneys' fees, judgments, fines and amounts paid or incurred by
them for settlement in any action or proceeding, including any derivative
action, arising out of their service as a director of the Company or of any
<PAGE> 3
subsidiary of the Company or of any other corporation for which he or she
serves as such at the request of the Company. The Company has no contractual
obligation, however, to indemnify any director on account of liability for any
breach of the director's duty of loyalty to the Company, any act or omission
not in good faith or which involved intentional misconduct or a knowing
violation of laws, or any transaction from which the director derived an
improper personal benefit.
Pursuant to the provisions of the Delaware General Corporation Law, the
Company has adopted provisions in its Restated Certificate of Incorporation
which eliminate the personal liability of its directors to the Company or its
stockholders for monetary damages incurred as a result of the breach of their
duty of care.
The foregoing description of certain provisions of the Company's
Restated Certificate of Incorporation, By-laws and Directorship Agreements is
qualified in its entirety by reference to the Company's Restated Certificate of
Incorporation, By-laws and Directorship Agreements, filed as exhibits to the
Company's Registration Statement on Form S- 1, as amended (File No. 333-702).
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable
ITEM 8. EXHIBITS.
EXHIBIT
NO. DESCRIPTION
4.1 The Company's Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to the
Registration Statement on Form S-1 (File No.
333-702)).
4.2 The Company's By-Laws (incorporated by reference to
Exhibit 3.2 to the Registration Statement on Form S-1
(File No. 333-702)).
4.3 Specimen Certificate for Common Stock (incorporated
by reference to Exhibit 4.1 to the Registration
Statement on Form S-1 (File No. 333-702)).
4.4 Registration Agreement dated June 21, 1996 between
the Company, Philip Meurer, Joseph Parker, Lee J.
Jacobson and E. Michael Loftus (incorporated by
reference to the item listed as Exhibit 3 on the
Exhibit Index to the Company's Current Report on Form
8-K dated June 21, 1996).
4.5 Registration Rights Agreement dated as of July 31,
1996 between the Company and Thomas R. Graunke
(incorporated by reference to the item listed as
Exhibit 99.4 on the Exhibit Index to the Company's
Current Report on Form 8-K dated July 31, 1996).
4.6 The Company's Amended and Restated Employee Stock
Purchase Plan (incorporated by reference to Exhibit
10.13 to the Registration Statement on Form S-1 (File
No. 333-702)).
4.7 The Company's Amended and Restated 1995 Executive
Stock Option Plan.
4.8 The Company's Amended and Restated 1995 Employee
Stock Option Plan.
4.9 Rights Agreement between the Company and Harris Trust
and Savings Bank, as Rights Agent.
5 Opinion of Sidley & Austin.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Sidley & Austin (contained in Exhibit 5
hereto).
24 Power of Attorney (contained in the signature page of
this Registration Statement).
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes:
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<PAGE> 4
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended
(the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high and of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
this Registration Statement or any material change to
such information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the shares of Common Stock being registered
hereby which remain unsold at the termination of the offering.
(b) The Company hereby undertakes that, for the purposes of determining
any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering hereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the
opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of
expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
The Registrant, pursuant to the requirements of the Securities Act of
1933, as amended, certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Scottsdale, State of Arizona on this 22nd day of
December, 1997.
MASTERING, INC.
By: /s/ Marc Pinto
-------------------------
Marc Pinto
Executive Vice President and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears immediately below constitutes and appoints Terence M. Graunke and Marc
Pinto, and each or any of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title(s)
--------- --------
<S> <C>
/s/ Terence M. Graunke Chairman of the Board, President
- ------------------------- and Chief Executive Officer
Terence M. Graunke
/s/ Marc Pinto Executive Vice President
- ------------------------- and Chief Financial Officer
Marc Pinto
/s/ Paul D. Carbery Director
- -------------------------
Paul D. Carbery
/s/ Casey G. Cowell Director
- -------------------------
Casey G. Cowell
/s/ Andrew J. Filipowski Director
- -------------------------
Andrew J. Filipowski
/s/ James E. Cowie Director
- -------------------------
James E. Cowie
/s/ Peter I. Mason Director
- -------------------------
Peter I. Mason
/s/ Paul Yovovich Director
- -------------------------
Paul Yovovich
</TABLE>
II-4
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<S> <C>
4.1 The Company's Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to the
Registration Statement on Form S-1 (File No. 333-702)).
4.2 The Company's By-Laws (incorporated by reference to Exhibit
3.2 to the Registration Statement on Form S-1 (File No.
333-702)).
4.3 Specimen Certificate for Common Stock (incorporated by
reference to Exhibit 4.1 to the Registration Statement on
Form S-1 (File No. 333-702)).
4.4 Registration Agreement dated June 21, 1996 between the
Company, Philip Meurer, Joseph Parker, Lee J. Jacobson and
E. Michael Loftus (incorporated by reference to the item
listed as Exhibit 3 on the Exhibit Index to the Company's
Current Report on Form 8-K dated June 21, 1996).
4.5 Registration Rights Agreement dated as of July 31, 1996
between the Company and Thomas R. Graunke (incorporated by
reference to the item listed as Exhibit 99.4 on the Exhibit
Index to the Company's Current Report on Form 8-K dated July
31, 1996).
4.6 The Company's Amended and Restated Employee Stock Purchase
Plan (incorporated by reference to Exhibit 10.13 to the
Registration Statement on Form S-1 (File No. 333-702)).
4.7* The Company's Amended and Restated 1995 Executive Stock
Option Plan.
4.8* The Company's Amended and Restated 1995 Employee Stock
Option Plan.
4.9* Rights Agreement between the Company and Harris Trust and
Savings Bank, as Rights Agent.
5* Opinion of Sidley & Austin.
23.1* Consent of Arthur Andersen LLP.
23.2* Consent of Sidley & Austin (contained in Exhibit 5 hereto).
24* Power of Attorney (contained in the signature page of this
Registration Statement).
</TABLE>
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*Filed herewith
<PAGE> 1
EXHIBIT 4.7
1995 EXECUTIVE STOCK OPTION PLAN
OF
EAGLE RIVER INTERACTIVE, INC.
AMENDED AND RESTATED AS OF DECEMBER 18, 1996
1. Introduction and Purpose. The purpose of this Plan is to
advance the interests of the Corporation by encouraging and enabling the
acquisition of a proprietary interest in the Corporation by Eligible
Participants upon whose judgment and keen interest the Corporation and its
Subsidiaries are largely dependent for the successful conduct of their service
and operations. It is anticipated that the acquisition of such proprietary
interest in the Corporation will stimulate the efforts of such Eligible
Participants on behalf of the Corporation and its Subsidiaries, and strengthen
their desire to remain with the Corporation and its Subsidiaries. It is also
expected that the opportunity to acquire such a proprietary interest will
foster the efforts of the Corporation and its Subsidiaries to attract desirable
personnel.
2. Definitions. When used in this Plan, unless the context
otherwise requires:
a. "Administrator" means the Board of Directors or the Committee.
b. "Board of Directors" or "Board" means the Board of Directors
of the Corporation as constituted at any time.
c. "Change in Control" means the earlier of (i) the date on which
any person or entity, or persons or entities acting in concert, shall acquire
the beneficial ownership, as defined by the Board of Directors in its sole
discretion, of Shares or other securities having more than fifty percent (50%)
of the Voting Power then outstanding, or (ii) the date on which any person or
entity, or persons or entities acting in concert, shall first disclose an
intent to commence an offer to tender for Shares or other securities having
more than fifty percent (50%) of the Voting Power.
d. "Committee" means the Compensation Committee, as described in
Section 3 hereof, appointed by the Board to administer this Plan.
e. "Common Stock" means the common stock of the Corporation, par
value $.001 per share, including both treasury shares and authorized but
unissued shares, or any security of the Corporation issued in substitution,
exchange or in lieu thereof.
f. "Corporation" means Eagle River Interactive, Inc.
g. "Eligible Participants" means any employee, officer or
director of, or consultant to, the Corporation or its Subsidiaries designated
to receive Options pursuant to this Plan, as provided in Sections 3 and 4.
<PAGE> 2
h. "Fair Market Value" on a specified date means (i) the closing
price at which a Share is quoted on such date if quoted on the Nasdaq Stock
Market or listed on a national securities exchange on which Shares are
primarily traded; or (ii) if the Shares are not so quoted or listed on such
date, then the average of the bid and asked closing prices at which one Share
is traded on the over-the-counter market, as reported on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"); but if
no Shares were traded on such date, then on the last previous date on which a
Share was so traded, or (iii) if none of the above is applicable, the value of
a Share as established by the Administrator for such date using any reasonable
method of valuation.
i. "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor thereto.
j. "Issue Date" means the date designated by the Administrator
with reference to which the exercisability of an Eligible Participant's Options
may be determined in accordance with Section 5 hereof. Unless otherwise
designated by the Administrator, the Issue Date of an Option shall be the date
that the Option is awarded to the Eligible Participant.
k. "Options" means the stock options granted pursuant to this
Plan.
l. "Plan" means this Executive Stock Option Plan, as amended from
time to time.
m. "Plan Year" means the calendar year.
n. "Rule 16b-3" means Rule 16b-3 of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, or any
successor thereto.
o. "Securities Exchange Act of 1934" means the Securities
Exchange Act of 1934, as amended from time to time, or any successor thereto.
p. "Share" means a share of Common Stock of the Corporation, par
value $.001.
q. "Special Option Share" has the meaning assigned in Section 5
hereof.
r. "Standard Option Share" has the meaning assigned in Section 5
hereof.
s. "Subsidiary" means any "subsidiary corporation", as such term
is defined in Section 424(f) of the Internal Revenue Code.
t. "Voting Power" means the voting power of any securities of the
Corporation then outstanding which are generally entitled to vote for the
election of directors of the Corporation.
3. Administration of the Plan. The Plan shall be administered by
the Board of Directors or the Committee. The Committee shall be appointed by
the Board of Directors and shall consist of at least two members of the Board
of Directors. Insofar as it is necessary for compliance with the requirements
of Section 16 of the Securities Exchange Act of 1934, each
2
<PAGE> 3
member of the Committee must be a "Non-Employee Director" within the meaning of
the rules promulgated pursuant to Section 16 of the Securities Exchange Act of
1934. Insofar as the Administrator deems it is desirable and necessary in
order for compensation recognized by Eligible Participants pursuant to the Plan
to be fully deductible by the Corporation for federal income tax purposes, each
member of the Committee shall also be an "outside director" (as defined in
Treasury Regulations issued under Section 162(m) of the Internal Revenue Code).
The Administrator shall have the authority to administer the Plan as provided
herein and, in exercising this authority, shall establish such rules and
procedures as it deems necessary or advisable to administer the Plan.
Each member of the Committee shall hold office until the next regular
annual meeting of the Board of Directors following his or her designation and
until his or her successor is designated as a member of the Committee. Any
vacancy in the Committee may be filled by a resolution adopted by a majority of
the Board of Directors. Any member of the Committee may be removed at any
time, with or without cause, by resolution adopted by a majority of the Board
of Directors. A member of the Committee may resign from the Committee at any
time by giving written notice to the President, Secretary or Assistant
Secretary of the Corporation in person or by certified or registered mail,
return receipt requested, sent to P.O. Box 3600, 1060 West Beaver Creek Blvd.,
Avon, Colorado 81620, and, unless otherwise specified therein, such
resignation shall take effect upon receipt of such written notice. The
acceptance of such resignation by the President, Secretary or Assistant
Secretary of the Corporation shall not be necessary for such resignation to be
made effective.
In accordance with the terms of this Section 3, at all times after the
Corporation registers any class of equity security (other than an exempt
security) pursuant to Section 12 of the Securities Exchange Act of 1934, all
members of the Board of Directors who are not employees of the Corporation
shall receive Options under the Plan without any action by the Administrator.
Each non-employee member of the Board shall receive an Option to purchase
15,000 Standard Option Shares (after giving effect to the three-for-one stock
split effected by the Corporation on March 21, 1996, hereafter referred to as
the "Stock Split," and subject to adjustment for stock splits, stock dividends
and other share adjustments described in Section 14 hereof), which shall be
granted on and have an Issue Date of that date which is the later of (i) the
date such person is first appointed or elected or (ii) with respect to any such
person who has received Options prior to December 22, 1995, the date on which
all Options previously granted to such person have become immediately
exercisable (other than as a result of a Change of Control as provided in
Section 10 hereof). As long as he or she shall continue to serve on the Board,
each continuing non-employee member of the Board shall receive an additional
Option to purchase 15,000 Shares (after giving effect to the Stock Split, and
subject to adjustment for stock splits, stock dividends and other share
adjustments described in Section 14 hereof), every three years on the
anniversary of the Issue Date of the first such Option granted to him or her
pursuant to this Section 3, and the Issue Date of such Options shall be the
date of granting. Options granted to non-employee members of the Board
pursuant to this Section 3 shall become exercisable in three (3) equal annual
installments on the first three (3) anniversaries of the Issue Date. The
exercise price of any Option granted to a Board member pursuant to this Section
3 shall be equal to the Fair Market Value as of the Issue Date and each such
Option shall have a term of ten (10) years.
3
<PAGE> 4
4. Participants. Except as otherwise provided herein, the class
of individuals who are potential recipients of Options to be granted under this
Plan are the Eligible Participants who, in the sole discretion of the
Administrator, contribute significantly to the success of the Corporation or
any of its Subsidiaries. The Eligible Participants to whom Options are granted
under this Plan and the number of Shares subject to each such Option shall be
determined by the Administrator in its sole discretion, in accordance with the
terms and conditions of this Plan. Notwithstanding the foregoing, the Options
granted to non-employee directors pursuant to Section 3 above shall be as set
forth therein.
5. Grant and Vesting of Options. The Administrator may, but
shall not be required to, grant in accordance with this Plan Options to
purchase an aggregate of up to 4,500,000 Shares (after giving effect to the
Stock Split and subject to adjustment for stock splits, stock dividends and
other share adjustments described in Section 14 hereof), which Shares may be
either treasury Shares or authorized but unissued Shares, classified as
follows: 3,750,000 shares shall be "Standard Option Shares" and the remaining
750,000 shares shall be "Special Option Shares" which will be subject to the
special vesting requirements of this Section 5. In no event may an Eligible
Participant be granted Options under the Plan to the extent that the sum of (i)
the number of Shares subject to such Options, and (ii) the number of Shares
subject to all other prior Options granted to such Eligible Participant under
the Plan during the five-year period ending on the date such Options are
granted would exceed the Eligible Participant's Individual Limit. An Eligible
Participant's "Individual Limit" is 1,500,000 Shares (after giving effect to
the Stock Split and subject to adjustment for stock splits, stock dividends and
other share adjustments as described in Section 14 hereof).
Except as otherwise provided in this Plan, Options granted pursuant to
this Plan for the purchase of Standard Option Shares shall become exercisable
in four equal annual installments on the first four anniversaries of the Issue
Date of such Options; provided, however, that the Administrator may in its
discretion specify, upon the Option grant and with respect to all or any
portion of the Shares subject to such Options, immediate exercisability or
exercisability vesting over a shorter or longer period in any particular case.
Except as otherwise provided herein, Options granted pursuant to this
Plan for the purchase of Special Option Shares shall become exercisable on the
fourth anniversary of the Issue Date of such Options. Options to purchase
Special Option Shares may be exercised in full, to the extent they are not then
vested and exercisable, in the amounts and upon the occurrence of the events
described in this Section 5. As used herein, "Frontenac" means Frontenac VI
Limited Partnership, the holder of 1,000,000 shares of Series A Convertible
Preferred Stock of the Corporation (the "Series A Preferred"), which shares
were purchased by Frontenac for the purchase price of $5,000,000 (the "Original
Investment Amount"). To the extent an Option to purchase Special Option Shares
is not then vested and exercisable, such Option shall vest and become
exercisable as follows:
(i) An amount such that twenty percent (20%) of any Special Option
Share grant may be exercised on and after the date that the
"Investment Recovery Amount" (as hereafter defined) equals or exceeds
the product of three times the Original Investment Amount, calculated
in the aggregate;
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<PAGE> 5
(ii) An amount such that an additional forty percent (40%) of any
Special Option Share grant may be exercised on and after the date that
the Investment Recovery Amount equals or exceeds the product of five
times the Original Investment Amount, calculated in the aggregate; and
(iii) An amount such that the remaining forty percent (40%) of any
Special Option Share grant may be exercised on and after the date that
the Investment Recovery Amount equals or exceeds the product of seven
times the Investment Amount, calculated in the aggregate.
"Investment Recovery Amount" means the sum of:
(i) the amount of any dividends or other distributions,
whether in the form of cash or other property (valued at its fair
market value), paid or otherwise distributed by the Corporation to
Frontenac on account of its holdings of shares of Series A Preferred
(or Common Stock into which its shares of Series A Preferred have been
converted, hereafter, the "Underlying Common"); and
(ii) the amount of cash and other property (valued at its fair
market value) paid or otherwise distributed to Frontenac upon the
conversion, redemption, sale, or other disposition of all or any part
of the shares of Series A Preferred or Underlying Common held by
Frontenac, excluding any deduction for brokers fees or other
commissions payable by Frontenac upon any such sale or disposition;
and
(iii) at such time as the Company's Common Stock is traded on
a national securities exchange or on the National Association of
Securities Dealers Automated Quotation System over-the-counter market,
the product of:
(x) the average closing price per share of Common
Stock on such securities exchange, if any, on which such
shares are primarily traded (or, for shares traded on the
over-the-counter market as reported on the National
Association of Securities Dealers Automated Quotation System,
the average of the bid and asked closing prices at which one
share is traded), but if no shares were so traded on such
date, then on the last previous date on which a share was so
traded, as reported by The Wall Street Journal, with such
average price, in each case, determined over fifteen
consecutive trading days; times
(y) the sum of (i) the number of shares of Common
Stock into which the shares of Series A Preferred held by
Frontenac may be converted, and (ii) the number of shares of
Underlying Common held by Frontenac.
Options granted under this Plan may be either non-qualified stock
options or, with respect to Eligible Participants who are employees of the
Corporation or its Subsidiaries, incentive stock options within the meaning of
Section 422 of the Internal Revenue Code. An Option granted under this Plan
shall be deemed to be a non-qualified stock option unless the Administrator, in
its sole discretion, designates otherwise. Options which are designated or
deemed not to be
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<PAGE> 6
incentive stock options shall not be treated as such for purposes of this Plan
and the Internal Revenue Code.
Nothing contained herein shall be construed to prohibit the grant of
Options at different times to the same Eligible Participant.
The terms of any Option granted to an Eligible Participant shall,
subject to the other terms and provisions of this Plan, be conclusively
determined by the Administrator, in its sole discretion at or before the time
of grant. The terms and provisions of the Option shall be set forth in a
writing (such writing being hereinafter referred to as the "Option
Certificate") signed on behalf of the Corporation by the President, any Vice
President or the Treasurer of the Corporation. The Option Certificate shall
state whether the Option is an incentive stock option or a non-qualified stock
option. At the time an Option is granted, the Administrator may, in its sole
discretion, establish one or more conditions to the exercise of such Option,
provided that if such Option is designated as an incentive stock option, then
such condition or conditions shall not be inconsistent with Section 422 of the
Internal Revenue Code.
6. Price. Except as otherwise provided herein, the exercise
price per Share of the Shares subject to purchase pursuant to any Option shall
be fixed by the Administrator at the time an Option is granted and may be less
than, equal to, or greater than the Fair Market Value of the Common Stock on
the date such Option is granted; provided, however, that if the Option is an
incentive stock option, in no event shall the price be less than the Fair
Market Value of a Share on the day on which the Option is granted (one hundred
ten percent (110%) of the Fair Market Value of a Share on such date if the
grantee is a greater than ten percent (10%) stockholder within the meaning of
Section 422(b)(6) of the Internal Revenue Code).
7. Duration of Options. The duration of any Option granted under
this Plan shall be for a period fixed by the Administrator, in its sole
discretion, but no more than ten (10) years from the date upon which the Option
is granted (five (5) years if the Option is an incentive stock option and the
grantee is a greater than ten percent (10%) stockholder within the meaning of
Section 422(b)(6) of the Internal Revenue Code).
8. Option Holder Not a Stockholder. An Option holder shall not
be deemed to be the holder of, or to have any rights of a stockholder with
respect to, any Shares subject to such Option, unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Corporation
shall have issued and delivered a certificate representing the Shares to the
Option holder, and (iii) said holder's name shall have been entered as a
stockholder of record on the books of the Corporation. Thereupon, said holder
shall have full voting, dividend and other ownership rights with respect to
such Shares.
9. Transferability of Options. Except as expressly provided in
this Section 9, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than (i) by will or by the laws
of descent or distribution, and (ii) pursuant to a domestic relations order
issued by a court with jurisdiction over the Option holder. In no event,
however, will an Option be transferable if such transfer is prohibited by the
securities laws or regulations of any state, including but not limited to the
State of California.
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<PAGE> 7
The Administrator may, in its sole discretion after considering the
relevant facts and circumstances, authorize the transfer by an Eligible
Participant of all or a portion of the Options granted or to be granted to such
Eligible Participant to:
(i) the spouse, children or grandchildren of the Eligible Participant
("Immediate Family Members");
(ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members;
(iii) a partnership or limited liability company in which such
Immediate Family Members and the Eligible Participant are the only
partners or members, as applicable; or
(iv) such other persons or entities as the Administrator permits,
provided that (a) the Option Certificate (as defined in Section 5 of this Plan)
pursuant to which such Options are granted must be approved by the
Administrator, and must expressly provide (or be amended to so provide) for
transferability in a manner consistent with this Section and (b) subsequent
transfers of transferred Options (including indirect transfers through the
transfer of, for example, an ownership interest in the entity to which an
Option is transferred) shall be prohibited except those in accordance with the
first paragraph of this Section 9 (by will, the laws of descent and
distribution or pursuant to a domestic relations order). In consideration for
authorizing the transferability of an Option, the Administrator may impose such
restrictions on the sale of the Option Shares underlying the transferred Option
as it deems appropriate after considering the facts and circumstances of the
Option transfer.
Options which have been transferred shall continue to be subject to
the same terms and conditions as were applicable immediately prior to the
transfer, provided that for purposes of this Plan the term "Eligible
Participant" shall be deemed to refer to the transferee. The events of
termination of employment of Section 13 hereof shall continue to be applied
with respect to the original Eligible Participant, following which the Options
shall be exercisable by the transferee only to the extent and for the periods
specified in Section 13. In no event shall the Corporation be obligated to
provide notice to an Option transferee of any of the events specified in
Section 13 or of any other event or circumstance which may relate to the
transferred Option.
10. Exercise of Options. Except as otherwise provided herein, an
Option, after the grant thereof in accordance with the provisions of this Plan,
shall be exercisable by the holder of such Option at such rate and at such time
or times as may be fixed by the Administrator at the time the Option is
granted; provided, however, that no Option may be exercised in part or in full
prior to the approval of the Plan by a majority vote of the stockholders of the
Corporation as provided in Section 18 hereof.
Notwithstanding any other provisions of this Plan, any Option granted
under the Plan which is an incentive stock option shall not be exercisable to
the extent that the Fair Market Value of the Shares (determined as of the date
of grant), with respect to which such Option (and any other incentive stock
option granted to the holder under this Plan or any other stock option
7
<PAGE> 8
plan maintained by the Corporation or any Subsidiary) first becomes exercisable
in any calendar year, exceeds $100,000.
All or any part of the unexpired and unexercised Options granted to
any Eligible Participant may be exercised in full, after approval of the Plan
by the stockholders of the Corporation as provided in Section 18 hereof,
whether or not such Options were otherwise then exercisable, upon a Change in
Control or upon the occurrence of such special circumstances or event which, in
the sole discretion of the Administrator, merits special consideration.
An Option shall be exercised by the delivery of a written notice duly
signed by the Option holder (or the representative of the estate or the heirs
of a deceased Option holder), together with the Option Certificate and (i)
cash, (ii) a certified check payable to the order of the Corporation, (iii)
subject to the approval of the Administrator, Shares duly endorsed over to the
Corporation (which Shares shall have been owned by the Option holder for at
least six months prior to such exercise and, for purposes of this paragraph, be
valued at their Fair Market Value as of the date preceding the day of such
exercise), (iv) written direction to an authorized broker to sell the Shares
purchased pursuant to such exercise immediately for the account of the Option
holder and pay an appropriate portion of the proceeds thereof to the
Corporation, or (v) any combination of such methods of payment which together
amount to the full exercise price of the Shares purchased pursuant to the
exercise of the Option plus the amount, if any, of any applicable taxes which
the Corporation is required to withhold. Such notice and payment shall be
delivered to the Treasurer or Secretary of the Corporation, or to any other
person designated by the Corporation, in a written notice to the Option holder
(the "Authorized Representative").
No Option may be granted or exercised pursuant to the provisions
hereof when such Option, or the granting or exercise thereof, may result in the
violation of any law or governmental order or regulation.
Within a reasonable time after the exercise of an Option, the
Corporation shall cause to be delivered to the person entitled thereto a
certificate for the Shares purchased pursuant to the exercise of the Option.
If the Options shall have been exercised with respect to less than all of the
Shares subject to the Option, the Corporation shall (i) cause to be delivered
to the person entitled thereto a new Option Certificate in replacement of the
Option Certificate surrendered at the time of the exercise of the Option,
indicating the number of Shares with respect to which the Option remains
available of exercise, or (ii) endorse the original Option Certificate to give
effect to the partial exercise thereof.
An Option that is an incentive stock option granted pursuant hereto
shall be exercisable by an Eligible Participant only if such employee has been
in the employ of the Corporation or its Subsidiaries at all times during the
period beginning on the date such Option was granted and ending three (3)
months before the date of such exercise or one year before the date of exercise
in the case of death or disability, as set forth below in Section 13.
11. Disposition of Shares. If the Option is an incentive stock
option, no Shares acquired pursuant to the exercise of an Option granted herein
may be sold, exchanged, gifted or
8
<PAGE> 9
otherwise disposed of within two (2) years following the date such Option was
granted or one (1) year following the date such Option was exercised, whichever
is later.
12. Fractional Shares. The Corporation shall not be required to
issue fractional Shares pursuant to this Plan and, accordingly, Eligible
Participants may be required to purchase only a whole Share or Shares.
13. Termination of Services. All or any part of any Option, to
the extent unexercised, shall terminate immediately if the Option holder ceases
to be an employee, officer or director of, or consultant to, the Corporation or
its Subsidiaries; except that (i) with respect to Options granted before
December 22, 1995, the Option holder shall have until the end of the thirtieth
(30th) day, and (ii) with respect to Options granted on or after December 22,
1995, the Option holder shall have until the end of three (3) months
(extendible in the discretion of the Administrator for non-qualified Options
to the end of six (6) months), following the date he or she ceases to be an
employee, officer or director of, or consultant to, the Corporation or any of
its Subsidiaries to exercise any exercisable Option rights that he or she could
have exercised on the day on which such employment or service terminated;
provided, however, that such exercise must be accomplished prior to the
expiration of the term of such Option. Notwithstanding the foregoing, if an
individual ceases to be an employee or director of, or a consultant to, the
Corporation or its Subsidiaries due to (i) retirement on or after attaining the
age of sixty-five (65) years (or such earlier date as such person shall be
permitted under the Corporation's retirement plan), (ii) disability (as such
term is defined in Section 422(c)(6) of the Internal Revenue Code, the
existence of which shall be conclusively determined by the Administrator in its
sole discretion), or (iii) death, then the Option holder, or the representative
of the estate or the heirs of a deceased Option holder, shall have the
privilege of exercising the Options which are then exercisable but are
unexercised at the time of such retirement, disability or death, but only to
the extent that such Options which are then exercisable are exercised (i)
within three (3) months following the Option holder's retirement (extendible in
the discretion of the Administrator for non-qualified Options, to six (6)
months), (ii) within one (1) year following the Option holder's disability, or
(iii) within one (1) year following the Option holder's death, as the case may
be; provided, further, that such exercise must be accomplished prior to the
expiration of the term of such Option. If an Option holder ceases to be an
employee or director of, or a consultant to, the Corporation or its
Subsidiaries because of the Option holder's violation of his or her duties to
the Corporation and its Subsidiaries, the existence of such violation to be
conclusively determined by the Administrator in its sole discretion, all
unexercised Options of such Option holder shall immediately terminate and such
Option holder shall have no right to exercise any unexercised Option he or she
might have exercised prior to the date he or she ceased to be an employee or
director of, or a consultant to, the Corporation or its Subsidiaries.
When an Eligible Participant ceases to be an employee or director of,
or a consultant to, the Corporation or its Subsidiaries, all Options held by
such Eligible Participant which are not then exercisable shall immediately
lapse and be canceled.
Nothing contained herein or in the Option Certificate shall be
construed to confer on any Eligible Participant any right to continue in the
employ or service of the Corporation or its Subsidiaries or derogate from any
right of the Corporation or its Subsidiaries to request, in its
9
<PAGE> 10
sole discretion, the retirement, resignation or discharge of such Eligible
Participant, at any time, with or without cause.
14. Adjustment of Shares. If, prior to the complete exercise of
any Option, there shall be declared and paid a stock dividend upon the Common
Stock of the Corporation or if the Common Stock of the Corporation shall be
split, converted, exchanged, reclassified or in any way substituted, the
Option, to the extent that it has not been exercised, shall entitle the holder
thereof, upon the future exercise of the Option in accordance with the Plan, to
such number and kind of securities, cash or other property, subject to the
terms of the Option, to which he or she would have been entitled had he or she
actually owned the Shares subject to the unexercised portion of the Option at
the time of the occurrence of such stock dividend, split, conversion, exchange,
reclassification or substitution; and the aggregate exercise price upon the
future exercise of the Option shall be the same as if the originally optioned
Shares were being purchased thereunder. If, prior to the complete exercise of
any Option, there shall be a spin-off transaction pursuant to the
reorganization of the Corporation, the Option, to the extent that it has not
been exercised, shall be adjusted by adjusting the exercise price of the Option
and adjusting the number of Shares subject thereto, in order to reflect the
decrease, if any, in the fair market value of the Shares resulting from the
spin-off transaction; in any such case, the Option as adjusted, shall entitle
the holder thereof, upon the future exercise of the Option in accordance with
the Plan, to the number of Shares which have a Fair Market Value, immediately
after the occurrence of the spin-off transaction, equal to the Fair Market
Value of the Shares subject to the Option on the day before the occurrence of
such spin-off transaction, and the aggregate exercise price upon the future
exercise of the Option shall be the same as the aggregate exercise price of the
Shares subject to the Option on the day before the occurrence of such spin-off
transaction. Any fractional shares or other securities payable upon the
exercise of the Option, as a result of such adjustment due to the occurrence of
such stock dividend, stock split, conversion, exchange, reclassification,
substitution or spin-off transaction, shall be payable in cash based upon the
Fair Market Value of such Shares or securities at the time of such exercise.
If any such event should occur, the number of Shares, with respect to which
Options remain to be issued or with respect to which Options may be reissued,
and the Individual Limit shall be adjusted in a similar manner.
Except as otherwise provided in the third paragraph of Section 10
hereof (relating to changes of control among other matters), upon the
dissolution or liquidation of the Corporation, or upon a reorganization, merger
or consolidation in which the Corporation is not the surviving corporation or
entity, or in which the Corporation becomes a subsidiary of another
corporation, or upon the sale of all or substantially all of the property of
the Corporation, both the Plan and the Options issued thereunder shall
terminate, unless a provision is made in connection with such transaction for
(i) the assumption of Options theretofore granted or (ii) the substitution for
such Option of options of the successor employer corporation or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and the per share exercise prices.
Upon a business combination by the Corporation or any of its
Subsidiaries with any corporation or other entity through the adoption of a
plan of merger or consolidation or a share exchange or through the purchase of
all or substantially all of the capital stock or assets of such other
corporation or entity, the Board or the Administrator may, in its sole
discretion, grant Options pursuant hereto to all or any persons who, on the
effective date of such transaction, hold
10
<PAGE> 11
outstanding options to purchase securities of such other corporation or entity
and who, on and after the effective date of such transaction, will become
employees or directors of, or consultants to, the Corporation or its
Subsidiaries. The number of Shares subject to such substitute Options shall be
determined in accordance with the terms of the transaction by which the
business combination is effected. Notwithstanding the other provisions of this
Plan, the other terms of such substitute Options shall be substantially the
same as or economically equivalent to the terms of the options for which such
Options are substituted, all as determined by the Board or by the Committee, as
the case may be. Upon the grant of substitute Options pursuant hereto, the
options to purchase securities of such other corporation or entity for which
such Options are substituted shall be canceled immediately.
15. Issuance of Shares and Compliance with Securities Laws.
Before issuing and delivering any Shares to an Option holder, the Corporation
may: (i) require the holder to give satisfactory assurances that the Shares
are being purchased for investment and not with a view to resale or
distribution, and will not be transferred in violation of applicable federal
and state securities laws, rules and regulations, including but not limited to
the Securities and Exchange Commission Rule 144 and Section 16(b) of the
Securities Exchange Act of 1934, (ii) restrict the transferability of such
Shares and require a legend to be endorsed on the certificates representing the
Shares, as appropriate to reflect resale restrictions, if any, imposed by the
Administrator pursuant to the Option when granted, or as appropriate to comply
with any applicable state or federal securities laws, rules or regulations, and
(iii) condition the exercise of an Option or the issuance and delivery of
Shares upon the listing, quotation, registration or qualification of the Shares
covered by such Option upon a securities exchange, quotation system or under
applicable securities laws.
Any provision hereof which is inconsistent with Rule 16b-3 under the
Securities Exchange Act of 1934, as now or hereafter in effect, shall be
inoperative and shall not affect the validity of the Plan.
16. Income Tax Withholding. If the Corporation or its
Subsidiaries shall be required to withhold any amounts by reason of federal,
state or local tax laws, rules or regulations, in respect of the issuance of
Shares pursuant to the exercise of an Option, the Corporation or such
Subsidiary shall be entitled to deduct and withhold such amounts from any cash
payments to be made to the Option holder. In any event, the holder shall
promptly make available to the Corporation or such Subsidiary, when requested
by the Corporation or such Subsidiary, sufficient funds to meet the
requirements of such withholding, and the Corporation or such Subsidiary shall
be entitled to take and authorize such steps as it may deem advisable in order
to have such funds made available to the Corporation or such Subsidiary from
any funds or property due or to become due to the holder. The obligations of a
holder under this Section 16 shall survive the transfer of an Option pursuant
to Section 9 of this Plan and continue to be enforceable against the Option
transferor.
17. Administration and Amendment of the Plan. Except as
hereinafter provided, the Board of Directors and the Committee may, (a) at any
time, withdraw or, from time to time, amend the Plan as it relates to the terms
and conditions of any Options not theretofore granted, and (b) from time to
time, amend the Plan is it relates to the terms and conditions of any
11
<PAGE> 12
outstanding Option to the extent such Option is not then exercisable. The
Board of Directors and the Committee, with the consent of each adversely
affected Option holder may, at any time, withdraw or cancel any outstanding
Option. Notwithstanding the foregoing, any amendment which would increase the
number of Shares issuable under Options or change the class of employees to
whom Options may be granted, must be adopted by the Board of Directors and
approved by the stockholders of the Corporation within one (1) year following
such amendment.
Determinations of the Administrator as to any question which may arise
with respect to the interpretation of the provisions of the Plan and Options
shall be final. The Administrator may authorize and establish such rules,
regulations and revisions thereof, not inconsistent with the provisions of the
Plan, as it may deem advisable to make the Plan and Options effective or
provide for their administration and may take such other action with regard to
the Plan and Options as it shall deem desirable to effectuate their purpose.
18. Effective Date of the Plan. This Plan was originally adopted
and approved by the Board of Directors of the Corporation, effective as of the
date of such adoption and approval, conditioned upon its approval by the
stockholders of the Corporation within twelve months following the date the
Plan was adopted by the Board of Directors. Such approval occurred on
September 29, 1995. This Plan was subsequently amended and restated by the
Board of Directors (i) in 1995, effective upon approval of the restatement by
the stockholders of the Corporation which occurred on December 12, 1995, and
(ii) on December 18, 1996, effective as of such date, except with respect to
the amendment to Section 5 increasing the number of Shares available hereunder,
which is conditioned upon the approval by the stockholders of the Corporation
within 12 months after such date.
The Plan shall remain in full force and effect until the close of
business on September 29, 2005 at which time the right to grant Options under
the Plan shall automatically terminate, unless the stockholders of the
Corporation approve an extension or renewal of the Plan. Any Options granted
before the termination of the right to grant Options under the Plan shall
continue to be governed thereafter by the terms of the Plan.
19. Severability. If any provision herein shall be held unlawful
or otherwise invalid or unenforceable in whole or in part, such unlawfulness,
invalidity or unenforceability shall not affect any other provision of the Plan
or part thereof, each of which shall remain in full force and effect. If the
making of any payment required under the Plan shall be held unlawful or
otherwise invalid or unenforceable, such unlawfulness, invalidity or
unenforceability shall not prevent any other payment from being made under the
Plan, and if the making of any payment in full, as required under the Plan,
would be unlawful or otherwise invalid or unenforceable, then such
unlawfulness, invalidity or unenforceability shall not prevent such payment
from being made in part, to the extent that it would not be unlawful, invalid,
or unenforceable, and the maximum payment that would not be unlawful, invalid
or unenforceable shall be made under the Plan.
20. Governing Law. The Plan and all determinations made and
actions taken hereunder, to the extent not otherwise governed by the Internal
Revenue Code or laws of the United States of America, shall be governed by the
laws of the State of Delaware and construed accordingly.
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<PAGE> 1
EXHIBIT 4.8
1995 EMPLOYEE
STOCK OPTION PLAN OF
EAGLE RIVER INTERACTIVE, INC.
AMENDED AND RESTATED AS OF DECEMBER 18, 1996
1. Introduction and Purpose. The purpose of this Plan is to
advance the interests of the Corporation by encouraging and enabling the
acquisition of a proprietary interest in the Corporation by Eligible
Participants upon whose judgment and keen interest the Corporation and its
Subsidiaries are largely dependent for the successful conduct of their
operations. It is anticipated that the acquisition of such proprietary
interest in the Corporation will stimulate the efforts of such Eligible
Participants on behalf of the Corporation and its Subsidiaries, and strengthen
their desire to remain with the Corporation and its Subsidiaries. It is also
expected that the opportunity to acquire such a proprietary interest will
foster the efforts of the Corporation and its Subsidiaries to attract desirable
personnel.
2. Definitions. When used in this Plan, unless the context
otherwise requires:
a. "Administrator" means the Board of Directors or the
Committee.
b. "Board of Directors" or "Board" means the Board of
Directors of the Corporation as constituted at any time.
c. "Change in Control" means the earlier of (i) the date
on which any person or entity, or persons or entities acting
in concert, shall acquire the beneficial ownership, as defined
by the Board of Directors in its sole discretion, of Shares or
other securities having more than fifty percent (50%) of the
Voting Power then outstanding, or (ii) the date on which any
person or entity, or persons or entities acting in concert,
shall first disclose an intent to commence an offer to tender
for Shares or other securities having more than fifty percent
(50%) of the Voting Power.
d. "Committee" means the Stock Option Committee, as
described in Section 3 hereof, appointed by the Board to
administer this Plan.
e. "Common Stock" means the common stock of the
Corporation, par value $.001 per share, including both
treasury shares and authorized but unissued
<PAGE> 2
shares, or any security of the Corporation issued in
substitution, exchange or in lieu thereof.
f. "Corporation" means Eagle River Interactive, Inc.
g. "Eligible Participant" means any employee, officer
of, or consultant to, the Corporation or its Subsidiaries
designated to receive Options pursuant to this Plan, as
provided in Section 4.
h. "Fair Market Value" on a specified date means (i) the
closing price at which a Share is quoted on such date if
quoted on the Nasdaq Stock Market or listed on a national
securities exchange on which Shares are primarily traded; or
(ii) if the Shares are not so quoted or listed on such date,
then the average of the bid and asked closing prices at which
one Share is traded on the over-the-counter market, as
reported on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"); but if no Shares were
traded on such date, then on the last previous date on which a
Share was so traded, or (iii) if none of the above is
applicable, the value of a Share as established by the
Administrator for such date using any reasonable method of
valuation.
i. "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor thereto.
j. "Issue Date" means the date designated by the
Administrator with reference to which the exercisability of an
Eligible Participant's Options may be determined in accordance
with Section 5 hereof. Unless otherwise designated by the
Administrator, the Issue Date of an Option shall be the date
that the Option is awarded to the Eligible Participant by the
Administrator.
k. "Options" means the stock options granted pursuant to
this Plan.
l. "Plan" means this Employee Stock Option Plan, as
amended from time to time.
m. "Plan Year" means the calendar year.
n. "Securities Exchange Act of 1934" means the
Securities Exchange Act of 1934, as amended from time to time,
or any successor thereto.
o. "Share" means a share of Common Stock of the
Corporation, par value $.001.
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<PAGE> 3
p. "Subsidiary" means any "subsidiary corporation", as
such term is defined in Section 424(f) of the Internal Revenue
Code.
q. "Voting Power" means the voting power of any
securities of the Corporation then outstanding which are
generally entitled to vote for the election of directors of
the Corporation.
3. Administration of the Plan. The Plan shall be administered by
the Board of Directors or the Committee. The Committee shall be appointed by
the Board of Directors and shall consist of at least two members of the Board
of Directors. Insofar as it is necessary for compliance with the requirements
of Section 16 of the Securities Exchange Act of 1934, each member of the
Committee must be a "Non-Employee Director" within the meaning of the rules
promulgated pursuant to Section 16 of the Securities Exchange Act of 1934. The
Administrator shall have the authority to administer the Plan as provided
herein and, in exercising this authority, shall establish such rules and
procedures as the Administrator deems necessary or advisable to administer the
Plan.
Each member of the Committee shall hold office until the next regular
annual meeting of the Board of Directors following his or her designation and
until his or her successor is designated as a member of the Committee. Any
vacancy in the Committee may be filled by a resolution adopted by a majority of
the Board of Directors. Any member of the Committee may be removed at any
time, with or without cause, by resolution adopted by a majority of the Board
of Directors. A member of the Committee may resign from the Committee at any
time by giving written notice to the President, Secretary or Assistant
Secretary of the Corporation in person or by certified or registered mail,
return receipt requested, sent to P.O. Box 3600, 1060 West Beaver Creek Blvd.,
Avon, Colorado 81620, and, unless otherwise specified therein, such
resignation shall take effect upon receipt of such written notice. The
acceptance of such resignation by the President, Secretary or Assistant
Secretary of the Corporation shall not be necessary for such resignation to be
made effective.
4. Participants. Except as otherwise provided herein, the class
of individuals who are potential recipients of Options to be granted under this
Plan are the Eligible Participants who, in the sole discretion of the
Administrator, (i) contribute materially to the success of the Corporation or
any of its Subsidiaries, and (ii) are not subject to the reporting requirements
of Section 16 of the Securities Exchange Act of 1934 and the rules promulgated
thereunder on the date that the Option is awarded under this Plan. The
Eligible Participants to whom Options are granted under this Plan and the
number of Shares subject to each such Option shall be determined by the
Administrator in its sole discretion, in accordance with the terms and
conditions of this Plan.
5. Grant and Vesting of Options. The Administrator may, but
shall not be required to, grant in accordance with this Plan Options to
purchase an aggregate of up to 1,500,000 Shares (after giving effect to the
three-for-one stock split effected by the Corporation on March 21,
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<PAGE> 4
1996, hereafter referred to as the "Stock Split," and subject to adjustment for
stock splits, stock dividends and other share adjustments described in Section
14 hereof), which Shares may be either treasury Shares or authorized but
unissued Shares. In no event may an Eligible Participant be granted Options
under the Plan to the extent that the sum of (i) the number of Shares subject
to such Options, and (ii) the number of Shares subject to all other prior
Options granted to such Eligible Participant under the Plan during the
five-year period ending on the date such Options are granted would exceed the
Eligible Participant's Individual Limit. An Eligible Participant's "Individual
Limit" is 60,000 Shares (after giving effect to the Stock Split and subject to
adjustment for stock splits, stock dividends and other share adjustments as
described in Section 14 hereof).
Except as otherwise provided herein, Options granted pursuant to this
Plan shall become exercisable in four (4) equal annual installments on the
first four (4) anniversaries of the Issue Date of such Options; provided,
however, that the Administrator may in its discretion specify, upon the Option
grant and with respect to all or any portion of the Shares subject to such
Options, immediate exercisability or exercisability vesting over a shorter or
longer period in any particular case.
Options granted under this Plan may be either non-qualified stock
options or, with respect to Eligible Participants who are employees of the
Corporation or its Subsidiaries, incentive stock options within the meaning of
Section 422 of the Internal Revenue Code. An Option granted under this Plan
shall be deemed to be a non-qualified stock option unless the Administrator, in
its sole discretion, designates otherwise. Options which are designated or
deemed not to be incentive stock options shall not be treated as such for
purposes of this Plan and the Internal Revenue Code.
Nothing contained herein shall be construed to prohibit the grant of
Options at different times to the same Eligible Participant.
The terms of any Option granted to an Eligible Participant shall,
subject to the other terms and provisions of this Plan, be conclusively
determined by the Administrator, in its sole discretion. The terms and
provisions of the Option shall be set forth in a writing (such writing being
hereinafter referred to as the "Option Certificate") signed on behalf of the
Corporation by the President, any Vice President or the Treasurer of the
Corporation. The Option Certificate shall state whether the Option is an
incentive stock option or a non-qualified stock option. At the time an Option
is granted, the Administrator may, in its sole discretion, establish one or
more conditions to the exercise of such Option, provided that if such Option is
designated as an incentive stock option, then such condition or conditions
shall not be inconsistent with Section 422 of the Internal Revenue Code.
6. Price. Except as otherwise provided herein, the exercise
price per Share of the Shares subject to purchase pursuant to any Option shall
be fixed by the Administrator at the time an Option is granted and may be less
than, equal to, or greater than the Fair Market Value of the
4
<PAGE> 5
Common Stock on the date such Option is granted; provided, however, that if the
Option is an incentive stock option, in no event shall the price be less than
the Fair Market Value of a Share on the day on which the Option is granted (one
hundred ten percent (110%) of the Fair Market Value of a Share if the grantee
is a greater than ten percent (10%) stockholder within the meaning of Section
422(b)(6) of the Internal Revenue Code).
7. Duration of Options. The duration of any Option granted under
this Plan shall be for a period fixed by the Administrator, in its sole
discretion, but no more than ten (10) years from the date upon which the Option
is granted (five (5) years if the Option is an incentive stock option and the
grantee is a greater than ten percent (10%) stockholder within the meaning of
Section 422(b)(6) of the Internal Revenue Code).
8. Option Holder Not a Stockholder. An Option holder shall not
be deemed to be the holder of, or to have any rights of a stockholder with
respect to, any Shares subject to such Option, unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Corporation
shall have issued and delivered a certificate representing the Shares to the
Option holder, and (iii) said holder's name shall have been entered as a
stockholder of record on the books of the Corporation. Thereupon, said holder
shall have full voting, dividend and other ownership rights with respect to
such Shares.
9. Non-Transferability of Options. Options and all rights
thereunder shall be non-transferable and non-assignable by the holder thereof,
except to the extent that the representative of the estate or the heirs of a
deceased Option holder may be permitted to exercise such options and rights
thereunder and, during the holders's lifetime, shall be exercisable only by the
holder or his or her legal representative.
10. Exercise of Options. Except as otherwise provided herein, an
Option, after the grant thereof in accordance with the provisions of this Plan,
shall be exercisable by the holder of such Option at such rate and at such time
or times as may be fixed by the Administrator at the time the Option is
granted; provided, however, that no Option may be exercised in part or in full
prior to the approval of the Plan by a majority vote of the stockholders of the
Corporation, as provided in Section 18 hereof.
Notwithstanding any other provisions of this Plan, any Option granted
under the Plan which is an incentive stock option shall not be exercisable to
the extent that the Fair Market Value of the Shares (determined as of the date
of grant), with respect to which such Option (and any other incentive stock
option granted to the holder under this Plan or any other stock option plan
maintained by the Corporation or any Subsidiary) first becomes exercisable in
any calendar year, exceeds $100,000.
All or any part of the unexpired and unexercised Options granted to
any Eligible Participant may be exercised in full, after approval of the Plan
by the stockholders of the Corporation as provided in Section 18 herein,
whether or not such Options were otherwise then
5
<PAGE> 6
exercisable, upon a Change in Control or upon the occurrence of such special
circumstances or event which, in the sole discretion of the Administrator,
merits special consideration.
An Option shall be exercised by the delivery of a written notice duly
signed by the Option holder (or the representative of the estate or the heirs
of a deceased Option holder), together with the Option Certificate and (i)
cash, (ii) a certified check payable to the order of the Corporation, (iii)
subject to the approval of the Administrator, Shares duly endorsed over to the
Corporation (which Shares shall have been owned by the Option holder for at
least six months prior to such exercise and, for purposes of this paragraph, be
valued at their Fair Market Value as of the date preceding the day of such
exercise), (iv) written direction to an authorized broker to sell the Shares
purchased pursuant to such exercise immediately for the account of the Option
holder and pay an appropriate portion of the proceeds thereof to the
Corporation, or (v) any combination of such methods of payment which together
amount to the full exercise price of the Shares purchased pursuant to the
exercise of the Option plus the amount, if any, of any applicable taxes which
the Corporation is required to withhold. Such notice and payment shall be
delivered to the Treasurer or Secretary of the Corporation, or to any other
person designated by the Corporation in a written notice to the Option holder
(the "Authorized Representative").
No Option may be granted or exercised pursuant to the provisions
hereof when such Option, or the granting or exercise thereof, may result in the
violation of any law or governmental order or regulation.
Within a reasonable time after the exercise of an Option, the
Corporation shall cause to be delivered to the person entitled thereto a
certificate for the Shares purchased pursuant to the exercise of the Option.
If the Options shall have been exercised with respect to less than all of the
Shares subject to the Option, the Corporation shall (i) cause to be delivered
to the person entitled thereto a new Option Certificate in replacement of the
Option Certificate surrendered at the time of the exercise of the Option,
indicating the number of Shares with respect to which the Option remains
available of exercise, or (ii) endorse the original Option Certificate to give
effect to the partial exercise thereof.
An Option that is an incentive stock option granted pursuant hereto
shall be exercisable by an Eligible Participant only if such employee has been
in the employ of the Corporation or its Subsidiaries at all times during the
period beginning on the date such Option was granted and ending three (3)
months before the date of such exercise or one year before the date of exercise
in the case of death or disability, as set forth below in Section 13.
11. Disposition of Shares. If the Option is an incentive stock
option, no Shares acquired pursuant to the exercise of an Option granted herein
may be sold, exchange, gifted or otherwise disposed of within two (2) years
following the date such Option was granted or one (1) year following the date
such Option was exercised, whichever is later.
6
<PAGE> 7
12. Fractional Shares. The Corporation shall not be required to
issue fractional Shares pursuant to this Plan and, accordingly, Eligible
Participants may be required to purchase only a whole Share or Shares.
13. Termination of Services. All or any part of any Option, to
the extent unexercised, shall terminate immediately if the Option holder ceases
to be an officer or employee of the Corporation or its Subsidiaries or (if
applicable ) ceases to be a consultant to the Corporation or any of its
subsidiaries; except that the Option holder shall have until the end of three
(3) months (extendible in the discretion of the Administrator for non-qualified
Options to the end of six (6) months), following the date he or she ceases to
be an officer or employee, of, or consultant to, the Corporation or its
Subsidiaries to exercise any exercisable Option rights that he or she could
have exercised on the day on which such employment or service terminated;
provided, however, that such exercise must be accomplished prior to the
expiration of the term of such Option. Notwithstanding the foregoing, if an
individual ceases to be an officer or employee of, or a consultant to, the
Corporation or its Subsidiaries due to (i) retirement on or after attaining the
age of sixty-five (65) years (or such earlier date as such person shall be
permitted under the Corporation's retirement plan), (ii) disability (as such
term is defined in Section 422(c)(6) of the Internal Revenue Code, the
existence of which shall be conclusively determined by the Administrator in its
sole discretion), or (iii) death, then the Option holder, or the representative
of the estate or the heirs of a deceased Option holder, shall have the
privilege of exercising the Options which are then exercisable but are
unexercised at the time of such retirement, disability or death; but only to
the extent that such Options, which are then exercisable, are exercised (i)
within three (3) months following the Option holder's retirement (extendible in
the discretion of the Administrator for non-qualified Options, to six (6)
months), (ii) within one (1) year following the Option holder's disability, or
(iii) within one (1) year following the Option holder's death, as the case may
be; provided, further, that such exercise must be accomplished prior to the
expiration of the term of such Option. If an Option holder ceases to be an
officer or employee of, or a consultant to the Corporation or its Subsidiaries
because of the Option holder's violation of his or her duties to the
Corporation and its Subsidiaries, the existence of such violation to be
conclusively determined by the Administrator in its sole discretion, all
unexercised Options of such Option holder shall immediately terminate and such
Option holder shall have no right to exercise any unexercised Option he or she
might have exercised prior to the date he or she ceased to be an officer or
employee of, or a consultant to, the Corporation or its Subsidiaries.
When a Eligible Participant ceases to be an officer or employee of, or
a consultant to, the Corporation or its Subsidiaries, all Options held by such
Eligible Participant which are not then exercisable shall immediately lapse and
be canceled.
Nothing contained herein or in the Option Certificate shall be
construed to confer on any Eligible Participant any right to continue in the
employ or service of the Corporation or its Subsidiaries or derogate from any
right of the Corporation or its Subsidiaries to request, in its sole
discretion, the retirement, resignation or discharge of such Eligible
Participant, at any time, with or without cause.
7
<PAGE> 8
14. Adjustment of Shares. If, prior to the complete exercise of
any Option, there shall be declared and paid a stock dividend upon the Common
Stock of the Corporation or if the Common Stock of the Corporation shall be
split, converted, exchanged, reclassified or in any way substituted, the
Option, to the extent that it has not been exercised, shall entitle the holder
thereof, upon the future exercise of the Option in accordance with this Plan,
to such number and kind of securities, cash or other property, subject to the
terms of the Option, to which he or she would have been entitled had he or she
actually owned the Shares subject to the unexercised portion of the Option at
the time of the occurrence of such stock dividend, split, conversion, exchange,
reclassification or substitution; and the aggregate exercise price upon the
future exercise of the Option shall be the same as if the originally optioned
Shares were being purchased thereunder. If, prior to the complete exercise of
any Option, there shall be a spin-off transaction pursuant to the
reorganization of the Corporation, the Option, to the extent that it has not
been exercised, shall be adjusted by adjusting the exercise price of the Option
and adjusting the number of Shares subject thereto, in order to reflect the
decrease, if any, in the fair market value of the Shares resulting from the
spin-off transaction; in any such case, the Option as adjusted, shall entitle
the holder thereof, upon the future exercise of the Option in accordance with
this Plan, to the number of Shares which have a Fair Market Value, immediately
after the occurrence of the spin-off transaction, equal to the Fair Market
Value of the Shares subject to the Option on the day before the occurrence of
such spin-off transaction, and the aggregate exercise price upon the future
exercise of the Option shall be the same as the aggregate exercise price of the
Shares subject to the Option on the day before the occurrence of such spin-off
transaction. Any fractional shares or other securities payable upon the
exercise of the Option, as a result of such adjustment due to the occurrence of
such stock dividend, stock split, conversion, exchange, reclassification,
substitution or spin-off transaction, shall be payable in cash based upon the
Fair Market Value of such Shares or securities at the time of such exercise.
If any such event should occur, the number of Shares with respect to which
Options remain to be issued or with respect to which Options may be reissued,
and the Individual Limit, shall be adjusted in a similar manner.
Except as otherwise provided in the third paragraph of Section 10
hereof (relating to changes in control among other matters), upon the
dissolution or liquidation of the Corporation, or upon a reorganization, merger
or consolidation in which the Corporation is not the surviving corporation or
entity, or in which the Corporation becomes a subsidiary of another
corporation, or upon the sale of all or substantially all of the property of
the Corporation, both the Plan and the Options issued thereunder shall
terminate, unless a provision is made in connection with such transaction for
(i) the assumption of Options theretofore granted or (ii) the substitution for
such Option of options of the successor employer corporation or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and the per share exercise prices.
Upon a business combination by the Corporation or any of its
Subsidiaries with any corporation or other entity through the adoption of a
plan of merger or consolidation or a share exchange or through the purchase of
all or substantially all of the capital stock or assets of such other
corporation or entity, the Board or the Administrator may, in its sole
discretion, grant Options pursuant hereto to all or any persons who, on the
effective date of such transaction, hold
8
<PAGE> 9
outstanding options to purchase securities of such other corporation or entity
and who, on and after the effective date of such transaction, will become
employees or directors of, or consultants to, the Corporation or its
Subsidiaries. The number of Shares subject to such substitute Options shall be
determined in accordance with the terms of the transaction by which the
business combination is effected. Notwithstanding the other provisions of this
Plan, the other terms of such substitute Options shall be substantially the
same as or economically equivalent to the terms of the options for which such
Options are substituted, all as determined by the Board or by the Committee, as
the case may be. Upon the grant of substitute Options pursuant hereto, the
options to purchase securities of such other corporation or entity for which
such Options are substituted shall be canceled immediately.
15. Issuance of Shares and Compliance with Securities Laws.
Before issuing and delivering any Shares to an Option holder, the Corporation
may: (i) require the holder to give satisfactory assurances that the Shares
are being purchased for investment and not with a view to resale or
distribution, and will not be transferred in violation of applicable federal
and state securities laws, rules and regulations, including but not limited to
the Securities and Exchange Commission Rule 144, (ii) restrict the
transferability of such Shares and require a legend to be endorsed on the
certificates representing the Shares, as appropriate to reflect resale
restrictions, if any, imposed by the Administrator pursuant to the Option when
granted, or as appropriate to comply with any applicable state or federal
securities laws, rules or regulations, and (iii) condition the exercise of an
Option or the issuance and delivery of Shares upon the listing, quotation,
registration or qualification of the Shares covered by such Option upon a
securities exchange, quotation system or under applicable securities laws.
Any provision hereof which is inconsistent with Rule 16b-3 under the
Securities Exchange Act of 1934, as now or hereafter in effect, shall be
inoperative and shall not affect the validity of the Plan.
16. Income Tax Withholding. If the Corporation or its
Subsidiaries shall be required to withhold any amounts by reason of federal,
state or local tax laws, rules or regulations, in respect of the issuance of
Shares pursuant to the exercise of an Option, the Corporation or such
Subsidiary shall be entitled to deduct and withhold such amounts from any cash
payments to be made to the Option holder. In any event, the holder shall
promptly make available to the Corporation or such Subsidiary, when requested
by the Corporation or such Subsidiary, sufficient funds to meet the
requirements of such withholding, and the Corporation or such Subsidiary shall
be entitled to take and authorize such terms as it may deem advisable in order
to have such funds made available to the Corporation or such Subsidiary from
any funds or property due or to become due to the holder.
17. Administration and Amendment of the Plan. Except as
hereinafter provided, the Board of Directors and the Committee may, (a) at any
time, withdraw or, from time to time, amend the Plan as it relates to the terms
and conditions of any Options not theretofore granted, and (b) from time to
time, amend the Plan is it relates to the terms and conditions of any
9
<PAGE> 10
outstanding Option to the extent such Option is not then exercisable. The
Board of Directors and the Committee, with the consent of each adversely
affected Option holder may, at any time, withdraw or cancel any outstanding
Option. Notwithstanding the foregoing, any amendment which would increase the
number of Shares issuable under Options or change the class of employees to
whom Options may be granted, must be adopted by the Board of Directors and
approved by the stockholders of the Corporation within one (1) year following
such amendment.
Determinations of the Administrator as to any question which may arise
with respect to the interpretation of the provisions of the Plan and Options
shall be final. The Administrator may authorize and establish such rules,
regulations and revisions thereof, not inconsistent with the provisions of the
Plan, as it may deem advisable to make the Plan and Options effective or
provide for their administration and may take such other action with regard to
the Plan and Options as it shall deem desirable to effectuate their purpose.
18. Effective Date of the Plan. This Plan was originally adopted
and approved by the Board of Directors of the Corporation, effective as of the
date of such adoption and approval, conditioned upon its approval by the
stockholders of the Corporation within twelve months following its adoption by
the Board of Directors. Such approval by the Board of Directors and the
stockholders occurred on December 12, 1995. This Plan was subsequently amended
and restated by the Board of Directors on December 18, 1996, effective as of
such date, except with respect to the amendment to Section 5 increasing the
number of Shares available hereunder, which is conditioned upon the approval by
the stockholders of the Corporation within 12 months after such date.
The Plan shall remain in full force and effect until the close of
business on December 12, 2005, at which time the right to grant Options under
the Plan shall automatically terminate, unless the stockholders of the
Corporation approve an extension or renewal of the Plan. Any Options granted
before the termination of the right to grant Options under the Plan shall
continue to be governed thereafter by the terms of the Plan.
19. Severability. If any provision herein shall be held unlawful
or otherwise invalid or unenforceable in whole or in part, such unlawfulness,
invalidity or unenforceability shall not affect any other provision of the Plan
or part thereof, each of which shall remain in full force and effect. If the
making of any payment required under the Plan shall be held unlawful or
otherwise invalid or unenforceable, such unlawfulness, invalidity or
unenforceability shall not prevent any other payment from being made under the
Plan, and if the making of any payment in full, as required under the Plan,
would be unlawful or otherwise invalid or unenforceable, then such
unlawfulness, invalidity or unenforceability shall not prevent such payment
from being made in part, to the extent that it would not be unlawful, invalid,
or unenforceable, and the maximum payment that would not be unlawful, invalid
or unenforceable shall be made under the Plan.
10
<PAGE> 11
20. Governing Law. The Plan and all determinations made and
actions taken hereunder, to the extent not otherwise governed by the Code or
laws of the United States of America, shall be governed by the laws of the
State of Delaware and construed accordingly.
11
<PAGE> 1
EXHIBIT 4.9
================================================================================
RIGHTS AGREEMENT
between
EAGLE RIVER INTERACTIVE, INC.
and
HARRIS TRUST AND SAVINGS BANK,
Rights Agent
Dated as of March 15, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions.. . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . 8
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . 8
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . 11
Section 5. Countersignature and Registration . . . . . . . . . . . . . 12
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates . . . . . . . . . . . . . . . . . 13
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . . . . . . . . 15
Section 8. Cancellation and Destruction of
Right Certificates. . . . . . . . . . . . . . . . . . . . . 19
Section 9. Availability of Preferred Shares . . . . . . . . . . . . . 20
Section 10. Preferred Shares Record Date . . . . . . . . . . . . . . . . 21
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. . . . . . . . . . . . . . . . . 21
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares . . . . . . . . . . . . . . . . . . . . 34
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. . . . . . . . . . . . . . . . . 34
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . 38
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 16 Agreement of Right Holders . . . . . . . . . . . . . . . . . 41
Section 17. Right Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . 42
Section 19. Merger or Consolidation or Change of
Name of Rights Agent . . . . . . . . . . . . . . . . . . . . 43
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . 44
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . 48
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . 50
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . 54
Section 26. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . 56
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 29. Benefits of This Agreement . . . . . . . . . . . . . . . . . 57
section 30. Severability . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 57
Section 32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 34. Determinations and Actions by the
Board of Directors . . . . . . . . . . . . . . . . . . . . . 58
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
Exhibit A - Form of Certificate of Designation, Preferences and
Rights
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights Plan
-iii-
<PAGE> 5
RIGHTS AGREEMENT
Rights Agreement, dated as of March 15, 1996 (the "Agreement"),
between EAGLE RIVER INTERACTIVE, INC., a Delaware corporation (the "Company"),
and HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation (the "Rights
Agent").
WITNESSETH:
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding as of the
close of business on January 26, 1996 (the "Record Date"), conditioned upon the
effectiveness of an S-1 registration statement in connection with the initial
public offering of the Common Shares of the Company, with each Right
representing the right to purchase one one-hundredth of a Preferred Share (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 Common Share that shall become outstanding between the Record
Date and the Expiration Date (as such term is 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:
-1-
<PAGE> 6
"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 Common Shares
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 any Subsidiary of the Company, any Person
holding Common Shares for or pursuant to the terms of any such plan, or any
Grandfathered Person. Notwithstanding the foregoing, no Person (including a
Grandfathered Person) shall become an "Acquiring Person" as the result of (a)
an acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Shares of the Company then
outstanding or (b) the acquisition by such Person of newly issued Common Shares
directly from the Company (it being understood that a purchase from an
underwriter or other intermediary is not directly from the Company); provided,
however, that if a Person shall become the Beneficial Owner of 15% or more of
the Common Shares of the Company then outstanding by reason of share purchases
by the Company or the receipt of newly issued Common Shares directly from the
Company and shall, after such share purchases or direct issuance by the
Company, become the Beneficial Owner of any additional Common Shares of the
Company, then such Person shall be deemed to be an "Acquiring Person"; provided
further, however, that any transferee from such Person who becomes the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding shall nevertheless be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who
-2-
<PAGE> 7
would otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently, and such Person
divests as promptly as practicable (and in any event within ten business days
after notification by the Company) a sufficient number of Common Shares so that
such Person would no longer be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph, then such Person shall not be deemed to
be an "Acquiring Person" for any purposes of this Agreement.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to have "beneficial ownership" of or "beneficially own" any
securities:
(a) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
(b) 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 written or oral (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
these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such
-3-
<PAGE> 8
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; (B) the sole or shared right to
vote or dispose (including any such right pursuant to any agreement,
arrangement or understanding, whether written or oral); provided,
however, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act
and (2) is not also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report); or (C) "beneficial
ownership" (as determined pursuant to Rule 13d-3 (or any successor
rule) of the General Rules and Regulations under the Exchange Act); or
(c) 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 written or oral
(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 clause (B) of subparagraph
(b) of this definition) or disposing of any securities of the Company.
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
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<PAGE> 9
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially hereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in Illinois are authorized or
obligated by law or executive order to close.
"Close of business" on any given date shall mean 5:00 P.M.,
Chicago time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Chicago time, on the next succeeding
Business Day.
"Common Shares" when used with reference to the Company shall
mean the shares of common stock, par value $.001 per share (as such shares may
be constituted or designated, or as such par value may be changed, from time to
time during the term of this Agreement), of the Company. "Common Shares" when
used with reference to any Person other than the Company shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person
or the equity securities or other equity interest having power to control or
direct the management of such other Person.
"Distribution Date" shall have the meaning set forth in
Section 3 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Ratio" shall have the meaning set forth in Section
24 hereof.
"Expiration Date" shall have the meaning set forth in Section
7 hereof.
"Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
"Grandfathered Person" shall mean:
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<PAGE> 10
(i) Frontenac VI Limited Partnership together as a group
with its affiliates, Terence M. Graunke and any family trusts established for
the benefit of members of the family of Terence M. Graunke (whether now
existing or hereafter created);
(ii) Any child, grandchild or great-grandchild, whether by
birth or adoption, whether now living or hereafter born, of Terence M. Graunke;
(iii) Any estate of, or the executor or administrator of
any estate of, or any guardian or custodian for Terence M. Graunke and any
Person described in subparagraph (ii) of this definition (so long as such
executor, administrator, guardian or custodian is acting in his or her capacity
as such);
(iv) Any legal advisor of Terence M. Graunke and any
Person described in subparagraph (ii) and (iii) of this definition who is given
a revocable proxy by such Person with respect to voting securities of the
Company of which such Person is the Beneficial Owner or who is or becomes an
attorney- in-fact or agent of such person;
(v) Any corporation, limited liability company, trust
(including any voting trust), general partnership, limited partnership,
organization or other entity (whether now existing or hereafter formed) of
which substantially all of the outstanding beneficial, voting or equity
interests are beneficially owned, directly or indirectly, by Terence M. Graunke
and one or more of the Persons described in subparagraphs (ii), (iii), (iv) and
(v) of this definition; and
(vi) Any other Person (A) who or which is or becomes an
Affiliate or Associate of Terence M. Graunke and any Person described in
subparagraph (ii), (iii), (iv), or (v), of this definition, or (B) of which
Terence M. Graunke or any Person described in subparagraph (ii), (iii), (iv),
or (v) of this definition is or becomes an Affiliate or Associate; provided, in
either case (A) or
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<PAGE> 11
case (B), such other Person is not the Beneficial Owner of 5% or more of the
Common Shares then outstanding (for purposes of determining the number of
Common Shares of which such other Person is the Beneficial Owner under this
subparagraph (vi), such other Person shall not be deemed to beneficially own
Common Shares solely by reason of an Affiliate or Associate relationship of
the kind described in (A) or (B) above in this subparagraph (vi)).
"Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
"Preferred Shares" shall mean shares of Series B Participating
Preferred Stock, par value $.001 per share, of the Company having the rights
and preferences set forth in the Form of Certificate of Designations,
Preferences and Rights attached to this Agreement as Exhibit A.
"Principal Party" shall have the meaning set forth in Section
13 hereof.
"Purchase Price" shall have the meaning set forth in Section 4
hereof.
"Redemption Date" shall have the meaning set forth in Section
7 hereof.
"Right Certificate" shall have the meaning set forth in
Section 3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"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) promulgated under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.
"Subsidiary" shall mean, with reference to any Person, 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.
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<PAGE> 12
"Trading Day" shall have the meaning set forth in
Section 11 (d)(i) hereof.
"Triggering Event" shall mean any event described in
Section 11 (a)(ii) or Section 13(a) hereof.
Any determination or interpretation required in connection with any of
the definitions contained in this Section 1 shall be made by the Board of
Directors of the Company in their good faith judgment, which determination
shall be final and binding on the Rights Agent.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares) 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 Right Certificates.
(a) Until the earlier of (i) the close of business on the tenth
day after the Shares Acquisition Date or (ii) the close of business on the
fifteenth business day (or such later date as may be determined by action of
the Board of Directors prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement by any Person (other than 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 Common Shares
for or pursuant to the terms of any such plan, or any Grandfathered Person) of,
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 Common Shares
for or pursuant to the terms of any such plan, or any Grandfathered Person) to
commence, a tender or exchange offer the consummation of which would
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<PAGE> 13
result in any Person becoming the Beneficial Owner of Common Shares aggregating
15% or more of the then outstanding Common Shares (including any such date
which is after the date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of Section
3(b) hereof) by the certificates for Common Shares registered in the names of
the holders thereof (which certificates shall also be deemed to be certificates
for Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company). As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage-prepaid mail,
to each record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right for each Common Share so held. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights Plan, in substantially the form
of Exhibit C hereto (the "Summary of Rights Plan"), by first-class, postage-
prepaid mail, to each record holder of Common Shares as of the close of
business on the Record Date (other than any Acquiring Person or any Associate
or Affiliate of any Acquiring Person), at the address of such holder shown on
the records of the Company. With respect to certificates for Common Shares
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 the Summary of Rights Plan, and registered holders
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<PAGE> 14
of Common Shares shall also be the registered holders of the associated Rights.
Until the Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the transfer of any certificate for Common Shares outstanding
on the Record Date, with or without a copy of the Summary of Rights Plan, shall
also constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(c) Rights shall be issued in respect of all Common Shares
which are issued (whether originally issued or delivered from the Company's
treasury) after the Record Date but prior to the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date. Certificates
representing such Common Shares shall also be deemed to be certificates for
Rights. Certificates representing both Common Shares and Rights in accordance
with this Section 3 which are executed and delivered (whether the Common Shares
represented thereby are originally issued, delivered from the Company's
treasury or are presented for transfer) by the Company (including, without
limitation, certificates representing reacquired Common Shares referred to in
the last sentence of this paragraph (c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Final Expiration
Date shall have impressed on, printed on, written on or otherwise affixed to
them a legend substantially equivalent to the following:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement between Eagle
River Interactive, Inc. (the "Company") and Harris Trust and Savings
Bank dated as of March 15, 1996 (the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer
be evidenced by this certificate. The Company will mail to the holder
of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a
written request therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any Person who is, was
or
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<PAGE> 15
becomes an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether currently
held by or on behalf of such Person or by any subsequent holder, shall
become null and void.
Until the Distribution Date, the Rights associated with the Common Shares shall
be evidenced by the certificates representing the associated Common Shares
alone, and the transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as 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 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 Right Certificates shall
entitle the holders thereof to purchase such number of one one-hundredths of a
Preferred Share as shall be set forth therein at the price per one one-
hundredth of a Preferred Share set forth therein (the "Purchase Price"), but
the amount and type of securities purchasable upon the exercise of each Right
and the Purchase Price thereof shall be subject to adjustment as provided
herein.
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<PAGE> 16
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof 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 such Associate or Affiliate) who becomes
a transferee after the Acquiring Person becomes an Acquiring Person, or (iii) a
transferee of an Acquiring Person (or such Associate or Affiliate) who becomes
a transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding, whether written or oral,
regarding the transferred Rights or (B) a transfer which is part of a plan,
arrangement or understanding, whether written or oral, which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Right Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall contain (to the extent feasible and otherwise reasonably
identifiable as such) the following legend:
The Rights represented by this Right 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). Accordingly, this Right Certificate
and the Rights represented hereby may become void in the circumstances
specified in Section 7(e) of such Agreement.
The provisions of Section 7(e) shall apply whether or not any Right Certificate
actually contains the foregoing legend.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, any Vice
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<PAGE> 17
Chairman, its President, any of its Vice Presidents, or its Treasurer, 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 Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right 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
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
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 Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right Certificates,
the number of Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), 14 and 24
hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the
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<PAGE> 18
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of Preferred Shares (or, following
a Triggering Event, Common Shares, other securities or property, as the case
may be) as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the 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
Right Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Right Certificate accompanied by such documents as the Rights Agent may deem
appropriate and the Company shall have been provided with 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 and 7 hereof,
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case
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<PAGE> 19
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to them, and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered holder in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder
of any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price with respect to each surrendered Right for
the total number of Preferred Shares (or other securities or property, as the
case may be) as to which the Rights are exercised, at or prior to the earliest
of (i) the close of business on January 26, 2006 (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in Section 23 hereof
(the "Redemption Date") (the earlier of (i) and (ii) being herein referred to
as the "Expiration Date") and (iii) the time at which such Rights are exchanged
as provided in Section 24 hereof. Notwithstanding anything herein to the
contrary, the Rights will become effective only upon the effective date of the
S-1 registration statement filed in connection with the initial public offering
of the Company's Common Shares. The Rights shall lapse and be of no further
effect if there is not on file with the Securities and
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<PAGE> 20
Exchange Commission prior to June 30, 1996 an effective the S-1 registration
statement relating to the initial public offering of the Company's Common
Shares.
(b) The Purchase Price for each one one-hundredth of a Preferred
Share pursuant to the exercise of a Right shall initially be five times the
initial offering price of one share of Common Stock of the Company pursuant to
an initial public offering of the Common Stock of the Company pursuant to an
S-1 registration statement filed on or before June 30, 1996, and 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 Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the
reverse side of the Right Certificate duly executed, accompanied by such
documents as the Rights Agent may deem appropriate, payment of the Purchase
Price for the shares (or other securities or property, as the case may be) to
be purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section 9
hereof by certified check, cashier's check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i)(A) requisition
from any transfer agent of the Preferred Shares (or make available, if the
Rights Agent is the transfer agent of the Preferred Shares) certificates for
the number of Preferred Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the Preferred Shares issuable
upon exercise of the Rights with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one one-
hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts
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<PAGE> 21
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct 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 Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate. In the event that
the Company is obligated to issue other securities (including Common Shares) of
the Company, pay cash and/or distribute other property pursuant to Section
11(a) hereof, the Company will make all arrangements necessary so that such
other securities, cash and/or property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to the registered holder of such Right
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 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 an
Acquiring Person, or (iii) a transferee of an Acquiring Person (or such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming an Acquiring
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<PAGE> 22
Person and receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring Person has
any continuing agreement, arrangement or understanding, whether written or
oral, regarding the transferred Rights or (B) a transfer which the Board of
Directors otherwise concludes in good faith is part of a plan, arrangement or
understanding (whether written or oral) which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without
any further action, and any holder of such Rights shall thereupon have no
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise, from and after the occurrence of a Triggering
Event. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) hereof are complied with, but shall have no
liability to any holder of Rights for the inability to make any determinations
with respect to an Acquiring Person or its 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 the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise shall have been completed and signed
by the registered holder thereof and the Company shall have been provided with
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.
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<PAGE> 23
(g) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares and/or
other securities) or any Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) held in its treasury,
the number of Preferred Shares (and, following the occurrence of a Triggering
Event, Common Shares and/or other securities) that will be sufficient to permit
the exercise in full of all outstanding Rights.
(h) Notwithstanding any statement to the contrary contained in
this Agreement or in any Right Certificate, if the Distribution Date or the
Shares Acquisition Date shall occur prior to the Record Date, the provisions of
this Agreement, including (without limitation) Sections 3 and 11(a)(ii), shall
be applicable to the Rights upon their issuance to the same extent such
provisions would have been applicable if the Record Date were the date of this
Agreement.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at the
written request
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<PAGE> 24
of the Company, cause such canceled Right Certificates to be destroyed, and in
such case cause a certificate of destruction to be delivered to the Company.
Section 9. Availability of Preferred Shares. The Company covenants and
agrees that it will take all such action as may be necessary to ensure that all
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Preferred Shares (and, following
the occurrence of a Triggering Event, Common Shares and/or other securities),
subject to payment of the Purchase Price, be duly and validly authorized and
issued and fully paid and nonassessable shares.
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 Right Certificates or of
any Preferred Shares (or Common Shares and/or other securities, as the case may
be) 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 Right Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for the Preferred Shares (or
Common Shares and/or other securities, as the case may be) in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depositary receipts for Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to
the Company's reasonable satisfaction that no such tax is due.
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<PAGE> 25
Section 10. Preferred Shares Record Date. Each person in whose name
any certificate for Preferred Shares (or Common Shares and/or other securities,
as the case may be) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares or
securities represented thereby on, and such certificate shall be dated, the
date upon which the Right 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 Shares (or Common Shares and/or
other securities, as the case may be) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares or
securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of Preferred Shares
(or Common Shares and/or other securities, as the case may be) 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 of Preferred Shares 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 Shares
payable in Preferred Shares, (B) subdivide
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the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, 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 Right
exercised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, he 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 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
any Person becomes an Acquiring Person, each holder of a Right, except
as provided below and in Section 7(e) hereof, shall thereafter have a
right to receive, upon exercise thereof at a price equal to
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the then current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right is then exercisable,
in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company as shall
equal the result obtained by (x) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and dividing that product by (y) 50%
of the then current per share market price of the Company's Common
Shares (determined pursuant to Section 1l(d) hereof) on the date of
the occurrence of such event. In the event that any Person shall
become an Acquiring Person and the Rights shall then be outstanding,
the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.
(iii) In lieu of issuing Common Shares of the Company in
accordance with Section 11(a)(ii) hereof, the Company may, in the
sole discretion of the Board of Directors, elect to (and, in the event
that the Board of Directors has not exercised the exchange right
contained in Section 24 hereof and there are not sufficient issued but
not outstanding and authorized but unissued Common Shares to permit
the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall) take all such action as may be
necessary to authorize, issue or pay, upon the exercise of the Rights,
cash (including by way of a reduction of the Purchase Price),
property, other securities or any combination thereof having an
aggregate value equal to the value of the Common Shares of the Company
which otherwise would have been issuable pursuant to Section 11(a)(ii),
which aggregate value shall be determined by a majority of the Board
of Directors. For
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purposes of the preceding sentence, the value of the Common Shares
shall be determined pursuant to Section 11(d) hereof and the value
of any equity securities which a majority of the Board of Directors
determines to be a "common stock equivalent" (including the Preferred
Shares, in such ratio as the Board of Directors shall determine) shall
be deemed to have the same value as the Common Shares. Any such
election by the Board of Directors must be made and publicly announced
within 60 days following the date on which the event described in
Section 11(a)(ii) shall have occurred. Following the occurrence of the
event described in Section 11(a)(ii), a majority of the Board of
Directors then in office may suspend the exercisability of the Rights
for a period of up to 60 days following the date on which the event
described in Section 11(a)(ii) shall have occurred to the extent
that such directors have not determined whether to exercise the
company's right of election under this Section 11(a)(iii). 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.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares (as defined in Section 11(d)) on such
record date, the
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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 Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares 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 Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares 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); 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. 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 the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent.
Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a
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consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
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 of the Preferred Shares on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share, and the denominator of which shall be such
current per share market price of the Preferred Shares; 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 to be issued upon exercise of one Right. 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, other
than under Section 11(a)(iii) hereof, 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 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for the purpose of any computation under Section
11(a)(iii) hereof, the "current per share market price" of a
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<PAGE> 31
Security on any date shall be deemed to be the average of the daily
closing prices per share of such Security for thirty (30) consecutive
Trading Days immediately following 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 (other than the Rights), or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 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 (ex-dividend) of such Security. The
closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to
trading on the New York Stock Exchange, 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 National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if
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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. If on any such date no market
maker is making a market in the Security, the fair value of such
Security on such date (as determined in good faith by the Board of
Directors of the Company) 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 Shares shall be
determined in accordance with the method set forth in Section
11(d)(i). If the Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the
Common Shares of the Company as determined pursuant to Section
11(d)(i) (appropriately adjusted to reflect any stock split or similar
transaction (other than a stock dividend) occurring after the date
hereof), multiplied by one hundred. If neither the Common Shares of
the Company nor the Preferred Shares are publicly held or so listed or
traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed
with the Rights Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least
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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-millionth of a Preferred Share or one ten-thousandth 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 date of the expiration of the right
to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other
than Preferred Shares, thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Shares contained in this Section 11, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
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thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-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 Right Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Right 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 Right Certificates on such record date Right Certificates
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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 Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
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
Right 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 one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one one-
hundredths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares 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 Preferred Shares 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 Right exercised after such record date
of the Preferred Shares and other capital stock or securities of the Company,
if any,
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<PAGE> 36
issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
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 consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise, other than by payment of dividends in Common Shares) into a greater
or lesser number of Common Shares, then in any such case (i) the number of one
one-hundredths of a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event, and the denominator of
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which is the number of Common Shares outstanding immediately after such event,
and (ii) each Common Share outstanding immediately after such event shall have
issued with respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(n) shall be made successively
whenever such a subdivision, combination or consolidation is effected.
(o) So long as the shares issuable upon the exercise of the Rights
may be listed on any national securities exchange, the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(p) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of a Triggering Event, 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 date of the expiration of the Rights. The Company will also take such
action as may be appropriate under the blue sky laws of the various states. The
Company may temporarily suspend, for a period of time not to exceed 90 days,
the exercisability of the Rights in order to prepare and file such registration
statement or in order to comply with such blue sky laws. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
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Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 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 Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and may assume that no
adjustment has been made unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) If after the Shares Acquisition Date, directly or indirectly,
(x) the Company shall consolidate with, or merge with and into, any other
Person, (y) any Person shall consolidate with the Company, or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Shares shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) 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), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
other than the Company or one or more of its wholly-owned Subsidiaries, then,
and in each such case, proper provision shall be made so that (i) each holder
of a Right (except as otherwise provided herein) shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the then
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current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of validly
authorized and issued, fully paid, nonassessable and freely tradeable Common
Shares of the Principal Party (as hereinafter defined), free and clear of all
liens, rights of call or first refusal, encumbrances or other adverse claims,
as shall equal the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share for which a Right
is then exercisable (or, if such Right is not then exercisable for a number of
one one-hundredths of a Preferred Share, the number of such fractional shares
for which it was exercisable immediately prior to an event described under
Section 11(a)(ii) hereof) and dividing that product by (B) 50% of the then
current per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, or otherwise, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such Principal Party and (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
its Common Shares thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
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(i) In the case of any transaction described in (x) or
(y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which Common Shares of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the surviving entity of such merger or
consolidation (including the Company if applicable); and
(ii) in the case of any transaction described in (z) of
the first sentence in Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case described in clauses (b)(i) and
(b)(ii): (1) if the Common Shares of such Person are not at such time and have
not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which is and has been so
registered, "Principal Party" shall refer to such other Person; (2) in case
such Person is a Subsidiary, directly or indirectly, or more than one Person,
the Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest aggregate market value; and (3) in case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties
in each such chain shall bear the obligations set forth in this Section 13 in
the same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
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(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have sufficient
Common Shares authorized to permit the full exercise of the Rights and 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, as
soon as practicable after the date of any consolidation, merger or sale of
assets mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(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; and
(iii) take such actions as may be necessary or appropriate
under the blue sky laws of the various states.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that one of the
transactions described in Section 13(a) shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof, the Rights
which have not theretofore been exercised shall thereafter become exercisable
in the manner described in Section 13(a).
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Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there may be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For 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 New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, 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 Board of Directors of the Company. 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 shall be used.
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(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one one-
hundredth of a Preferred Share 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, 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 Shares represented by such depositary receipts. In lieu
of fractional Preferred Shares that are not integral multiples of one one-
hundredth of a Preferred Share, the Company may pay to the registered holders
of Right 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
one-hundredth of a Preferred Share. For the purposes of this Section 14(b), the
current market value of one one-hundredth of a Preferred Share shall be one
one-hundredth of the closing price of a Preferred Share (as determined pursuant
to the second sentence of Section(11)(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates which evidence fractional Common Shares.
In lieu of fractional Common Shares, the Company may pay to the registered
holders of Right 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 Common
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Share. For purposes of this Section 14(c), the current market value of one
Common Share shall be the closing price of one Common Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
(d) 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).
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 Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this 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 under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement.
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Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with appropriate forms and
certificates fully executed;
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; 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 any 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,
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or any statute, rule, regulation or executive order promulgated or enacted by
any governmental authority prohibiting or otherwise restraining performance of
such obligation.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, 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 Right Certificate shall have been exercised in accordance with the
provisions hereof.
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 (including any taxes other
than income taxes) 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 negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim
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of liability arising, directly or indirectly, therefrom. The reasonable costs
and expenses incurred in enforcing this indemnity shall be paid by the Company.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
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 Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case
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at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in
the name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in
its changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this 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, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel satisfactory to
it (who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent,
and the Rights Agent shall incur no liability or responsibility to the Company
or to any holder of any Right Certificate in respect of any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering or omitting
action hereunder, such fact or matter (unless other
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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 Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken, 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
only for, and shall indemnify and hold harmless the Company from and against,
any and all losses, liabilities, costs, damages and expenses (including
attorneys' fees) arising out of or in connection with, the Rights Agent's
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e) 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
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ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate furnished pursuant to Section 12
describing a 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 Preferred Shares or Common Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preferred Shares or
Common Shares will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered 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 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
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or after the date specified in such application (which date shall not be less
than five Business Days after the date such application is given, 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.
(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 its Subsidiaries or become pecuniarily
interested in any transaction in which the Company or its Subsidiaries may be
interested, or contract with or lend money to the Company or its Subsidiaries
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 its Subsidiaries 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) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange, the
certificate attached to the form of assignment or form of election to purchase,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
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further action with respect to such requested exercise, transfer, split up,
combination or exchange without first consulting with the Company.
(k) The Rights Agent shall not be under any duty or responsibility
to ensure compliance with any applicable federal or state securities laws in
connection with the issuance, transfer or exchange of Right Certificates.
(l) The Rights Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more holders of Right Certificates shall
furnish the Rights Agent with security and indemnity to its satisfaction for
any costs and expenses which may be incurred.
(m) The Rights Agent shall not be liable for failure to perform any
duties except as specifically set forth herein, and no implied covenants or
obligations shall be read into this Agreement against the Rights Agent whose
duties and obligations are ministerial and shall be determined solely by the
express provisions hereof.
Section 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 30 days' notice in writing mailed to the Company and to each transfer
agent of the Common Shares or Preferred Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right 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
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successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by
the Company), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation or bank organized and doing business under the
laws of the United States or of any other state of the United States, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 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 Shares or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
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Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option, at
any time prior to such time as any Person becomes an Acquiring Person, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.001 per Right, appropriately adjusted to reflect any stock split or similar
transaction (other than a stock dividend) occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"). 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 the Board of Directors in
its sole discretion may establish. If redemption of the Rights is to be
effective as of a future date, the Rights shall continue to be exercisable,
subject to Section 7 hereof, until the effective date of the redemption,
provided that nothing contained herein shall preclude the Board of Directors
from subsequently causing the Rights to be redeemed at a date earlier than the
previously scheduled effective date of the redemption. The Company may, at its
option, pay the Redemption Price in cash, Common Shares (based on the current
per share market price of the Common Shares at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors.
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(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at the effective time of such
redemption established by the Board of Directors of the Company 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 the
Board of Directors ordering the redemption of the Rights or, if later, the
effectiveness of the redemption of the Rights pursuant to paragraph (a) of this
Section 23, the Company 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 Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made. The Company
may, at its option, discharge all of its obligations with respect to the Rights
by (i) issuing a press release announcing the manner of redemption of the
Rights, (ii) depositing with a bank or trust company having a capital and
surplus of at least $100,000,000, funds necessary for such redemption, in
trust, to be applied to the redemption of the Rights so called for redemption
and (iii) arranging for the mailing of the Redemption Price to the registered
holders of the Rights; then, and upon such action, all outstanding Rights
Certificates shall be null and void without further action by the Company.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for
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value any Rights at any time in any manner other than that specifically set
forth in this Section 23, in Section 24 hereof, or in connection with the
purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may,
at its option, at any time after a Triggering Event, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof) for
Common Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split or similar transaction (other than a stock
dividend) occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan, or any Grandfathered Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the 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
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promptly shall mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Shares (or equivalent preferred shares, as
such term is defined in Section 11(b) hereof) for Common Shares exchangeable
for Rights, at the initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares pursuant to
the terms thereof, so that the fraction of a Preferred Share delivered in lieu
of each Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares
or Preferred Shares issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange of the
Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares.
In lieu of such fractional
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Common Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Common Share. For the purposes of this paragraph (e), the
current market value of a whole Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose at any time after the
Distribution Date (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the
holders of its Preferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Preferred Shares rights or warrants to
subscribe for or to purchase any additional Preferred Shares or shares of stock
of any class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv) to effect
any consolidation or merger into or with, 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 effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise, other than by payment of
dividends in Common Shares), then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26
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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 Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given, in
the case of any action covered by clause (i) or (ii) above, at least 10 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, 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 Right 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.
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 Right
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:
Eagle River Interactive, Inc.
1060 West Beaver Creek Boulevard
Avon, Colorado 81620
Attention: Corporate Secretary
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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
Right Certificate to or on the Rights Agent shall be sent by registered or
certified mail, and shall be deemed given upon receipt, addressed (until
another address is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Shareholder Services Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right 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. Notices or demands sent by mail shall be deemed given or
made three Business Days after the date they are sent.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Right Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions with respect to the
Rights which the Company may deem necessary or desirable, 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.
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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. 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 Right Certificates (and,
prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).
Section 30. 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.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. 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.
-57-
<PAGE> 62
Section 33. 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.
Section 34. Determinations and Actions by the Board of Directors. 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, interpretations and determinations
(including, for purpose of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Right Certificates and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Right Certificates.
-58-
<PAGE> 63
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: EAGLE RIVER INTERACTIVE, INC.
By: /s/ Marc Pinto By: /s/ Terence M. Graunke
------------------------------- --------------------------------
Marc Pinto Terence M. Graunke
Executive Vice President Title: President
and Chief Financial Officer
Attest: HARRIS TRUST AND SAVINGS BANK
By: /s/ Susan A. Knaack By: /s/ Tod Shafer
------------------------------- --------------------------------
Trust Officer Assistant Vice President
<PAGE> 64
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES B PARTICIPATING PREFERRED STOCK
of
EAGLE RIVER INTERACTIVE, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, the President and Chief Executive Officer, and Assistant Secretary
of Eagle River Interactive, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation, as amended, of the Corporation, the Board
of Directors on January 24, 1996 adopted the following resolution creating a
series of 300,000 shares of preferred stock designated as Series B
Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of its
Certificate of Incorporation, as amended, a series of preferred stock, par
value $.001 per share, of the Corporation (such preferred stock being herein
referred to as "Preferred Stock," which term shall include any additional
shares of preferred stock of the same class heretofore or hereafter authorized
to be issued by the Corporation), consisting of 300,000 shares is hereby
created, and the voting powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, are as follows:
Section 1. Designation and Amount. There shall be a series of
Preferred Stock of the Corporation which shall be designated as "Series B
Participating Preferred Stock," par value $.001 per share (hereinafter called
"Series B Preferred Stock"), and the number of shares constituting such series
shall be 300,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors and by the filing of a certificate
pursuant to the provisions of the General Corporation Law of the State of
Delaware stating that such increase or reduction has been so authorized;
provided, however, that no decrease shall reduce the number of shares of Series
B Preferred Stock to a number less than that of the shares then outstanding
plus the number of shares of Series B Preferred Stock issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
<PAGE> 65
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series B Preferred Stock with respect to dividends, the holders of
shares of Series B 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 to holders of record on the last
business day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series B Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock
(hereinafter defined) or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, par
value $.001 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series B Preferred Stock. In the event the Corporation
shall at any time following January 26, 1996 effect a subdivision, split,
combination or consolidation of the Common Stock (by reclassification or
otherwise, other than by payment of dividends in Common Stock), then in each
such case the amount to which holders of shares of Series B Preferred Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying each 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
the Series B Preferred Stock as provided in paragraph (A) above at the time it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock).
(C) No dividend or distribution (other than a dividend payable in
shares of Common Stock) shall be paid or payable to the holders of shares of
Common Stock unless, prior thereto, all accrued but unpaid dividends to the
date of such dividend or distribution shall have been paid to the holders of
shares of Series B Preferred Stock.
(D) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series B
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series B
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series B Preferred Stock in an
<PAGE> 66
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series B Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each one one-hundredth of a share of Series B 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
following January 26, 1996 effect a subdivision, split, combination or
consolidation of the Common Stock (by reclassification or otherwise, other than
by payment of dividends in Common Stock), then in each such case the number of
votes per share to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series B Preferred Stock and the holders of shares of Common Stock
and any other capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any
share or shares of Series B Preferred Stock shall be in arrears in an
amount equal to at least six full quarterly dividends (whether or not
declared and whether or not consecutive), the holders of record of the
outstanding Preferred Stock shall have the exclusive right, voting
separately as a single class, to elect two directors of the
Corporation at a special meeting of stockholders of the Corporation or
at the Corporation's next annual meeting of stockholders, and at each
subsequent annual meeting of stockholders, as provided below. At
elections for such directors, the holders of shares of Series B
Preferred Stock shall be entitled to cast one vote for each one one-
hundredth of a share of Series B Preferred Stock held.
(ii) Upon the vesting of such right of the holders of the
Preferred Stock, the maximum authorized number of members of the Board
of Directors shall automatically be increased by two and the two
vacancies so created shall be filled by vote of the holders of the
outstanding Preferred Stock as hereinafter set forth. A special
meeting of the stockholders of the Corporation then entitled to vote
shall be called by the Chairman or the President or the Secretary of
the Corporation, if requested in writing by the holders of record of
not less than 10% of the Preferred Stock then outstanding. At such
special meeting, or, if no such special meeting shall have been
called, then at the next annual meeting of stockholders of the
Corporation, the holders of the shares of the Preferred
<PAGE> 67
Stock shall elect, voting as above provided, two directors of the
Corporation to fill the aforesaid vacancies created by the automatic
increase in the number of members of the Board of Directors. At any
and all such meetings for such election, the holders of a majority of
the outstanding shares of the Preferred Stock shall be necessary to
constitute a quorum for such election, whether present in person or by
proxy, and such two directors shall be elected by the vote of at least
a plurality of shares held by such stockholders present or represented
at the meeting. Any director elected by holders of shares of the
Preferred Stock pursuant to this Section may be removed at any annual
or special meeting, by vote of a majority of the stockholders voting
as a class who elected such director, with or without cause. In case
any vacancy shall occur among the directors elected by the holders of
the Preferred Stock pursuant to this Section, such vacancy may be
filled by the remaining director so elected, or his successor then in
office, and the director so elected to fill such vacancy shall serve
until the next meeting of stockholders for the election of directors.
After the holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during the
continuance of such period, the number of Directors shall not be
further increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to or pari passu with the Series B
Preferred Stock.
(iii) The right of the holders of the Preferred Stock,
voting separately as a class, to elect two members of the Board of
Directors of the Corporation as aforesaid shall continue until, and
only until, such time as all arrears in dividends (whether or not
declared) on the Preferred Stock shall have been paid or declared and
set apart for payment, at which time such right shall terminate,
except as herein or by law expressly provided, subject to revesting in
the event of each and every subsequent default of the character above-
mentioned. Upon any termination of the right of the holders of the
shares of the Preferred Stock as a class to vote for directors as
herein provided, the term of office of all directors then in office
elected by the holders of Preferred Stock pursuant to this Section
shall terminate immediately. Whenever the term of office of the
directors elected by the holders of the Preferred Stock pursuant to
this Section shall terminate and the special voting powers vested in
the holders of the Preferred Stock pursuant to this Section shall have
expired, the maximum number of members of the Board of Directors of
the Corporation shall be such number as may be provided for in the
By-laws of the Corporation irrespective of any increase made pursuant
to the provisions of this Section.
(D) Except as set forth herein, holders of Series B Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series B Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
<PAGE> 68
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, except dividends paid ratably on the Series
B 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 B 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 B Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series B 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.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation Dissolution or Winding Up. (A) Upon any
voluntary liquidation, 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 B Preferred Stock unless, prior thereto, the holders of shares of Series
B Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series B Liquidation Preference").
Following the payment of the full amount of the Series B Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series
<PAGE> 69
B 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 B Liquidation Preference by (ii)
100 (as appropriately adjusted as set forth in subparagraph C below to reflect
such events (other than stock dividends) as stock splits and recapitalizations
with respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series B Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series B Preferred Stock and Common Stock, respectively, holders of Series B
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in
the ratio, on a per share basis, of the Adjustment Number to 1 with respect to
such Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series B Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series B Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences.
(C) In the event the Corporation shall at any time following
January 26, 1996 effect a subdivision, split, combination or consolidation of
the Common Stock (by reclassification or otherwise, other than by payment of
dividends in Common Stock), then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series B Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time effect a subdivision, split,
combination or consolidation of the Common Stock (by reclassification or
otherwise, other than by payment of dividends in Common Stock), then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series B 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. Redemption. The shares of a Series B Preferred Stock shall
not be redeemable by the Corporation. The preceding sentence shall not limit
the ability of the Corporation to purchase or otherwise deal in such shares of
stock to the extent permitted by law.
<PAGE> 70
Section 9. Ranking. The Series B Preferred Stock shall rank junior to
all other series of the Corporation's preferred stock (whether with or without
par value) 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 amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series B 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 Series B Preferred
Stock, voting separately as a class.
Section 11. Fractional Shares. Series B Preferred Stock may be issued
in fractions of a share which 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 B Preferred Stock.
IN WITNESS WHEREOF, Eagle River Interactive, Inc. has caused its
corporate seal to be hereunto affixed and this Certificate to be signed by its
President and Chief Executive Officer and the same to be attested by its
Assistant Secretary, this __th day of January, 1996.
Eagle River Interactive, Inc.
By:
-------------------------------
Terrence Graunke
President and
Chief Executive Officer
(SEAL)
Attest:
By:
---------------------
<PAGE> 71
Exhibit B
[Form of Right Certificate]
Certificate No. R- ___ Rights
NOT EXERCISABLE AFTER JANUARY 26, 2006 OR EARLIER IF THE RIGHTS EXPIRE
UNDER CERTAIN CIRCUMSTANCES OR ARE REDEEMED BY THE COMPANY. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS 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). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.](*)
Right Certificate
Eagle River Interactive, Inc.
This certifies that _____________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of ____________ ___ 1996 (the "Rights
Agreement"), between Eagle River Interactive, Inc., a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank, an Illinois 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. (Chicago time) on January 26, 2006, or notice of redemption or
exchange at the office of the Rights Agent (or its successors as Rights Agent)
designated for such purpose, one one-hundredth of a fully paid non-assessable
share of Series B Participating Preferred Stock, par value $.001 per share (the
"Preferred Shares") of the Company at a purchase price of five times the
initial offering price of one share of Common Stock of the Company, pursuant to
an initial public offering of the Common Stock of the Company, per one
one-hundredth of a share (the "Purchase Price") upon presentation and surrender
of this Right
- ---------------
(*) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
<PAGE> 72
Certificate with the appropriate Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of the date of the initial public offering of
the Common Stock of the Company, based on the Preferred Shares as constituted
at such date. Capitalized terms not defined in this Right Certificate that are
defined in the Rights Agreement shall have the meanings ascribed to them in the
Rights Agreement.
Upon the occurrence of a Triggering Event, if the Rights evidenced by
this Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), (ii) under certain circumstances specified in the
Rights Agreement, a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of any such
Triggering Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of Preferred Shares or other securities, which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right 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 Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under certain circumstances specified in such Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right at any time prior to the earlier of the
close of business on (i) the tenth day following the Shares Acquisition Date
and (ii) the Final Expiration Date.
<PAGE> 73
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may at the election
of the Company be evidenced by depository receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a 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 Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
<PAGE> 74
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ________ ____, 19__
ATTEST: (SEAL) EAGLE RIVER INTERACTIVE, INC.
By:
- -------------------------- ------------------------------------
Name: Name:
Title: Title:
Countersigned:
- ----------------------------
By:
----------------------
Authorized Signature
<PAGE> 75
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________
hereby sells, assigns and transfers unto __________________________
_____________________________________________
(Please print name and address of transferee)
_____________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Date: ____________, 19__
__________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement)
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated:_______________, 19__
_____________________
Signature
<PAGE> 76
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 77
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Right Certificate.)
To: Eagle River Interactive, Inc.
The undersigned hereby irrevocably elects to exercise ____ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number: ___________________
___________________________________________
(Please print name and address)
___________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance 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:__________, 19__ _________________
Signature
Signature Guaranteed:
<PAGE> 78
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:___________, 19__ ___________________
Signature
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
<PAGE> 79
Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS
OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL
AND VOID AND WILL NO LONGER BE TRANSFERABLE
SUMMARY OF RIGHTS PLAN
On January 24, 1996, the Board of Directors of Eagle River
Interactive, Inc. (the "Company") declared a dividend distribution of one Right
for each outstanding share of common stock, par value $.001 per share (the
"Common Stock"), of the Company to stockholders of record at the close of
business on January 26, 1996 (the "Record Date"). This dividend is conditional
upon the effectiveness of the S-1 registration statement filed in connection
with the initial public offering of the Company's Common Stock. Except as
described below, each Right, when exercisable, entitles the registered holder
to purchase from the Company one one-hundredth of a share of Series B
Participating Preferred Stock, par value $.001 per share (the "Preferred
Stock"), at a price of five times the initial offering price of one share of
Common Stock of the Company, pursuant to an initial public offering of the
Common Stock of the Company, per one one-hundredth share (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the Company and
Harris Trust and Savings Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. 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") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the "Shares Acquisition Date") or (ii) 15 business days (or such
later date as may be determined by action of the Board of Directors of the
Company (the "Board of Directors") prior to the time that any person becomes an
Acquiring Person) following the commencement of (or a public announcement of an
intention to make) a tender or exchange offer if, upon consummation thereof,
such person or group would be the beneficial owner of 15% or more of such
outstanding shares of Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by the Common Stock
certificates together with a copy of the Summary of Rights Plan and not by
separate certificates. An Acquiring Person, under the terms of the Rights
Agreement, does not include the Company, any subsidiary of the Company, any
employee benefit plan of the Company or any subsidiary, Terence M. Graunke, or
Frontenac VI Limited Partnership, together with certain of their affiliates and
associates. Also, no person becomes an Acquiring Person solely as a result of
the Company acquiring shares of Common Stock or through the acquisition by a
person of newly-issued shares of Common Stock directly from the Company.
<PAGE> 80
The Rights Agreement also 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, expiration or termination of the
Rights), the transfer of any certificates for Common Stock, with or without a
copy of this Summary of Rights Plan, will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution Date
and, thereafter, such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the earliest of (i) January 26, 2006, (ii) the redemption of the
Rights by the Company as described below and (iii) the exchange of all Rights
for Common Stock as described below. Notwithstanding anything herein to the
contrary, the Rights shall become effective only upon the date of the closing
in connection with the initial public offering of the Company's Common Stock.
The Rights will lapse and be of no further effect if there is not on file with
the Securities and Exchange Commission prior to June 30, 1996 an effective S-1
Registration Statement relating to the initial public offering of the Company's
Common Stock.
In the event that any person becomes an Acquiring Person, each holder
of a Right will thereafter have the right to receive, upon exercise at the then
current exercise price of the Right, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a
value equal to two times the exercise price of the Right. The Rights Agreement
contains an exemption for any issuance of Common Stock by the Company directly
to any person (for example, in a private placement or an acquisition by the
Company in which Common Stock is used as consideration), even if that person
would become the beneficial owner of 15% or more of the Common Stock, provided
that such person does not acquire any additional shares of Common Stock.
In the event that, at any time following the Shares Acquisition Date,
the Company is acquired in a merger or other business combination transaction
or 50% or more of the Company's assets or earning power are sold, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon exercise at the then current exercise price of the
Right, common stock of the acquiring or surviving company having a value equal
to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any of the
events set forth in the preceding two paragraphs (the "Triggering Events"), any
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will immediately
become null and void.
The Purchase Price payable, and the number of shares 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, among other
circumstances, in the event of a subdivision, split (other
<PAGE> 81
than a stock dividend on the Common Stock payable in shares of Common Stock),
combination, consolidation or reclassification of, the Preferred Stock or the
Common Stock, or a reverse split of the outstanding shares of Preferred Stock
or the Common Stock.
At any time after the acquisition by a person or group of affiliated
or associated persons (other than the Company, its subsidiaries, any employee
benefit plan of the Company or any subsidiary, Terence M. Graunke or Frontenac
VI Limited Partnership) of beneficial ownership of 15% or more of the
outstanding Common Stock and prior to the acquisition by such person or group
of 50% or more of the outstanding Common Stock, the Board of Directors may
exchange the Rights (other than Rights owned by such person or group, which
have become void), in whole or in part, at an exchange ratio of one share of
Common Stock per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. The Company will not be required to issue fractional shares
of Preferred Stock or Common Stock (other than fractions in multiples of one
one-hundredths of a share of Preferred Stock) and, in lieu thereof, an
adjustment in cash may be made based on the market price of the Preferred Stock
or Common Stock on the last trading date prior to the date of exercise.
At any time after the date of the Rights Agreement until the time that
a person becomes an Acquiring Person, the Board of Directors may redeem the
Rights in whole, but not in part, at a price of $.001 per Right (the
"Redemption Price"), which may (at the option of the Company) be paid in cash,
shares of Common Stock or other consideration deemed appropriate by the Board
of Directors. Upon the effectiveness of any action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
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 provisions of the Rights Agreement may be amended by the Company,
except that any amendment adopted after the time that a person becomes an
Acquiring Person may not adversely affect the interests of holders of Rights.
As of January 26, 1996, there were 7,163,448 shares of Common Stock
outstanding and 3,600,000 shares of Common Stock reserved for issuance under
employee benefit plans. Each outstanding share of Common Stock on January 26,
1996 will receive one Right. Three hundred thousand (300,000) shares of
Preferred Stock will be reserved for issuance in the event of exercise of the
Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired, and under certain circumstances the Rights
beneficially owned by such a person or group may become void. The
<PAGE> 82
Rights should not interfere with any merger or other business combination
approved by the Board of Directors because, if the Rights would become
exercisable as a result of such merger or business combination, the Board of
Directors may, at its option, at any time prior to the time that any Person
becomes an Acquiring Person, redeem all (but not less than all) of the then
outstanding Rights at the Redemption Price.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form S-1. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
<PAGE> 1
EXHIBIT 5
[SIDLEY & AUSTIN LETTERHEAD]
December 22, 1997
Mastering, Inc.
11000 N. Scottsdale Rd., #260
Scottsdale, Arizona 85254
Re: Mastering, Inc. (f/k/a Eagle River Interactive, Inc.)
Registration Statement on Form S-8
Ladies and Gentlemen:
We are counsel to Mastering, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with the Registration
Statement on Form S-8 (the "Registration Statement") being filed by the Company
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the issuance and delivery of up
to 2,400,000 shares of common stock, par value $.001 per share, of the Company
("Common Stock"), together with 2,400,000 Preferred Stock Purchase Rights of the
Company (the "Rights") associated therewith. The terms of the Rights are set
forth in the Rights Agreement dated as of March 15, 1996 (the "Rights
Agreement") between the Company and Harris Trust and Savings Bank, as Rights
Agent. Up to 1,500,000 shares of Common Stock (the "Executive Plan Shares") are
to be issued and delivered pursuant to the Company's Amended and Restated 1995
Executive Stock Option Plan (the "Executive Plan") and up to 900,000 shares of
Common Stock (the "Employee Plan Shares") are to be issued and delivered
pursuant to the Company's Amended and Restated 1995 Employee Stock Option Plan
(the "Employee Plan").
In rendering this opinion, we have examined and relied upon a copy of
the Executive Plan, the Employee Plan and the Registration Statement. We have
also examined and relied upon originals, or copies of originals certified to
our satisfaction, of such agreements, documents, certificates and other
statements of governmental officials and other instruments, and have examined
such questions of law and have satisfied ourselves as to such matters of fact,
as we have considered relevant and necessary as a basis for this opinion. We
have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of all natural persons
and the conformity with the original documents of any copies thereof submitted
to us for our examination.
<PAGE> 2
Mastering, Inc.
December 22, 1997
Page 2
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing under
the laws of the State of Delaware.
2. The Executive Plan Shares will be legally issued, fully paid
and nonassessable when (i) the Registration Statement shall have become
effective under the Securities Act; (ii) the Executive Plan Shares shall have
been duly issued and delivered in the manner contemplated by the Executive
Plan; and (iii) certificates representing the Executive Plan Shares shall have
been duly executed, countersigned and registered and duly delivered to the
persons entitled thereto against receipt of the agreed consideration therefor
(not less than the par value thereof) in accordance with the Executive Plan.
3. The Employee Plan Shares will be legally issued, fully paid
and nonassessable when (i) the Registration Statement shall have become
effective under the Securities Act; (ii) the Employee Plan Shares shall have
been duly issued and delivered in the manner contemplated by the Employee Plan;
and (iii) certificates representing the Employee Plan Shares shall have been
duly executed, countersigned and registered and duly delivered to the persons
entitled thereto against receipt of the agreed consideration therefor (not less
than the par value thereof) in accordance with the Employee Plan.
4. The Rights associated with the newly issued shares of Common
Stock referred to in paragraphs 2 and 3 will be legally issued when such Rights
have been duly issued in accordance with the terms of the Rights Agreement and
such associated shares have been duly issued and delivered as set forth in
paragraphs 2 and 3.
We do not find it necessary for the purposes of this opinion to cover,
and accordingly we express no opinion as to, the application of the securities
or "Blue Sky" laws of the various states to the issuance and delivery of the
Executive Plan Shares and the Employee Plan Shares.
This opinion is limited to the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our Firm in or made a part of
the Registration Statement.
Very truly yours,
SIDLEY & AUSTIN
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 5, 1997 included in Mastering Inc.'s Form 10-K for the year ended
December 31, 1996 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Denver, Colorado
December 22, 1997
