U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-A/A
Post-Effective Amendment No. 2
For Registration of Certain Classes of Securities
Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
-----------------
MIM CORPORATION
---------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-28740 05-0489664
-------- ------- ----------
(State of Organization) (Commission File Number) (IRS Employer
Identification No.)
100 Clearbrook Road
Elmsford, New York 10523
------------------------
(Address of Registrant's Principal Executive Office) (Zip Code)
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A. (c), please check the following box [_].
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A. (d), please check the following box [x].
Securities Act registration statement file number to which this form relates (if
applicable): None
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Series A Junior Participating Preferred Stock Purchase Rights
(Title of Class)
<PAGE>
By resolution adopted on May 20, 1999, the Board of Directors ("Board") of
MIM Corporation (the "Company") amended the Rights Agreement, dated as of
November 24, 1998, between the Company and American Stock Transfer and Trust
Company, as Rights Agent (as amended on December 14, 1998, the "Rights
Agreement"), in order to delete the "delayed redemption" provision of the Rights
Agreement. The Board directed the Company to amend the Rights Agreement as a
result of and in response to the Delaware Supreme Court's recent holding that
such a "delayed redemption" provision is invalid under Delaware corporate law.
In accordance with the Board's resolution, on May 20, 1999, the Company and the
Rights Agent executed and delivered an Amended and Restated Rights Agreement
(the "Amended and Restated Rights Agreement"), which is filed as Exhibit 4.1 to
this Post-Effective Amendment No. 2 on Form 8-A/A. The Amended and Restated
Rights Agreement deleted the "delayed redemption" provision and made certain
other technical changes relating solely to the deletion of the "delayed
redemption" provision.
On December 4, 1998, the Company filed a Registration Statement on Form
8-A (as amended on December 14, 1998 by Post-Effective Amendment No. 1 on Form
8-A/A thereto, the "Registration Statement") to register the Series A Junior
Participating Preferred Stock Purchase Rights issuable under the Rights
Agreement under the Securities Exchange Act of 1934 (the "Exchange Act"). The
description of the Rights contained in Item 1 of the Registration Statement is
hereby deleted in its entirety and replaced with the description of the Rights
set forth in Item 1 to this Post-Effective Amendment No. 2 to Registration
Statement on Form 8-A/A. The Amended and Restated Rights Agreement (including
the form of Rights Certificate and Certificate of Designations of Preferred
Stock as exhibits thereto) is attached hereto as Exhibit 4.1 and is incorporated
herein by reference in its entirety.
Item 1. Description of Registrant's Securities to be Registered
On November 24, 1998, the Board declared a dividend distribution of one
right (a "Right") for each outstanding share of the Company's common stock, par
value $.0001 per share ("Company Common Stock"), to stockholders of record at
the close of business on December 4, 1998 (the "Record Date") and for each share
of Company Common Stock issued (including shares distributed from the Company's
treasury) by the Company from and after the Record Date up to, but not including
the Distribution Date (as defined below). Each Right will entitle the registered
holder, subject to the terms of the Amended and Restated Rights Agreement, to
purchase from the Company one one-thousandth of a share (a "Unit") of Series A
Junior Participating Preferred Stock, par value $.0001 per share ("Preferred
Stock"), of the Company, at a purchase price of $20.00 per share, in cash (the
"Purchase Price"), subject to adjustment as more fully set forth below. The
description and terms of the Rights are set forth in the Amended and Restated
Rights Agreement. In general, each Unit has substantially the same economic
attributes and voting rights as one share of Company Common Stock.
The following summary description of the Rights and the Preferred Stock
does not purport to be complete and is qualified in its entirety by reference to
all the terms and provisions of the Amended and Restated Rights Agreement as
well as to the Certificate of Designations of Series A Junior Participating
Preferred Stock filed with the Delaware Secretary of State on December 4, 1998,
including the definitions therein of certain terms.
Description of the Rights
Initially, the Rights will attach to all certificates representing shares
of outstanding Company Common Stock, and no separate Rights certificates will be
distributed and the Rights will not be separately traded. The Rights will
separate from the Company Common Stock and Rights certificates will be
separately distributed (the "Distribution Date") and the Rights will be
separately traded upon the earliest to occur of (i) ten (10) business days (or,
subject to certain limitations, such later date as may be determined by action
of the Board prior to such time) following a public announcement (the date of
such announcement being the "Stock Acquisition Date") that (a) a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired,
obtained the right to acquire, or otherwise obtained beneficial ownership of 15%
or more of the then outstanding shares of Company Common Stock or (b) the Board
has, in accordance with the criteria set forth in the Amended and Restated
Rights Agreement, declared a person who beneficially owns at least 10% of the
then outstanding shares of Company Common Stock to be an "Adverse Person," (ii)
ten (10) business days (or, subject to certain limitations, such later date as
may be determined by action of the Board prior to such time) following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 15% or more of the then outstanding shares of
Company Common Stock (other than a tender or exchange offer for all outstanding
shares of Company Common Stock at a price and on terms that the Board determines
to be fair to and otherwise in the best interests of the Company and its
stockholders (a "Permitted Offer")), (iii) the date on which it is publicly
announced that a person or group has acquired beneficial ownership of 40% or
more of the then outstanding shares of Company Common Stock and (iv) the
occurrence of a Flip-Over Event (as defined below). Until the Distribution Date,
(i) the Rights will be evidenced by
<PAGE>
Company Common Stock certificates and will be transferred with and only with
such Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after the Record Date (including shares distributed from the
Company's treasury) will contain a notation incorporating the Amended and
Restated Rights Agreement by reference and (iii) the surrender for transfer of
any certificates evidencing outstanding Company Common Stock will also
constitute the transfer of the Rights associated with the Company Common Stock
evidenced by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on November 24, 2008, unless the Rights are earlier
redeemed or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, separate Certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of Company Common Stock as of the close of business on the Distribution
Date and, thereafter, the separate Rights Certificates alone will represent the
Rights.
In the event (a "Flip-In Event") that (i) a person becomes an Acquiring
Person (other than pursuant to a "Flip-Over Event" (as defined below)), (ii) the
Board declares a person to be an Adverse Person, (iii) the Company is the
surviving corporation in a merger with an Acquiring Person in which shares of
Company Common Stock shall remain outstanding, (iv) an Acquiring Person or an
Adverse Person engages in one or more "self-dealing" transactions specified in
the Amended and Restated Rights Agreement, or (v) during such time that an
Acquiring Person or an Adverse Person exists, an event occurs which results in
such Acquiring Person's or Adverse Person's ownership interest being increased
by more than 1% (e.g., by means of a reverse stock split or recapitalization),
then, in each such case, each holder of a Right will thereafter have the right
to receive, upon exercise, Units (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 exercise price is the Purchase Price multiplied
by the number of Units issuable upon exercise of a Right prior to the Flip-In
Event. Notwithstanding the foregoing, following the occurrence of any Flip-In
Event all Rights that are, or (under certain circumstances specified in the
Amended and Restated Rights Agreement) were, beneficially owned by any Acquiring
Person or Adverse Person (or by certain related parties) will be null and void.
In the event (a "Flip-Over Event") that, at any time following the Stock
Acquisition Date or at a time that Continuing Directors (as defined below)
constitute less than a majority of the Company's Board of Directors, (i) the
Company is acquired in a merger or other business combination transaction and
the Company is not the surviving corporation, (ii) any person consolidates or
merges with the Company and all or part of the Company Common Stock is converted
or exchanged for securities, cash or property of any other Person, or (iii) 50%
or more of the Company's assets or earning power is sold or transferred, then,
in each such case, each holder of a Right (except Rights which previously have
been voided as described above) shall be entitled to receive, upon exercise,
common stock of the Acquiring Person or Adverse Person having a value equal to
two times the exercise price of the Right.
The Purchase Price payable, and the number of Units issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
economic and voting rights dilution (i) in the event of a stock dividend on, or
a subdivision, combination or reclassification of, the Company Common Stock,
(ii) if holders of the Company Common Stock are granted certain rights or
warrants to subscribe for Company Common Stock or convertible securities at less
than the current market price of the Company Common Stock, or (iii) upon the
dividend or distribution, as the case may be, of evidences of indebtedness, cash
or assets (excluding regular quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above) to the holders of the Company
Common Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Company
Common Stock prior to the date of exercise.
At any time prior to the Distribution Date, the Company, by action of the
Board, may redeem the Rights in whole, but not in part, at a price of $.0001 per
Right (the "Redemption Price"), subject to adjustment in certain events,
payable, at the election of the Board, in cash, shares of Company Common Stock
or such other form of consideration as the Board may determine. Immediately upon
effectiveness of the action of the Board ordering the redemption of the Rights,
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price. The ten-day period of redemption between the Stock
Acquisition Date and the Distribution Date may be extended by the Board so long
as the Rights are then redeemable.
3
<PAGE>
At any time prior to the Distribution Date, the Company may exchange the
Rights (other than Rights owned by an Acquiring Person or an Adverse Person, or
an affiliate or an associate of an Acquiring Person or an Adverse Person, which
will have become null and void), in whole or in part, for shares of Company
Common Stock at an exchange ratio determined as provided in the Amended and
Restated Rights Agreement.
Until a Right is exercised, the holder thereof will have no rights as a
stockholder of the Company with respect to such Right, including, without
limitation, the right to vote or to receive dividends. Following exercise of a
Right, the holder's rights will be determined by the type of consideration
received upon the exercise. Although the distribution of the Rights should not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units (or other consideration) or are exchanged as provided in
the preceding paragraph.
The provisions of the Amended and Restated Rights Agreement may be amended
without the approval of the holders of Company Common Stock at any time prior to
the Distribution Date. After the Distribution Date, the provisions of the
Amended and Restated Rights Agreement may be amended in order to (i) cure any
ambiguity, defect or inconsistency, (ii) make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person or Adverse Person), or (iii) shorten or lengthen any time
period under the Amended and Restated Rights Agreement; provided, however, that
no amendment to adjust the time period governing redemption may be made after
the Rights are no longer redeemable.
Item 2. Exhibits.
Exhibit Number Exhibit
- -------------- -------
4.1 Amended and Restated Rights Agreement, dated as of May
20, 1999, between MIM Corporation and American Stock
Transfer and Trust Company, as Rights Agent (including
form of Rights Certificate).
4
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Post-Effective Amendment No. 2 to
Registration Statement to be signed on its behalf by the undersigned hereunto
duly authorized.
MIM CORPORATION
By: /s/ Barry A. Posner
-----------------------
Barry A. Posner
Vice President and General Counsel
Date: May 20, 1999
5
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
- -------------- -------
4.1 Amended and Restated Rights Agreement, dated as of May
20, 1999, between MIM Corporation and American Stock
Transfer and Trust Company, as Rights Agent (including
form of Rights Certificate).
6
================================================================================
MIM CORPORATION
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Rights Agent
--------------------
AMENDED AND RESTATED
RIGHTS AGREEMENT
Dated as of May 20, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions ............................................. 1
Section 2. Appointment of Rights Agent ..................................... 5
Section 3. Issue of Rights Certificates .................................... 5
Section 4. Form of Rights Certificates ..................................... 6
Section 5. Countersignature and Registration ............................... 7
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates .................................................... 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights .......................................................... 8
Section 8. Cancellation and Destruction of Rights Certificates ............. 9
Section 9. Reservation and Availability of Capital Stock ................... 10
Section 10. Record Date upon Exercise of Rights ............................. 11
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights ................................................ 11
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares .......................................................... 19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power ................................................... 19
Section 14. Fractional Rights and Fractional Shares ......................... 22
Section 15. Rights of Action ................................................ 22
Section 16. Agreement of Rights Holders ..................................... 22
Section 17. Rights Certificate Holder Not Deemed a Stockholder .............. 23
Section 18. Concerning the Rights Agent ..................................... 23
Section 19. Merger or Consolidation or Change of Name of Rights Agent ....... 24
Section 20. Duties of Rights Agent .......................................... 24
Section 21. Change of Rights Agent .......................................... 26
Section 22. Issuance of New Rights Certificates ............................. 27
Section 23. Redemption and Termination ...................................... 27
Section 24. Notice of Certain Events ........................................ 27
Section 25. Notices ......................................................... 28
Section 26. Supplements and Amendments ...................................... 29
Section 27. Successors ...................................................... 29
Section 28. Determinations and Actions by the Board of Directors, Etc. ...... 29
Section 29. Benefits of this Agreement ...................................... 30
Section 30. Severability .................................................... 30
Section 31. Governing Law ................................................... 30
i
<PAGE>
TABLE OF CONTENTS
Page
Section 32. Counterparts .................................................... 30
Section 33. Captions ........................................................ 30
Section 34. Exchange ........................................................ 30
ii
<PAGE>
EXHIBITS
EXHIBIT A. Form of Rights Certificate ..................................... A-1
EXHIBIT B. Summary of Rights and Preferred Stock .......................... B-1
EXHIBIT C. Form of Certificate of Designations for Preferred Stock ........ C-1
iii
<PAGE>
RIGHTS AGREEMENT
AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of May 20, 1999 (this
"Agreement" or the "Amended and Restated Rights Agreement"), between MIM
Corporation, a Delaware corporation (the "Company"), and American Stock Transfer
& Trust Company, a New York corporation (the "Rights Agent").
WHEREAS, effective November 24, 1998 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a dividend
distribution of one preferred stock purchase right ("Right") for each share of
common stock, par value $.0001 per share, of the Company (the "Company Common
Stock") outstanding at the Close of Business on December 4, 1998 (the "Record
Date"), and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of this Agreement) for each
share of Company Common Stock issued (whether originally issued or delivered
from the Company's treasury) between the Record Date and, except as otherwise
provided in Section 22, the Distribution Date, each Right initially representing
the right to purchase one Unit (each as hereinafter defined) upon the terms and
subject to the conditions hereinafter set forth;
WHEREAS, on May 20, 1999, the Board of Directors the Company adopted a
resolution directing the Company to amend the Rights Agreement, dated as of
November 24, 1998, between the Company and American Stock Transfer and Trust
Company, as Rights Agent (as amended on December 14, 1998, the "Original Rights
Agreement"), in order to delete the "delayed redemption" provision contained in
Section 28 of the Original Rights Agreement and cross references to that
provision in other Sections of the Original Rights Agreement, as a result of and
in response to the Delaware Supreme Court's recent holding that such a "delayed
redemption" provision is invalid under Delaware corporate law;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, and in accordance with the Board's May 20 resolution, the
parties hereby amend and restate the Original Rights Agreement as follows:
SECTION 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
"Acquiring Person" shall mean any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect to such a
plan acting in such capacity) who or which, alone or together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or more
of the shares of Company Common Stock then outstanding, which shares were
acquired by such Person other than pursuant to a Permitted Offer.
Notwithstanding the foregoing, (i) no Person shall become an "Acquiring Person"
as a result of an acquisition of Company Common Stock by the Company which, by
reducing the number of shares of the Company Common Stock outstanding, increases
the proportionate number of shares Beneficially Owned by such Person to 15% or
more of the Company Common Stock then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Company Common
Stock by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any additional Company
Common Stock other than as a direct or indirect result of any corporate action
taken by the Company, then such Person shall be deemed to be an "Acquiring
Person"; and (ii) if a majority of the Board determines in good faith that a
Person who would otherwise be an "Acquiring Person," as defined pursuant to the
first sentence of this definition, has become such inadvertently (including,
without limitation, because (a) such Person was unaware that it Beneficially
Owned 15% or more of the Company Common Stock or (b) such Person was aware of
the extent of such Beneficial Ownership but such Person acquired Beneficial
Ownership of such
<PAGE>
shares of Company Common Stock without the intention to change or influence the
control of the Company and without actual knowledge of the consequences of such
Beneficial Ownership under this Agreement), and such Person divests itself as
promptly as practicable of a sufficient number of shares of Company Common Stock
so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the first sentence of this definition, then such Person shall not be
deemed to be, or have been, an "Acquiring Person" for any purposes of this
Agreement, and no Stock Acquisition Date shall be deemed to have occurred. All
questions as to whether a Person who would otherwise be an Acquiring Person has
become such inadvertently shall be determined in good faith by the Board, which
determination shall be conclusive for all purposes.
"Adjustment Units" has the meaning set forth in Section 11(a)(ii).
"Adverse Person" shall mean any Person declared to be an Adverse Person by
the Board upon determination that the criteria set forth in Section 11(a)(ii)(B)
apply to such Person.
"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 (the "Exchange Act Regulations"), as in effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to
"beneficially own," any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3 of
the Exchange Act Regulations as in effect on the date hereof; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own," any securities under this subparagraph (i) as a
result of an agreement, arrangement or understanding to vote such
securities if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the Exchange Act and the Exchange Act Regulations, and (B)
is not reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor form);
(ii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such other Person) with
which such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (i) above) or
disposing of such securities; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time or upon
the satisfaction of conditions) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that under this definition a Person shall
not be deemed the "Beneficial Owner" of, or to "beneficially own," (A)
securities tendered pursuant to a tender or exchange offer made in
accordance with the Exchange Act Regulations by such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (B) securities that may be issued upon
exercise of Rights at any time prior to the occurrence of a Triggering
Event, or (C) securities that may be issued upon exercise of Rights from
and after the occurrence of a Triggering Event, which Rights were acquired
by such Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(c) or Section 22 (the
"Original Rights") or pursuant to Section 11(i) in connection with an
adjustment made with respect to any Original Rights.
2
<PAGE>
Notwithstanding the foregoing, nothing contained in this definition shall
cause a Person ordinarily engaged in business as an underwriter of securities to
be the "Beneficial Owner" of, or to "beneficially own," any securities acquired
in a bona fide firm commitment underwriting pursuant to an underwriting
agreement between such Person and the Company, unless such Person shall make a
filing on Schedule 13D (or any comparable or successor form) with respect to
such securities.
"Board" means the Board of Directors of the Company.
"Business Day" shall mean any day other than a Saturday, Sunday or a day
on which either (i) banking institutions in New York City are authorized or
obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m., New York City
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 p.m., New York City time, on the next succeeding Business
Day.
"Common Stock" of any Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or, if such Person shall
have no capital stock, the equity securities or other equity interest having
power to control or direct the management of such Person.
"Company Common Stock" has the meaning set forth in the Whereas Clause.
"Continuing Director" shall mean (i) any member of the Board who was a
member of the Board prior to the date of this Agreement, while such Person is a
member of the Board, so long as such Person is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative or nominee of
an Acquiring Person or of any such Affiliate or Associate or (ii) any Person who
becomes a member of the Board after the date of this Agreement, pursuant to a
nomination for election or election to the Board that is recommended or approved
by a majority of the Continuing Directors, while such Person is a member of the
Board, so long as such Person is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative or nominee of an Acquiring
Person or of any such Affiliate or Associate.
"Current Market Price" has the meaning set forth in Section 11(d).
"Current Value" has the meaning set forth in Section 11(a)(iii).
"Distribution Date" has the meaning set forth in Section 3(a).
"Equivalent Company Common Stock" has the meaning set forth in Section
11(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Act Regulations" has the meaning set forth in Section 1.
"Exchange Ratio" has the meaning set forth in Section 34(a).
"Expiration Date" shall mean the earliest of (i) the Final Expiration
Date, (ii) the time at which the Rights are redeemed (or deemed redeemed) as
provided in Section 23 and (iii) the time at which all Rights then outstanding
and exercisable are exchanged (or deemed exchanged) pursuant to Section 34.
"Final Expiration Date" shall mean the Close of Business on November 24,
2008.
"40% Person" shall mean any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan maintained by the Company or any of
its Subsidiaries or any trustee or fiduciary with respect to such a plan acting
in such capacity) who or which, alone or together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 40% or more of the
shares of Company Common Stock then outstanding, which shares were acquired by
such Person other than pursuant to a Permitted Offer; provided, however, that
the term "40% Person" shall not include any
3
<PAGE>
Person who is the Beneficial Owner of 40% or more of the Company Common Stock
then outstanding by virtue of ownership of Company Common Stock by such Person's
Affiliates and/or Associates, which Affiliates and/or Associates are deemed to
be Affiliates and/or Associates solely by reason of each of them being directors
or officers of the Company or members of a slate of directors, proposed by
management, standing for election to the Board.
"Permitted Offer" shall mean a tender or exchange offer by any Person for
all outstanding shares of Company Common Stock which the Board determines, based
upon the advice of a nationally recognized investment banking firm and such
other advice as the Board deems appropriate, is fair from a financial point of
view to the stockholders of the Company (other than such Person) and otherwise
in the best interests of the Company and its stockholders (other than such
Person). A Permitted Offer will cease to be such if, prior to the acquisition of
Beneficial Ownership of any Company Common Stock pursuant thereto, the Board so
determines, and in such event the tender or exchange offer shall be deemed for
purposes of Section 3 commenced on the date of such determination.
"Person" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange
Act.
"Preferred Stock" shall mean the Series A Junior Participating Preferred
Stock, par value $.0001 per share, of the Company having such voting powers,
designation, preferences and relative, participating, optional or other special
rights and qualifications, limitations and restrictions as are described in the
form of Certificate of Designations attached as Exhibit C hereto.
"Principal Party" has the meaning set forth in Section 13(b).
"Purchase Price" has the meaning set forth in Section 7(b).
"Record Date" has the meaning set forth in the Whereas Clause.
"Redemption Price" has the meaning set forth in Section 23(a).
"Registered Common Stock" has the meaning set forth in Section 13(b).
"Registration Date" has the meaning set forth in Section 9(c).
"Registration Statement" has the meaning set forth in Section 9(c).
"Right" has the meaning set forth in the Whereas Clause.
"Rights Agent" shall mean American Stock Transfer & Trust Company.
"Rights Certificate" has the meaning set forth in Section 3(a).
"Rights Dividend Declaration Date" has the meaning set forth in the
Whereas Clause.
"Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A), (B), (C) or (D).
"Section 13 Event" shall mean any event described in clause (x), (y) or
(z) of Section 13(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Spread" has the meaning specified in Section 11(a)(iii).
"Stock Acquisition Date" shall mean the first date of public announcement
(including, without limitation, the filing of any report pursuant to Section
13(d) of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such or by the Company that an Adverse Person has
become such.
4
<PAGE>
"Subsidiary" shall mean, with respect to any Person, any other Person of
which an amount of voting securities or equity interests sufficient to elect at
least a majority of the directors or equivalent governing body of such other
Person is beneficially owned, directly or indirectly, by such first-mentioned
Person, or otherwise controlled by such first-mentioned Person.
"Substitution Period" has the meaning set forth in Section 11(a)(iii).
"Summary of Rights" has the meaning set forth in Section 3(b).
"Transfer Agent" has the meaning set forth in Section 7(c).
"Triggering Event" shall mean any Section 11(a)(ii) Event or any Section
13 Event.
"Unit" shall mean one one-thousandth of a share of Preferred Stock.
SECTION 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. With
the consent of the Rights Agent, the Company may from time to time appoint such
co-rights agents as it may deem necessary or desirable.
SECTION 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the Close of Business on the tenth Business
Day after the Stock Acquisition Date, (ii) the Close of Business on the tenth
Business Day after the date that a tender or exchange offer (other than a
Permitted Offer) by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such a plan acting in
such capacity) is first published or sent or given within the meaning of Rule
14d-4(a) of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the shares of Company Common Stock then outstanding, (iii) the first date of
public announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) of the Exchange Act) by the Company or a 40% Person
that a 40% Person has become such and (iv) the occurrence of a Section 13 Event
(the earliest of (i), (ii) (iii) and (iv) above being the "Distribution Date"),
(x) the Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for shares of Company Common Stock
registered in the names of the holders of shares of Company Common Stock as of
and subsequent to the Record Date (which certificates for shares of Company
Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable only by transfer
of the underlying shares of Company Common Stock (including a transfer to the
Company). As soon as practicable after the Distribution Date, the Rights Agent
will send, by first-class, insured, postage-prepaid mail, to each record holder
of shares of Company Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more rights certificates, in substantially the form attached as
Exhibit A hereto (the "Rights Certificates"), evidencing one Right for each
share of Company Common Stock so held, subject to adjustment as provided herein.
In the event that an adjustment in the number of Rights per share of Company
Common Stock has been made pursuant to Section 11(p), at the time of
distribution of the Rights Certificates, the Company may make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a)) so that
Rights Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights, in a form which may be appended to
certificates that represent shares of Company Common Stock, in substantially the
form of Exhibit B attached hereto (the "Summary of Rights"), by
5
<PAGE>
first-class, postage-prepaid mail, to each record holder of shares of Company
Common Stock as of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Company.
(c) Rights shall, without any further action, be issued in respect of all
shares of Company Common Stock which are issued (including any shares of Company
Common Stock held in treasury) after the Record Date but prior to the earlier of
the Distribution Date and the Expiration Date. To the extent practicable,
certificates representing such shares of Company Common Stock and issued after
the Record Date shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Amended and Restated Rights
Agreement between MIM Corporation (the "Company") and American Stock
Transfer & Trust Company dated as of May 20, 1999 as it may be
amended from time to time (the "Amended and Restated Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set forth in
the Amended and Restated 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 Amended and Restated 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 Amended and Restated Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an
Acquiring Person or an Adverse Person or any Affiliate or Associate
thereof (as such terms are defined in the Amended and Restated
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void and
nontransferable.
With respect to certificates representing shares of Company Common Stock
(whether or not such certificates include the foregoing legend or have appended
to them the Summary of Rights), until the earlier of the Distribution Date and
the Expiration Date, the Rights associated with the shares of Company Common
Stock represented by such certificates shall be evidenced by such certificates
alone and registered holders of the shares of Company Common Stock shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.
SECTION 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to purchase and the
form of assignment to be printed on the reverse side thereof) shall each be
substantially in the form set forth in Exhibit A attached 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 any rule or regulation thereunder or with any
rule or regulation of any stock exchange or automated quotation system on which
the Rights may from time to time be listed or to conform to usage. Subject to
the provisions of Section 11 and Section 22, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of Units as shall be set
forth therein at the price set forth therein, but the amount and type of
securities, cash or other assets that
6
<PAGE>
may be acquired upon the exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided in this Agreement.
(b) Any Rights Certificate issued pursuant to this Agreement that
represents Rights beneficially owned by: (i) an Acquiring Person or an Adverse
Person or any of their respective Associates or Affiliates, (ii) a transferee of
an Acquiring Person or an Adverse Person (or of any such Associate or Affiliate)
which becomes a transferee after the Acquiring Person or Adverse Person becomes
such, or (iii) a transferee of an Acquiring Person or an Adverse Person (or of
any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person or Adverse Person becoming such and which
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person
or Adverse Person (or such Associate or Affiliate) or to any Person with whom
such Acquiring Person or Adverse Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer which a majority of the Board has determined to be part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(e) shall, upon the written direction of a majority of the
Board, contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Adverse Person or an Affiliate or Associate of an Acquiring
Person or an Adverse Person (as such terms are defined in the
Amended and Restated Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and
void and nontransferable in the circumstances specified in Section
7(e) of the Amended and Restated Rights Agreement.
SECTION 5. Countersignature and Registration.
(a) Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, the Chief Executive Officer, the President or one of its
Vice Presidents under its corporate seal reproduced thereon attested by its
Secretary, Treasurer or one of its Assistant Secretaries. The signature of any
of these officers on the Rights Certificates may be manual or facsimile. Rights
Certificates bearing the manual or facsimile signatures of the individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the countersignature of such Rights Certificates or did not
hold such offices at the date of such Rights Certificates. No Rights Certificate
shall be entitled to any benefit under this Agreement or be valid for any
purpose unless there appears on such Rights Certificate a countersignature duly
executed by the Rights Agent by manual signature of an authorized signatory, and
such countersignature upon any Rights Certificate shall be conclusive evidence,
and the only evidence, that such Rights Certificate has been duly countersigned
as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office designated for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the name and address of
each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
7
<PAGE>
(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of Units (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and executed
the certificate set forth in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
represented by such Rights Certificate or Affiliates or Associates thereof as
the Company shall reasonably request; whereupon the Rights Agent shall, subject
to the provisions of Section 4(b), Section 7(e) and Section 14, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or destroyed,
then upon request by the registered holder of the Rights represented thereby and
upon payment to the Company and the Rights Agent of all reasonable expenses
incident thereto, there shall be issued, in exchange for and upon cancellation
of the mutilated Rights Certificate, or in substitution for the lost, stolen or
destroyed Rights Certificate, a new Rights Certificate, in substantially the
form of the prior Rights Certificate, of like tenor and representing the
equivalent number of Rights, but, in the case of loss, theft or destruction,
only upon receipt of evidence satisfactory to the Company and the Rights Agent
of such loss, theft or destruction of such Rights Certificate and, if requested
by the Company or the Rights Agent, indemnity also satisfactory to it.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Prior to the Expiration Date, the registered holder of any Rights
Certificate may, subject to the provisions of Sections 7(e) and 9(c), exercise
the Rights evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate 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 aggregate Purchase Price (as
hereinafter defined) for the number of Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
for which such surrendered Rights are then exercisable.
(b) The purchase price for one Unit pursuant to the exercise of a Right
shall initially be $20.00, subject to adjustment from time to time as provided
in Sections 11 and 13(a) (such purchase price, as so adjusted, being the
"Purchase Price"), and shall be payable in accordance with paragraph (c) below.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with the Rights Agent or another
corporation in good standing organized under the laws of the United States or
any 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 (such institution being the "Transfer
Agent"), certificates representing the Units that may
8
<PAGE>
be acquired upon exercise of the Rights. Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each Right so
exercised, of the Purchase Price for the Units (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) to be
purchased thereby as set forth below and an amount equal to any applicable
transfer tax or evidence satisfactory to the Company of payment of such tax, the
Rights Agent shall, subject to Section 20(k), thereupon promptly (i) requisition
from the Transfer Agent (or make available, if the Rights Agent is the Transfer
Agent) certificates for such number of Units as are to be purchased and the
Company will direct the Transfer Agent to comply with all such requests, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14, (iii) after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue Company Common
Stock, Preferred Stock or other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a), the Company will make all
arrangements necessary so that such Company Common Stock, Preferred Stock or
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate. The payment of the Purchase Price
(adjusted pursuant to Section 11(a)(iii)) may be made in cash or by certified or
bank check or money order payable to the order of the Company.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
the Rights remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Adverse Person, or an
Associate or Affiliate of an Acquiring Person or an Adverse Person, (ii) a
transferee of an Acquiring Person or an Adverse Person (or of any such Associate
or Affiliate) which becomes a transferee after the Acquiring Person or Adverse
Person becomes such, or (iii) a transferee of an Acquiring Person or an Adverse
Person (or of any such Associate or Affiliate) which becomes a transferee prior
to or concurrently with the Acquiring Person or Adverse Person becoming such and
which receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person
or Adverse Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person or Adverse Person (or such Associate or Affiliate) has
any continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer which a
majority of the Board has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall be null and void without any further action, and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) are complied with, but shall have no liability to any holder of
Rights or any other Person as a result of its failure to make any determination
under this Section 7(e) or Section 4(b) with respect to any Acquiring Person or
Adverse Person or any Affiliate, Associate or transferee of any Acquiring Person
or Adverse Person.
(f) Notwithstanding anything in this Agreement or any Rights Certificate
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 by such registered holder unless such
9
<PAGE>
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request
SECTION 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. Reservation and Availability of Capital Stock.
(a) The Company shall at all times following the Distribution Date cause
to be reserved and kept available, out of its authorized and unissued shares of
capital stock, the number of shares of Preferred Stock (and, following a
Triggering Event, other securities) that, as provided in this Agreement, will be
sufficient to permit the exercise in full of all outstanding Rights (or, if the
amount of authorized shares of Preferred Stock (or such other securities) not
then issued or reserved for issuance other than upon exercise of the Rights is
not sufficient, the maximum amount of shares of Preferred Stock (or such other
securities) as is then available). Without limiting the generality of the
foregoing, the Company's Board will, to the extent permitted by law, take such
action as may be required to increase the number of shares of Preferred Stock
that the Company is authorized to issue, to the extent necessary to permit the
exercise in full of all outstanding Rights. Upon the occurrence of any events
resulting in an increase in the aggregate number of Units (or other equity
securities of the Company) issuable upon exercise of all outstanding Rights
above the number then reserved, the Company shall make appropriate increases in
the number of Units or other securities so reserved.
(b) If the Units (and, following a Triggering Event, other securities) to
be issued and delivered upon the exercise of the Rights may be listed on any
national securities exchange or automated quotation system, the Company shall
during the period from the Distribution Date through the Expiration Date use its
best efforts to cause all securities reserved for such issuance to be listed on
such exchange or automated quotation system upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts (i) as soon as practicable
following the occurrence of a Section 11(a)(ii) Event and a determination by the
Company in accordance with Section 11(a)(iii) of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as practicable following the Distribution Date (such date being the
"Registration Date"), to file a registration statement on an appropriate form
under the Securities Act, with respect to the securities that may be acquired
upon exercise of the Rights (the "Registration Statement"), (ii) to cause the
Registration Statement to become effective as soon as practicable after such
filing, (iii) to cause the Registration Statement to continue to be effective
(and to include a prospectus complying with the requirements of the Securities
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for the securities covered by the Registration Statement and (B) the
Expiration Date, and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws.
10
<PAGE>
The Company may temporarily suspend for a period of time not to exceed 90 days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained.
(d) The Company shall take such action as may be necessary to ensure that
all Units (and, following the occurrence of a Triggering Event, any other
securities that may be delivered upon exercise of Rights) shall be, at the time
of delivery of the certificates for such Units and of such other securities,
duly and validly authorized and issued and fully paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer tax imposed
in connection with the issuance or delivery of the Rights Certificates or upon
the exercise of Rights; provided, however, that the Company shall not be
required to pay any such tax imposed in connection with the issuance or delivery
of Units, or any certificates or depositary receipts for such Units (or,
following the occurrence of a Triggering Event, any other securities, cash or
assets, as the case may be) to any person other than the registered holder of
the Rights Certificates evidencing the Rights surrendered for exercise. The
Company shall not be required to issue or deliver any certificates or depositary
receipts (or, following the occurrence of a Triggering Event, any other
securities, cash or assets, as the case may be) to, or in a name other than that
of, the registered holder upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
SECTION 10. Record Date upon Exercise of Rights. Each Person in whose name
any certificate for Units (or, following the occurrence of a Triggering Event,
other securities) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the Units (or, following the
occurrence of a Triggering Event, other securities) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or,
following the occurrence of a Triggering Event, the applicable other securities)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such securities on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or,
following the occurrence of a Triggering Event, the applicable other securities)
transfer books of the Company are open; and further provided that if delivery of
the Units is delayed pursuant to Section 9(c), such Persons shall be deemed to
have become the record holders of such Units only when such Units first become
deliverable. Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any rights of a stockholder of
the Company with respect to securities for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of securities covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Common Stock or the Preferred
Stock payable in shares (or fractional
11
<PAGE>
shares) of Common Stock or Preferred Stock, (B) subdivide the outstanding
Common Stock or Preferred Stock, (C) combine the outstanding Common Stock
or Preferred Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Stock or
the Preferred Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a)
and Section 7(e), 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 Units (or the
number and kind of other securities, as the case may be), issuable on such
date upon exercise of the Rights, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled
to receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of Units (or such other securities, as the case
may be), which, if such Right had been exercised immediately prior to such
date, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall
be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event:
(A) any Person shall become an Acquiring Person, other than
pursuant to any transaction which constitutes a Section 13 Event; or
(B) the Board shall declare by resolution any Person to be an
Adverse Person, upon a determination that such Person, alone or
together with its Affiliates and Associates, has, at any time after
this Agreement has been filed with the Securities and Exchange
Commission as an exhibit to a filing under the Exchange Act, become
the Beneficial Owner of a number of shares of Company Common Stock
which the Board determines to be substantial (which number of shares
shall in no event represent less than 10% of the outstanding shares
of Company Common Stock) and a determination by the Board, after
reasonable inquiry and investigation, including consultation with
such persons as the Board shall deem appropriate and consideration
of such factors selected by the Board as are permitted by applicable
law, that (a) such Beneficial Ownership by such Person is intended
to cause the Company to repurchase the shares of Common Stock
beneficially owned by such Person or to cause pressure on the
Company to take action or enter into a transaction or series of
transactions intended to provide such Person with short-term
financial gain under circumstances where the Board determines that
the best long-term interests of the Company would not be served by
taking such action or entering into such transaction or series of
transactions at that time, or (b) such Beneficial Ownership is
causing or reasonably likely to cause a material adverse impact
(including, but not limited to, impairment of relationships with
customers or impairment of the Company's ability to maintain its
competitive position) on the business or prospects of the Company,
on the Company's employees, customers or suppliers or on the
communities in which the Company operates or is located; or
(C) any Acquiring Person (for purposes of this Section
11(a)(ii)(C) and of Section 11(a)(ii)(D), the term "Acquiring
Person" shall be deemed to include an Adverse Person) or any
Associate or Affiliate of any Acquiring Person, at any time after
the date of this Agreement, directly or indirectly, (1) shall merge
into the Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of such
merger or combination and Company Common Stock shall remain
12
<PAGE>
outstanding and unchanged, (2) shall, in one transaction or a series
of transactions, transfer any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for shares of Company
Common Stock, for other equity securities of the Company or any such
Subsidiary, or for securities exercisable for or convertible into
shares of equity securities of the Company or any of its
Subsidiaries (whether Company Common Stock or otherwise) or
otherwise obtain from the Company or any of its Subsidiaries, with
or without consideration, any additional shares of such equity
securities or securities exercisable for or convertible into such
equity securities (other than pursuant to a pro rata distribution to
all holders of Company Common Stock), (3) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, in one transaction or a series of transactions, to, from
or with the Company or any of its Subsidiaries or any employee
benefit plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such a plan acting in such
capacity, assets (including securities) on terms and conditions less
favorable to the Company or such Subsidiary or plan than those that
could have been obtained in arm's-length negotiations with an
unaffiliated third party, other than pursuant to a transaction
described in Section 13(a), (4) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose
of, in one transaction or a series of transactions, to, from or with
the Company or any of the Company's Subsidiaries or any employee
benefit plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such a plan acting in such
capacity (other than transactions, if any, consistent with those
engaged in, as of the date hereof, by the Company and such Acquiring
Person or such Associate or Affiliate), assets (including
securities) having an aggregate fair market value of more than
$10,000,000, other than pursuant to a transaction set forth in
Section 13(a), (5) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the
Company or any of its Subsidiaries or any employee benefit plan
maintained by the Company or any of its Subsidiaries or any trustee
or fiduciary with respect to such a plan acting in such capacity,
any material trademark or material service mark, other than pursuant
to a transaction set forth in Section 13(a), (6) shall receive, or
any designee, agent or representative of such Acquiring Person or
any Affiliate or Associate of such Acquiring Person shall receive,
any compensation from the Company or any of its Subsidiaries other
than compensation for full-time employment as a regular employee at
rates in accordance with the Company's (or its Subsidiaries') past
practices, or (7) shall receive the benefit, directly or indirectly
(except proportionately as a holder of Company Common Stock or as
required by law or governmental regulation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits
or other tax advantage provided by the Company or any of its
Subsidiaries or any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect
to such a plan acting in such capacity; or
(D) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any
other transaction or series of transactions involving the Company or
any of its Subsidiaries, other than a transaction or transactions to
which the provisions of Section 13(a) apply (whether or not with or
into or otherwise involving an Acquiring Person), which has the
effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities of the
13
<PAGE>
Company or any of its Subsidiaries that is directly or indirectly
beneficially owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person;
then, immediately upon the date of the occurrence of an event described in
Section 11(a)(ii)(A)-(D) hereof (a "Section 11(a)(ii) Event"), proper
provision shall be made so that each holder of a Right (except as provided
below and in Section 7(e)) shall thereafter have the right to receive,
upon exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of the number of Units for which
a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, such number of Units as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of Units for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event (such product thereafter
being, for all purposes of this Agreement other than Section 13, the
Purchase Price), and (y) dividing that product by 50% of the then Current
Market Price (determined pursuant to Section 11(d)) per Unit on the date
of such first occurrence (such number of Units being the "Adjustment
Units"); provided, that the Purchase Price and the number of Adjustment
Units shall be further adjusted as provided in this Agreement to reflect
any Section 11(a)(ii) Event occurring after the initial occurrence of a
Section 11(a)(ii) Event.
(iii) In the event that the number of shares of Preferred Stock that
are authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii), the Board, acting by
resolution, shall: (A) determine the excess of (1) the value of the
Adjustment Units issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess being the "Spread"), and
(B) with respect to each Right (subject to Section 7(e)), make adequate
provision to substitute for such Adjustment Units, upon payment of the
applicable Purchase Price, (1) Company Common Stock, (2) cash, (3) a
reduction in the Purchase Price, (4) other equity securities of the
Company, (5) debt securities of the Company, (6) other assets, or (7) any
combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined in good
faith by the Board after receiving advice from a nationally recognized
investment banking firm selected by the Board which has not performed any
services for the Company or any Subsidiary of the Company in the prior
five years; provided, however, that if pursuant to the introductory clause
of this Section 11(a)(iii) the Company shall have elected or been required
to deliver value pursuant to clause (B) above and shall not have made
adequate provision to deliver such value within 30 days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the
date on which the Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein as the "Section
11(a)(iii) Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment
of the Purchase Price, Units (to the extent available) and then, if
necessary, cash (to the extent available) and then, if necessary, debt
securities, which Units and/or cash and/or debt securities shall have an
aggregate value equal to the Spread. If the Board shall determine in good
faith that it is likely that sufficient additional shares of Preferred
Stock could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended to the extent
necessary, but not more than 90 days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first sentence
of this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e), that such action shall apply uniformly to all outstanding
Rights and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization
of additional shares and/or to decide the appropriate form of distribution
to be made
14
<PAGE>
pursuant to the first sentence of this Section 11(a)(iii) and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of a Unit shall be the current market price
(as determined pursuant to Section 11(d)) per Unit on the date of the
first occurrence of the Section 11(a)(iii) Trigger Date.
(b) In the event the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Company Common Stock entitling
them to subscribe for or purchase (for a period expiring within 45 calendar days
after such record date) shares (or fractional shares) of Company Common Stock
(or shares having substantially the same rights, privileges and preferences as
shares of Company Common Stock ("Equivalent Company Common Stock")) or
securities convertible into Company Common Stock or Equivalent Company Common
Stock at a price per share of Company Common Stock or per share of Equivalent
Company Common Stock (or having a conversion price per share, if a security
convertible into Company Common Stock or Equivalent Company Common Stock) less
than the Current Market Price (as determined pursuant to Section 11(d)) per
share of Company Common Stock on such record date, then 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 sum of the number of shares of Company Common
Stock outstanding on such record date plus the number of shares of Company
Common Stock which the aggregate offering price of the total number of shares of
Company Common Stock and/or Equivalent Company Common Stock 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 shares of Company Common Stock outstanding on
such record date plus the number of additional shares of Company Common Stock
and/or Equivalent Company Common Stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In the event such subscription price may be paid by
delivery of consideration part or all of which may be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Shares of Company Common Stock owned by or held for the account of the
Company or any Subsidiary 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 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 the event the Company shall fix a record date for a distribution to
all holders of shares of Company Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend paid out of funds legally available therefor), assets
(other than a dividend payable in shares of Company Common Stock, but including
any dividend payable in stock other than Company Common Stock) or subscription
rights or warrants (excluding those referred to in Section 11(b)), then 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 Current Market Price (as
determined pursuant to Section 11(d)) per share of Company Common Stock on such
record date less the fair market value (as determined in good faith by the
Company, acting by resolution of its Board (whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holder of the Rights) of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
distributable in respect of a share of Company Common Stock, and the denominator
of which shall be such Current Market Price (as determined pursuant to Section
11(d)) per share of Company Common
15
<PAGE>
Stock. Such adjustments shall be made successively whenever such a record date
is fixed, and in the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in effect
if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "Current Market
Price" per share of Company Common Stock or Common Stock on any date shall
be deemed to be the average of the daily closing prices per share of such
shares for the ten consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that if prior
to the expiration of such ten Trading Day period the issuer announces
either (A) a dividend or distribution on such shares payable in such
shares or securities convertible into such shares (other than the Rights),
or (B) any subdivision, combination or reclassification of such shares,
then, following the ex-dividend date for such dividend or the record date
for such subdivision, as the case may be, the "Current Market Price" shall
be properly adjusted to take into account such event. The closing price
for each day shall be, if the shares are listed and admitted to trading on
a national securities exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which such shares are listed or
admitted to trading or, if such shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the Nasdaq Stock Market ("NASDAQ")
or such other system then in use, or, if on any such date such shares are
not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market
in such shares selected by the Board. If on any such date no market maker
is making a market in such shares, the fair value of such shares on such
date as determined in good faith by the Board shall be used. If such
shares are not publicly held or not so listed or traded, "Current Market
Price" per share shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. The
term "Trading Day" shall mean, if such shares are listed or admitted to
trading on any national securities exchange, a day on which the principal
national securities exchange on which such shares are listed or admitted
to trading is open for the transaction of business or, if such shares are
not so listed or admitted, a Business Day.
(ii) For the purpose of any computation hereunder, if the Units or
the Preferred Stock are actively publicly traded, the "current market
price" per Unit of Preferred Stock shall be determined in the same manner
as set forth above for Company Common Stock in clause (i) of this Section
11(d) (other than the fourth sentence thereof). If the Units or the
Preferred Stock are not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the "current market price"
per Unit shall be conclusively deemed to be the Current Market Price per
share of Company Common Stock. If neither Company Common Stock nor
Preferred Stock is publicly held or so listed or traded, the "current
market price" per Unit shall mean the fair value per share as determined
in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights.
(e) 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 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-thousandth of a share of Company Common Stock or
Common Stock or Unit, 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
16
<PAGE>
the earlier of (i) three years from the date of the transaction which mandates
such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
13(a), the holder of any Right thereafter exercised shall become entitled to
receive any equity securities other than Units, thereafter the number of such
other shares so receivable upon exercise of any Right and the Purchase Price
thereof shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
Units contained in Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j), (k),
(l) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
Units shall apply on like terms to any such other equity securities.
(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, that number of Units (or other
securities or amount of cash or combination thereof) that may be acquired from
time to time pursuant to this Agreement upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Units (calculated to
the nearest one-thousandth of a Unit) obtained by (i) multiplying (x) the number
or amount of Units (or cash or other securities) issuable upon exercise of 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 lieu of any adjustment in the
number of Units or other securities that may be acquired upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for that number of Units 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-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. The record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten days later
than the date of such public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution
and replacement for the Rights Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
17
<PAGE>
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of Units issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per Unit and the number of Units which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value of the number of Units 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 such fully paid and non-assessable Units 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
issuance to the holder of any Right exercised after such record date of the
Units and shares of other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Units and shares of 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 (fractional or otherwise) or securities 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 in its good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Company
Common Stock, (ii) issuance wholly for cash of any shares of Company Common
Stock at less than the Current Market Price, (iii) issuance wholly for cash of
shares of Company Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Company Common Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Company Common
Stock, shall not be taxable to such holders or shall reduce the taxes payable by
such holders.
(n) The Company shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), if (x)
at the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
Person which constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) shall have distributed or otherwise transferred to its
stockholders or other persons holding an equity interest in such Person Rights
previously owned by such Person or any of its Affiliates and Associates;
provided, however, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company.
18
<PAGE>
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 26, take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Company Common Stock payable in shares of Company Common
Stock, (ii) subdivide the outstanding shares of Company Common Stock, (iii)
combine the outstanding shares of Company Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a reclassification of
Company Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), the number of Rights associated with each share of Company Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Company Common Stock following
any such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Company Common Stock immediately prior to
such event by a fraction the numerator of which shall be the total number of
shares of Company Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of shares of
Company Common Stock outstanding immediately following the occurrence of such
event.
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Company Common
Stock and the Preferred Stock, a copy of such certificate, and mail a brief
summary thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of
Company Common Stock) in accordance with Section 25. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Stock Acquisition Date or at a time
when Continuing Directors constitute less than a majority of the Company's
Board, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o)) shall consolidate with, or merge with or into, the Company,
and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Company Common Stock shall be converted
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer) to any Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), in one or more
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) (any such
event being a "Section 13 Event"), then, and in each such case, proper provision
shall be made so that: (i) each holder of a Right, except as provided in Section
7(e), shall thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price, such number of validly authorized and issued,
fully paid and non-assessable shares of Common Stock of the Principal Party (as
such term is hereinafter defined),
19
<PAGE>
which shares shall not be subject to any liens, encumbrances, rights of first
refusal, transfer restrictions or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the number
of Units for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such Units for which a Right would be exercisable hereunder but for the
occurrence of such Section 11(a)(ii) Event by the Purchase Price which would be
in effect hereunder but for such first occurrence) and (2) dividing that product
(which, following the first occurrence of a Section 13 Event, shall be the
"Purchase Price" for all purposes of this Agreement) by 50% of the Current
Market Price (determined pursuant to Section 11(d)) per share of the Common
Stock of such Principal Party on the date of consummation of such Section 13
Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 shall apply only to such Principal
Party following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to ensure that the
provisions of this Agreement shall thereafter be applicable to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) shall be of no further effect following the
first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of
any securities into which shares of Company Common Stock are converted in
such merger or consolidation, or, if there is more than one such issuer,
the issuer of Common Stock that has the highest aggregate Current Market
Price (determined pursuant to Section 11(d)) and (B) if no securities are
so issued, the Person that is the other party to such merger or
consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the highest aggregate Current Market Price
(determined pursuant to Section 11(d)); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving
the largest portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets
or earning power transferred pursuant to such transaction or transactions
or if the Person receiving the largest portion of the assets or earning
power cannot be determined, whichever Person the Common Stock of which has
the highest aggregate Current Market Price (determined pursuant to Section
11(d));
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the
preceding twelve-month period registered under Section 12 of the Exchange
Act ("Registered Common Stock"), or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person that has
Registered Common Stock outstanding, "Principal Party" shall refer to such
other Person; (2) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Stock
outstanding, "Principal Party" shall refer to the ultimate parent entity
of such first-mentioned Person; (3) if the Common Stock of such Person is
not Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered
20
<PAGE>
Common Stock outstanding, "Principal Party" shall refer to whichever of
such other Persons is the issuer of the Registered Common Stock having the
highest aggregate Current Market Price (determined pursuant to Section
11(d)); and (4) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and none of
such other Persons have Registered Common Stock outstanding, "Principal
Party" shall refer to whichever ultimate parent entity is the corporation
having the greatest stockholders equity or, if no such ultimate parent
entity is a corporation, shall refer to whichever ultimate parent entity
is the entity having the greatest net assets.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized shares of its
Common Stock which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13, and unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that the Principal Party, at its own expense, will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement under
the Securities Act with respect to the Common Stock that may be acquired
upon exercise of the Rights, (B) cause such registration statement to
remain effective (and to include a prospectus complying with the
requirements of the Securities Act) until the Expiration Date, and (C) as
soon as practicable following the execution of such agreement, take such
action as may be required to ensure that any acquisition of such Common
Stock upon the exercise of the Rights complies with any applicable state
security or "blue sky" laws; and
(ii) use its best efforts either (A) to list (or continue the
listing of) the Common Stock of the Principal Party on a national
securities exchange or (B) to cause such Common Stock to be reported by
NASDAQ or such other comparable transaction reporting system as may then
be in use; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under
the Exchange Act.
(d) If the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then Current Market Price
per share (determined pursuant to Section 11(d)) or securities exercisable for,
or convertible into, Common Stock of such Principal Party at less than such then
Current Market Price (other than to holders of Rights pursuant to this Section
13) or (ii) providing for any special payment, tax or similar provisions in
connection with the issuance of the Common Stock of such Principal Party
pursuant to the provisions of this Section 13; then, in such event, the Company
shall not consummate any such transaction unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
21
<PAGE>
(e) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(f) Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 13 shall not be applicable to a transaction described
in clause (x) or (y) of Section 13(a) (A) if such transaction is consummated
pursuant to and in accordance with a definitive agreement approved by the
Company's Board at a time when Continuing Directors constitute a majority of the
Board or (B) if (i) such transaction is consummated with a Person or Persons who
acquired shares of Company Common Stock pursuant to a Permitted Offer (or a
wholly-owned Subsidiary of any such Person or Persons), (ii) the price per share
of Company Common Stock being offered in such transaction is not less than the
price per share of Company Common Stock paid to all holders of Company Common
Stock whose shares were purchased pursuant to such Permitted Offer, and (iii)
the form of consideration being offered to the remaining holders of shares of
Company Common Stock pursuant to such transaction is the same as the form of
consideration paid to holders of the Company Common Stock pursuant to such
Permitted Offer.
SECTION 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the Persons to which such fractional
Rights would otherwise be issuable, an amount in cash equal to such fraction of
the market value of a whole Right. For purposes of this Section 14(a), the
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 of the Rights for any day shall
be, if the Rights are listed or admitted to trading on a national securities
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.
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
shall be used and such determination shall be described in a statement filed
with the Rights Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of Units upon
exercise of the Rights or to distribute certificates which evidence such
fractional Units. In lieu of such fractional Units, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the then
current market price of a Unit on the day of exercise, determined in accordance
with Section 11(d).
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
SECTION 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or,
22
<PAGE>
prior to the Distribution Date, of a certificate representing shares of Company
Common Stock), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, of a certificate
representing shares of Company Common Stock), may, on his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company or any other Person to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
SECTION 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
by transfer of the shares of Company Common Stock in respect of which those
Rights were issued;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
duly executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the Rights
Agent may deem and treat the person in whose name a Rights Certificate (or,
prior to the Distribution Date, the associated Company Common Stock certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Company Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e), 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, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as promptly as practicable.
SECTION 17. Rights Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of Units or other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, except as provided in Section 24, to receive notice of
meetings or other actions affecting stockholders, or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions
hereof.
23
<PAGE>
SECTION 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, promptly
following demand of the Rights Agent, its reasonable expenses, including
reasonable fees and disbursements of its counsel, incurred in connection with
the execution and administration of this Agreement and the exercise and
performance of its duties hereunder. The Company shall indemnify the Rights
Agent for, and 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 of liability hereunder.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to have been signed, executed and,
where necessary, verified or acknowledged by the proper Person or Persons.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Rights Agent be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage and
regardless of the form of the action.
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stockholder services businesses 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 document or any further act on
the part of any of the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
24
<PAGE>
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "Current Market Price") be proved or established by the Company
prior to taking or suffering any action under this Agreement, such fact or
matter (unless other evidence in respect thereof be specified herein) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer,
the President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; provided, however, that so long as any Person is an Acquiring Person
under this Agreement, such certificate shall be signed and delivered by a
majority of the members of the Board; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable under this Agreement only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), 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 have any responsibility for the validity of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or for the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or failure by the Company to
satisfy conditions contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 or for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt by the Rights Agent of the certificate
describing any such adjustment contemplated by Section 12); nor shall it by any
act under this Agreement be deemed to make any representation or warranty as to
the authorization or reservation of any Units, shares of Preferred Stock or any
other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Units or any other securities will, when so
issued, be validly authorized and issued, fully paid and non-assessable.
(f) The Company shall perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Rights Agent for
the performance by the Rights Agent of its duties under this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, Chief Executive Officer, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer; provided, however, that so long as any Person
is an Acquiring Person under this Agreement, the Rights Agent shall accept such
instructions and advice only
25
<PAGE>
from a majority of the Board and shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with such instructions of
the majority of the Board. 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 Amended and Restated Rights Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than 5 Business Days
after the date any such officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of its rights hereunder if
the Rights Agent shall have reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed, not signed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company. If such certificate has been completed and signed and shows a negative
response to clauses 1 and 2 of such certificate, unless previously instructed
otherwise in writing by the Company (which instructions may impose on the Rights
Agent additional ministerial responsibilities, but no discretionary
responsibilities), the Rights Agent may assume without further inquiry that the
Rights Certificate is not owned by a person described in Section 4(b) or Section
7(e) and shall not be charged with any knowledge to the contrary.
(l) The Rights Agent shall have no duties or obligations other than those
specifically set forth in this Agreement, or as may subsequently be agreed to in
writing by the Company and the Rights Agent.
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' prior notice in writing mailed to the Company, and to each
transfer agent of the Company Common Stock and the Preferred Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' prior notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent of the
Company Common Stock and the Preferred Stock, by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or
26
<PAGE>
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or any state of the United States in good standing, shall be
authorized to do business as a banking institution in the State of New York,
shall be authorized under such laws to exercise corporate trust or stock
transfer powers, shall be subject to supervision or examination by federal or
state authorities and shall have at the time of its appointment as Rights Agent
a combined capital and surplus of at least $100,000,000 or (b) an Affiliate of a
corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the 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
that 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 Company Common Stock and the Preferred Stock, and
mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent.
SECTION 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by resolution of its Board to reflect any adjustment or change
made in accordance with the provisions of this Agreement in the Purchase Price
or the number or kind or class of shares or other securities or property that
may be acquired under the Rights Certificates. In addition, in connection with
the issuance or sale of shares of Company Common Stock following the
Distribution Date and prior to the Expiration Date, the Company (a) shall, with
respect to shares of Company Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 23. Redemption and Termination.
(a) The Company, acting by resolution of its Board may, at its option, at
any time prior to the earlier of (i) the Distribution Date or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.0001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being the "Redemption
Price"). The Company may, at its option, pay the Redemption Price in cash,
shares of Company Common Stock (based on the Current Market Price (determined
pursuant to Section 11(d)) of the shares of Company Common Stock at the time of
redemption), or such other form of consideration as the Board in good faith
deems appropriate.
27
<PAGE>
(b) Immediately upon an action by the Board in accordance with Section
23(a) ordering the redemption of the Rights, evidence of which shall be
filed with the Rights Agent, 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 for
each Right so held. Promptly after the action of the Board ordering the
redemption of the Rights in accordance with Section 23(a), the Company
shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for Company Common Stock. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made.
SECTION 24. 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
Company Common Stock or to make any other distribution to the holders of Company
Common Stock (other than a regular quarterly cash dividend paid out of funds
legally available therefor), (ii) to offer to the holders of Company Common
Stock rights or warrants to subscribe for or to purchase any additional shares
of Company Common Stock or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Company Common
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Company Common Stock), (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o)), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), or (v)
to effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Rights Certificate,
to the extent feasible and in accordance with Section 25, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Company Common Stock, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record date
for determining holders of the shares of Company Common Stock for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Company Common Stock whichever shall be
the earlier; provided, however, no such notice shall be required pursuant to
this Section 24, if any Subsidiary of the Company effects a consolidation or
merger with or into, or effects a sale or other transfer of assets or earnings
power to, any other Subsidiary of the Company.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each holder of
a Rights Certificate, to the extent feasible and in accordance with Section 25,
a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii).
SECTION 25. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:
MIM Corporation
28
<PAGE>
100 Clearbrook Road
Elmsford, New York 10523
Attention: General Counsel
Tel No.: (914) 460-1600
Fax No.: (914) 460-1670
and if to the Rights Agent, at its address at:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Corporate Trust Department
Tel No.: (718) 921-8380
Fax No.: (718) 259-1144
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage-prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 26. Supplements and Amendments. Prior to the Distribution Date,
the Company may by resolution of its Board, and the Rights Agent shall, if the
Company pursuant to such resolution so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing shares of Company Common Stock. From and after the Distribution
Date, the Company may by resolution of its Board, and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder, or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Adverse Person or an
Affiliate or Associate of an Acquiring Person or an Adverse Person); provided,
however, that this Agreement may not be supplemented or amended, at a time when
the Rights are not redeemable, to lengthen, pursuant to clause (iii) of this
sentence, (A) subject to Section 30, a time period (including a time period
described in Section 3(a)(i) or 3(a)(ii)) relating to when the Rights may be
redeemed, or (B) any other time period unless in a case described in this clause
(B) such lengthening is for the purpose of protecting, enhancing or clarifying
the rights of, and/or the benefits to, the holders of Rights. Upon the delivery
of a certificate from an appropriate officer of the Company or, so long as any
Person is an Acquiring Person hereunder, from a majority of the members of the
Board which states that the proposed supplement or amendment is in compliance
with the terms of this Section 26, the Rights Agent shall execute such
supplement or amendment. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Company Common Stock.
SECTION 27. 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 28. Determinations and Actions by the Board of Directors, Etc. For
all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance
29
<PAGE>
with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act Regulations as
in effect on the date hereof. Except as otherwise specifically provided herein,
the Board shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power (i) to interpret the provisions of this Agreement, and (ii) to make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board or any member
thereof to any liability to the holders of the Rights.
SECTION 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of shares of Company Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of shares of Company Common Stock).
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;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement and the
Rights shall not then be redeemable, then the right of redemption set forth in
Section 23 shall be reinstated and shall not expire until the Close of Business
on the tenth Business Day following the date of such determination by the Board.
SECTION 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued under this Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed entirely in such State, without giving effect to
the conflicts of laws principles thereof.
SECTION 32. Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 33. Captions. The captions contained in this Agreement are for
descriptive purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 34. Exchange.
(a) The Company may at any time prior to the Distribution Date, upon
resolution of the Board, exchange all or part of the then outstanding Rights
(which shall not include Rights that have become void pursuant to Section 7(e))
for shares of Company Common Stock at an exchange ratio specified in the
following sentence, as appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof. Subject to such
adjustment, each Right may be exchanged for that number of shares of Company
Common Stock obtained by dividing the Adjustment
30
<PAGE>
Spread (as defined below) by the then Current Market Price (determined pursuant
to Section 11(d)) per share of Company Common Stock on the earlier of (i) the
Stock Acquisition Date and (ii) the date on which a tender or exchange offer
(other than a Permitted Offer) by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect to such a
plan acting in such capacity) is first published or sent or given within the
meaning of Rule 14d-4(a) of the Exchange Act Regulations or any successor rule,
if upon consummation thereof such Person would be the Beneficial Owner of 15% or
more of the shares of Company Common Stock then outstanding (such exchange ratio
being the "Exchange Ratio"). The "Adjustment Spread" shall equal (x) the
aggregate market price on the date of such event of the number of Adjustment
Units determined pursuant to Section 11(a)(ii), minus (y) the Purchase Price.
(b) Immediately upon the action of the Board, in accordance with Section
34(a), ordering the exchange of any Rights 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 shares of Company Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange shall state the method by which the exchange of
shares of Company Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e)) held
by each holder of Rights.
(c) In the event that the number of shares of Company Common Stock which
are authorized by the Company's Certificate of Incorporation but not outstanding
or reserved for issuance are not sufficient to permit any exchange of Rights as
contemplated in accordance with this Section 34, the Company shall take all such
action as may be necessary to authorize additional shares of Company Common
Stock for issuance upon exchange of the Rights or make adequate provision to
substitute (i) cash, (ii) debt securities of the Company, (iii) other assets, or
(iv) any combination of the foregoing, having an aggregate value equal to the
Adjustment Spread, where such aggregate value has been determined by the Board.
(d) In connection with any exchange authorized pursuant to Section 34(a),
the Company shall not be required to issue fractions of shares of Company Common
Stock or to distribute certificates which evidence fractional shares. In lieu of
fractional shares, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exchanged as herein provided an amount
in cash equal to the same fraction of the Current Market Price (determined
pursuant to Section 11(d)) of one share of Company Common Stock.
31
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
MIM CORPORATION
By: /s/ Barry A. Posner
-----------------------------------------
Name: Barry A. Posner
Title: Vice President and General Counsel
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Herbert J. Lemmar
-----------------------------------------
Name: Herbert J. Lemmar
Title: Vice President
<PAGE>
EXHIBIT A
TO AMENDED AND RESTATED
RIGHTS AGREEMENT
[Form of Rights Certificate]
Certificate No. R-_________ __________ Rights
NOT EXERCISABLE AFTER NOVEMBER 24, 2008 OR EARLIER IF THE RIGHTS EXPIRE
UNDER CERTAIN CIRCUMSTANCES OR ARE REDEEMED OR EXCHANGED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.0001 PER RIGHT, ON THE TERMS SET FORTH IN THE AMENDED AND RESTATED
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN
THE AMENDED AND RESTATED 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 ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE
AMENDED AND RESTATED RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
RIGHTS CERTIFICATE
MIM CORPORATION
This certifies that ___________________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Amended and Restated Rights Agreement, dated as of May 20, 1999 (the
"Amended and Restated Rights Agreement"), between MIM Corporation, a Delaware
corporation (the "Company"), and American Stock Transfer & Trust Company, a New
York corporation, as Rights Agent (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date and prior to the Expiration Date
(each as defined in the Amended and Restated Rights Agreement), at the office of
the Rights Agent, one one-thousandth of a fully paid and non-assessable share of
Series A Junior Participating Preferred Stock, par value $.0001 per share (the
"Preferred Stock"), of the Company at a purchase price (the "Purchase Price") of
$20.00, in cash, per one one-thousandth of a share (each such one one-thousandth
of a share of Preferred Stock being a "Unit"), upon presentation and surrender
of this Rights Certificate with the Election to Purchase and related certificate
duly executed. In certain circumstances described in the Amended and Restated
Rights Agreement, the Board may elect to issue
- --------
* The portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.
<PAGE>
cash, assets or other equity or debt securities to the holder hereof in lieu of
Units. Capitalized terms used but not defined in this Rights Certificate that
are defined in the Amended and Restated Rights Agreement shall have the meanings
ascribed to them in the Amended and Restated Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an Acquiring Person or
an Adverse Person or an Affiliate or Associate of any such Acquiring Person or
Adverse Person, (ii) under certain circumstances specified in the Amended and
Restated Rights Agreement, a transferee of any such Acquiring Person or Adverse
Person, or Associate or Affiliate of any such Acquiring Person or Adverse
Person, or (iii) under certain circumstances specified in the Amended and
Restated Rights Agreement, a transferee of a person who, after such transfer,
became an Acquiring Person or an Adverse Person, or an Affiliate or Associate of
an Acquiring Person or an Adverse 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 such Section 11(a)(ii) Event.
The number of Rights evidenced by this Rights Certificate (and the number
of Units which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are subject to modification and adjustment upon
the occurrence of certain events as provided in the Amended and Restated Rights
Agreement.
In certain circumstances, the Rights evidenced hereby may entitle the
registered holder thereof to purchase capital stock of an entity other than the
Company or receive common stock, cash or other assets, all as provided in the
Amended and Restated Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Amended and Restated Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Amended and Restated Rights Agreement reference is hereby
made for a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Company and the holders
of the Rights Certificates. Copies of the Amended and Restated Rights Agreement
are on file at the principal office of the Company and are available from the
Company upon written request and at no charge.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing an aggregate number of Rights equal to the aggregate number
of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Amended and Restated Rights Agreement, at
any time prior to the earlier of (i) the Stock Acquisition Date or (ii) the
Final Expiration Date, the Rights evidenced by this Certificate may be redeemed
by the Company, at its option, by resolution of the Board, at a redemption price
of $.0001 per Right, payable at the Company's option in cash, common stock of
the Company or other consideration, subject to adjustment in certain events as
provided in the Amended and Restated Rights Agreement.
No fractional Units will be issued upon the exercise of any Right or
Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Amended and Restated Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Preferred Stock
or of any other securities which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Amended and Restated 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
2
<PAGE>
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 Amended and Restated Rights Agreement),
or to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Amended and Restated Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of _____________________________________,
ATTEST: MIM CORPORATION
By: ___________________________
Name: Name:
Title: Title:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
By: ___________________________
Authorized Signatory
3
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name of transferee)
________________________________________________________________________________
(Please print address of transferee)
this Rights evidenced by this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
__________________________________________, with full power of substitution, to
transfer said Rights on the books of the within-named Company.
Dated: __________________________________,
Signature:_______________________________
(Sign exactly as your name appears on the
other side of this Rights Certificate)
Signature Guarantee:_____________________
4
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Adverse Person or an Affiliate or Associate of any
such Acquiring Person or Adverse Person (as such terms are defined in the
Amended and Restated Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Adverse Person or an Affiliate or Associate of an Acquiring Person
or an Adverse Person.
Dated: _________________________________,
Signature: _____________________________________________________________________
(Sign exactly as your name appears on the other side of this Rights Certificate)
Signature Guarantee: ___________________
Notice
The signature to the foregoing Assignment and related Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Adverse Person or an Affiliate or
Associate thereof and, in the case of an Assignment, will affix a legend to that
effect on any Rights Certificates issued in exchange for this Rights
Certificate.
5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise the Rights evidenced by this Rights Certificate)
To: MIM CORPORATION
The undersigned hereby irrevocably elects to exercise ________________
Rights evidenced by this Rights Certificate to purchase the Units issuable upon
the exercise of the Rights (or such other securities, cash or property of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such Units (or such other securities
which may be issuable upon the exercise of the Rights) be issued in the name of
and delivered to:
Please insert social security
or other identifying number:_________________________
________________________________________
(Please print name)
________________________________________
________________________________________
(Please print address)
If such number of Rights shall not be all of the Rights evidenced by this
Rights Certificate, a new Rights 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)
________________________________________
________________________________________
(Please print address)
Dated: ______________________________________,
Signature: _____________________________________________________________________
(Sign exactly as your name appears on the other side of this Rights Certificate)
Signature Guarantee: ___________________
6
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
beneficially owned or being exercised by or on behalf of a Person who is or was
an Acquiring Person or an Adverse Person or an Affiliate or Associate of any
such Acquiring Person or Adverse Person (as such terms are defined in the
Amended and Restated Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Adverse Person or an Affiliate or Associate of an Acquiring Person
or an Adverse Person.
Dated: _________________________________,
Signature:______________________________________________________________________
(Sign exactly as your name appears on the other side of this Rights Certificate)
Signature Guarantee:____________________
Notice
The signature to the foregoing Election to Purchase and related
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Security Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Signature
Guarantee Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Adverse Person or an Affiliate or
Associate thereof and, in the case of an exercise of less than all of the Rights
evidenced by this Rights Certificate, will affix a legend to that effect on any
Rights Certificates issued for the balance of such Rights in exchange for this
Rights Certificate.
7
<PAGE>
EXHIBIT B
TO AMENDED AND RESTATED
RIGHTS AGREEMENT
SUMMARY OF
RIGHTS TO PURCHASE PREFERRED STOCK
On November 24, 1998, the Board of Directors (the "Board") of MIM
Corporation (the "Company") declared a dividend of one right ("Right") for each
outstanding share of the Company's Common Stock, par value $.0001 per share
("Company Common Stock"), to stockholders of record at the close of business on
December 4, 1998 (the "Record Date") and for each share of Company Common Stock
issued (including shares distributed from the Company's treasury) by the Company
thereafter and prior to the Distribution Date (as defined below). Each Right
entitles the registered holder, subject to the terms of the Amended and Restated
Rights Agreement (as defined below), to purchase from the Company one
one-thousandth of a share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $.0001 per share ("Preferred Stock"), of the Company, at a
purchase price of $20.00 per share, in cash (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in an Amended
and Restated Rights Agreement, dated as of May 20, 1999 (the "Amended and
Restated Rights Agreement"), between the Company and American Stock Transfer &
Trust Company, as Rights Agent. In general, each Unit has substantially the same
economic attributes and carries substantially the same voting rights as one
share of Company Common Stock.
Copies of the Amended and Restated Rights Agreement have been filed with
the Securities and Exchange Commission as exhibits to a Post-Effective Amendment
No. 2 to Registration Statement on Form 8-A/A dated May 20, 1999 (the "Form
8-A/A") and are publicly available. Copies of the Amended and Restated Rights
Agreement are also available free of charge from the Company. This summary
description of the Rights and the Preferred Stock does not purport to be
complete and is qualified in its entirety by reference to all the provisions of
the Amended and Restated Rights Agreement and the Certificate of Designations
creating the Preferred Stock, including the definitions therein of certain
terms, which Amended and Restated Rights Agreement and Certificate of
Designations are incorporated herein by reference.
Description of the Rights
Initially, the Rights will attach to all certificates representing shares
of outstanding Company Common Stock, and no separate Rights certificates will be
distributed. The Rights will separate from the Company Common Stock and the
"Distribution Date" will occur upon the earliest of (i) 10 business days (or,
subject to certain limitations, such later date as may be determined by action
of the Board prior to such time) following a public announcement (the date of
such announcement being the "Stock Acquisition Date") that (a) a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired,
obtained the right to acquire, or otherwise obtained beneficial ownership of 15%
or more of the then outstanding shares of Company Common Stock or (b) the Board
has, in accordance with the criteria set forth in the Amended and Restated
Rights Agreement, declared a person who beneficially owns at least 10% of the
then outstanding shares of Company Common Stock to be an "Adverse Person," (ii)
10 business days (or, subject to certain limitations, such later date as may be
determined by action of the Board prior to such time) following the commencement
of a tender offer or exchange offer that would result in a person or group
beneficially owning 15% or more of the then outstanding shares of Company Common
Stock (other than a tender or exchange offer for all outstanding shares of
Company Common Stock at a price and on terms that the Board determines to be
fair to and otherwise in the best interests of
1
<PAGE>
the Company and its stockholders (a "Permitted Offer")), (iii) the date on which
it is publicly announced that a person or group has acquired beneficial
ownership of 40% or more of the then outstanding shares of Company Common Stock
and (iv) the occurrence of a Flip-Over Event (as defined below). Until the
Distribution Date, (i) the Rights will be evidenced by Company Common Stock
certificates and will be transferred with and only with such Company Common
Stock certificates, (ii) new Company Common Stock certificates issued after the
Record Date (including shares distributed from the Company's treasury) will
contain a notation incorporating the Amended and Restated Rights Agreement by
reference and (iii) the surrender for transfer of any certificates evidencing
outstanding Company Common Stock will also constitute the transfer of the Rights
associated with the Company Common Stock evidenced by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on November 24, 2008 unless the Rights are earlier
redeemed or exchanged by the Company.
As soon as practicable after the Distribution Date, separate Certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of Company Common Stock as of the close of business on the Distribution
Date and, thereafter, the separate Rights Certificates alone will represent the
Rights.
In the event (a "Flip-In Event") that (i) a person becomes an Acquiring
Person (other than pursuant to a Flip-Over Event (as defined below)), (ii) the
Board declares a person to be an Adverse Person, (iii) the Company is the
surviving corporation in a merger with an Acquiring Person and shares of Company
Common Stock shall remain outstanding, (iv) an Acquiring Person or an Adverse
Person engages in one or more "self-dealing" transactions specified in the
Amended and Restated Rights Agreement, or (v) during such time as there is an
Acquiring Person or an Adverse Person, an event occurs which results in such
Acquiring Person's or Adverse Person's ownership interest being increased by
more than 1% (e.g., by means of a reverse stock split or recapitalization),
then, in each such case, each holder of a Right will thereafter have the right
to receive, upon exercise, Units (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 exercise price is the Purchase Price multiplied
by the number of Units issuable upon exercise of a Right prior to the Flip-In
Event. Notwithstanding the foregoing, following the occurrence of any Flip-In
Event all Rights that are, or (under certain circumstances specified in the
Amended and Restated Rights Agreement) were, beneficially owned by any Acquiring
Person or Adverse Person (or by certain related parties) will be null and void.
For example, at an exercise price of $100.00 per Right, each Right not
owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following a Flip-In Event would entitle its holder to purchase $200.00
worth of Units (or other consideration, as noted above), based upon its then
current market price (determined based upon the market price of the Company
Common Stock), for $100.00. Assuming that the Company Common Stock had a current
market price of $50.00 per share at such time, the holder of each valid Right
would be entitled to purchase 4 Units of Preferred Stock for $100.00.
In the event (a "Flip-Over Event") that, at any time following the Stock
Acquisition Date or at a time when Continuing Directors (as defined in the
Amended and Restated Rights Agreement) constitute less than a majority of the
Company's Board of Directors, (i) the Company is acquired in a merger or other
business combination transaction and the Company is not the surviving
corporation, (ii) any person consolidates or merges with the Company and all or
part of the Company Common Stock is converted or exchanged for securities, cash
or property of any other Person, or (iii) 50% or more of the Company's assets or
earning power is sold or transferred, then, in each such case, each holder of a
Right (except Rights which previously have been voided as described above) shall
thereafter have the right to receive, upon exercise, common stock of the
Acquiring Person or Adverse Person having a value equal to two times the
exercise price of the Right.
2
<PAGE>
The Purchase Price payable, and the number of Units issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Company Common Stock, (ii) if holders of the Company
Common Stock are granted certain rights or warrants to subscribe for Company
Common Stock or convertible securities at less than the current market price of
the Company Common Stock, or (iii) upon the distribution to the holders of the
Company Common Stock of evidences of indebtedness, cash or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units of Company Common
Stock. In lieu thereof, an adjustment in cash may be made based on the market
price of the Company Common Stock prior to the date of exercise.
At any time prior to the Distribution Date, except as described below, the
Company may redeem the Rights in whole, but not in part, at a price of $.0001
per Right (the "Redemption Price"), subject to adjustment in certain events,
payable, at the election of the Board, in cash, shares of Company Common Stock
or such other form of consideration as the Board may determine. Immediately upon
effectiveness of the action of the Board ordering the redemption of the Rights,
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
At any time prior to the Distribution Date, the Company may exchange the
Rights (other than Rights owned by an Acquiring Person or an Adverse Person, or
an affiliate or an associate of an Acquiring Person or an Adverse Person, which
will have become void), in whole or in part, for shares of Company Common Stock
at an exchange ratio determined as provided in the Amended and Restated Rights
Agreement.
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. Following exercise, the holder's rights will be
determined by the type of consideration received upon the exercise. Although the
distribution of the Rights should not be taxable to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize taxable
income in the event that the Rights become exercisable for Units (or other
consideration) or are exchanged as provided in the preceding paragraph.
Except as described below, the provisions of the Amended and Restated
Rights Agreement may be amended without the approval of the holders of Company
Common Stock at any time prior to the Distribution Date. After the Distribution
Date, the provisions of the Amended and Restated Rights Agreement may be amended
in order to cure any ambiguity, defect or inconsistency, to make changes which
do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person or Adverse Person), or to shorten or lengthen
any time period under the Amended and Restated Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption may be
made after the Rights are no longer redeemable.
3
<PAGE>
EXHIBIT C
TO AMENDED AND RESTATED
RIGHTS AGREEMENT
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
MIM CORPORATION
MIM CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors (the
"Board") of the Corporation by its Certificate of Incorporation and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware (the "DGCL"), the Board, on November 24, 1998 duly adopted a resolution
fixing the voting powers, designations, preferences and rights relating to a
series of preferred stock as follows:
"RESOLVED, that the Board authorizes the issuance of a series of preferred
stock consisting of 250,000 shares, par value $.0001 per share, and the Board
fixes the voting powers, designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions of such preferences and/or rights, of the shares of that series as
follows:
Section 1. Designation and Amount; Preference Shares.
(a) The shares of the series will be designated Series A Junior
Participating Preferred Stock ("Series A Preferred Stock"). The total number of
authorized shares of the series will be 250,000 shares, par value $.0001 per
share.
(b) Each share of Series A Preferred Stock shall be subdivided into and
issuable in fractions of one one-thousandth (1/1,000) of a share. Each such one
one-thousandth of a share of Series A Preferred Stock is hereinafter referred to
as a "Unit."
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 A Preferred Stock with respect to dividends, each holder of a Unit shall
be entitled to receive, when, as and if declared by the Board out of funds
legally available for that 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 Unit of Series A Preferred Stock, in an amount per
Unit (rounded to the nearest cent) equal to the greater of (a) $0.25 or (b)
subject to the provision for adjustment
1
<PAGE>
hereinafter set forth, the aggregate per share amount of all cash dividends
declared on shares of the common stock, par value $.0001 per share, of the
Company (the "Common Stock") since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of a Unit of Series A Preferred Stock, and (ii) subject
to the provision for adjustment hereinafter set forth, quarterly distributions
(payable in kind) on each Quarterly Dividend Payment Date in an amount per Unit
equal to the aggregate per share amount of all non-cash dividends or other
distributions declared on shares of Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or with respect to the first Quarterly Dividend
Payment Date, since the first issuance of a Unit. In the event the Corporation
shall at any time following November 24, 1998 (the "Rights Declaration Date")
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount to
which holders of Units of Series A 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 Units of
the Series A Preferred Stock as provided in paragraph (a) above at the time it
declares a dividend or distribution on the Common Stock; provided, however, that
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.25 per Unit on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) No dividend or distribution 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 Units of Series A Preferred Stock.
(d) Dividends shall begin to accrue and be cumulative on each outstanding
Unit from the Quarterly Dividend Payment Date next preceding the date of issue
of such Unit, unless the date of issue of such Unit is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on such
Unit shall begin to accrue from the date of issue of such 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 Units of Series A Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on Units in an amount less
than the total amount of such dividends at the time accrued and payable on such
Units shall be allocated pro rata on a Unit-by-Unit basis among all such Units
at the time outstanding. The Board may fix a record date for the determination
of holders of Units entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of Units shall have the following
voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each
Unit 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 the Rights Dividend Declaration Date (i) declare or pay
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding shares of Common Stock or (iii) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of Units 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.
2
<PAGE>
(b) Except as otherwise provided herein or by law, the holders of Units
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 Unit or
Units shall be in arrears in an amount equal to at least two full quarterly
dividends (whether or not declared and whether or not consecutive), the number
of Directors then constituting the entire Board shall automatically be increased
by 2 and the holders of record of the outstanding Units and holders of any other
shares of Preferred Stock of the Corporation ranking on a parity with the Series
A Preferred Stock shall have the exclusive right, voting together as a single
class, to elect two directors of the Corporation at a special meeting of
stockholders of the Corporation to fill such newly-created directorships. At
elections for such directors, the holders of Units shall be entitled to cast one
vote for each Unit held.
(ii) So long as any Units are outstanding, the number of Directors
of the Corporation shall at all times be such that the exercise, by the holders
of shares of Series A Preferred Stock and the holders of shares of Preferred
Stock on a parity therewith, of the right to elect Directors under the
circumstances provided in paragraph (iii) of this subclause (c) will not
contravene any provision of the General Corporation Law of the State of Delaware
or the Certificate of Incorporation of the Corporation. Any director elected by
holders of Units pursuant to this Section may be removed at any annual or
special meeting, by vote of a majority of the stockholders who elected such
director voting as a class, with or without cause. In case any vacancy shall
occur among the directors elected by the holders of Units 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 Units 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 Units as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Preferred Stock.
(iii) The right of the holders of Units, voting separately as a
class, to elect two members of the Board as aforesaid shall continue until, and
only until, such time as all arrears in dividends (whether or not declared) on
the Units 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 reinvesting 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 Units 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 Units pursuant
to this Section shall terminate immediately. Whenever the term of office of the
directors elected by the holders of Units 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 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 Units 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 Units as provided in herein are in arrears, thereafter and until
all accrued and unpaid dividends and distributions,
3
<PAGE>
whether or not declared, on outstanding Units outstanding shall have been paid
in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Units 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 Units and all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock;
provided, however, that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any Units,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board) to all holders of such Units, upon such terms as the
Board, 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 Units or shares of stock of
the Corporation unless the Corporation could, under paragraph (a) of this
Section, purchase or otherwise acquire such Units or shares at such time and in
such manner.
Section 5. Reacquired Units. Any Units purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such Units shall, upon their cancellation,
become authorized but unissued fractional 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, 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
Company, no distribution shall be made (i) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of Units shall have received $1.00 per Unit, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preference"), or (ii) to the holders
of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up.
Thereafter, the holders of Units shall be entitled to receive an aggregate
amount per Unit, subject to the provision for adjustment hereinafter set forth,
equal to the aggregate amount to be distributed per share to the holders of
Common Stock. In the event the Company shall at any time after the date hereof
declare or
4
<PAGE>
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation or the outstanding shares
of Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount to
which holders of Units were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences.
Section 7. Consolidation, Merger, Etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or converted into other stock or
securities, cash and/or any other property, then in any such case the Units
shall at the same time be similarly exchanged for or converted into an amount
per Unit (subject to the provision for adjustment hereinafter set forth) equal
to the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is converted or exchanged. In the event the Company shall at any
time (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or conversion
of Units 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 Units shall not be redeemable by the Company;
provided, however, that the foregoing shall not limit the ability of the Company
to purchase or otherwise deal in such Units to the extent otherwise permitted
hereby and by law.
Section 9. Ranking. The Series A Preferred Stock shall rank junior to all
other series of the Company'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. Neither this Certificate of Designations nor the
Certificate of Incorporation of the Company may be amended in any manner which
would materially alter or change the powers, preferences or special rights of
the Series A Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding Units,
voting separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be issued in
Units or other fractions of a share, which Units or fractions shall entitle the
holder, in proportion to such holder's Units or fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Preferred Stock.
5
