SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
NEXTLEVEL SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 36-4134221
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(State of incorporation or (I.R.S. Employer
organization) Identification No.)
8770 West Bryn Mawr Avenue
Suite 1300
Chicago, Illinois 60631
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(Address of principal executive (Zip Code)
offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class
to be so registered is to be registered
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Preferred Stock Purchase Rights New York Stock Exchange
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If this Form relates to the registration of a class of debt
securities and is effective upon filing pursuant to General
Instruction A.(c)(1), please check the following box. / /
If this Form relates to the registration of a class of debt
securities and is to become effective simultaneously with the
effectiveness of a concurrent registration statement under the
Securities Act of 1933 pursuant to General Instruction A.(c)(2),
please check the following box. / /
Securities to be registered pursuant to Section 12(g) of the
Act:
None
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(Title of Class)
Item 1. Description of Securities to be Registered.
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On June 10, 1997, the Board of Directors of NextLevel
Systems, Inc., a Delaware corporation (the "Company"), declared a
dividend of one preferred share purchase right (a "Right") for
each outstanding share of Common Stock, par value $.01 per share
(the "Common Shares"), of the Company. The dividend is payable
to the stockholders of record as of 5:00 P.M., New York, New York
time, on the first business day (the "Record Date") after the
date to be set by the Board of Directors of General Instrument
Corporation ("GI"), for the distribution of Common Shares to the
holders of shares of Common Stock, par value $.01 per share of
GI, as contemplated by the Distribution Agreement, dated as of
June 12, 1997 and as amended from time to time, among the
Company, CommScope, Inc. and GI and with respect to Common Shares
issued thereafter until the Distribution Date (as hereinafter
defined) and, in certain circumstances, with respect to Common
Shares issued after the Distribution Date. Except as set forth
below, each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Shares"), at a purchase
price of $85.00 per one one-thousandth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement, dated as
of June 12, 1997 (the "Rights Agreement"), between the Company
and ChaseMellon Shareholder Services, L.L.C. (the "Rights
Agent").
The Rights are attached to all certificates
representing outstanding Common Shares, and no separate Right
Certificates (as hereinafter defined) have been distributed. The
Rights will separate from the Common Shares on the earliest to
occur of (i) the first date of public announcement that a person
or "group" (other than FLC Entities (as hereinafter defined) to
the extent FLC Entities, individually or as a group, beneficially
own no more than 20% of the then outstanding Common Shares) has
acquired beneficial ownership of 15% or more of the outstanding
Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined); or (ii) ten (10) business days (or such
later date as the Board of Directors of the Company may
determine) following the commencement of, or announcement of an
intention to commence, a tender offer or exchange offer the
consummation of which would result in a person or group becoming
an Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "Distribution Date"). A person or
group whose acquisition of Common Shares causes a Distribution
Date pursuant to clause (i) above is an "Acquiring Person". The
first date of public announcement that a person or group has
become an Acquiring Person is the "Shares Acquisition Date".
"FLC Entities" means Instrument Partners, a New York limited
partnership, Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-IV, a New York limited partnership,
Theodore J. Forstmann, Nicholas C. Forstmann, Wm. Brian Little,
Winston W. Hutchins, Steven B. Klinsky, Sandra J. Horbach and
Thomas H. Lister and their Affiliates and Associates who or which
are considered as one Person and references to the FLC Entities
include any or all such persons.
The Rights Agreement provides that until the
Distribution Date the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new
issuance of Common Shares have contained and will continue to
contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date,
even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date (and
to each initial record holder of certain Common Shares issued
after the Distribution Date), and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date and will expire at 5:00 P.M., New York, New York time, on
June 12, 2007, unless earlier redeemed by the Company as
described below.
In the event that any person becomes an Acquiring
Person (except pursuant to a Permitted Offer as hereinafter
defined), each holder of a Right will have (subject to the terms
of the Rights Agreement) the right (the "Flip-In Right") to
receive upon exercise the number of Common Shares, or, in the
discretion of the Board of Directors of the Company, the number
of one one-thousandths of a Preferred Share (or, in certain
circumstances, other securities of the Company) having a value
(immediately prior to such triggering event) equal to two times
the Purchase Price. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that are, or
(under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person or any affiliate
or associate thereof will be null and void. A "Permitted Offer"
is a tender or exchange offer for all outstanding Common Shares
which is at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by a
majority of Disinterested Directors (as hereinafter defined) to
be adequate (taking into account all factors that such
Disinterested Directors deem relevant) and otherwise in the best
interests of the Company and its stockholders (other than the
person or any affiliate or associate thereof on whose basis the
offer is being made) taking into account all factors that such
Disinterested Directors may deem relevant. "Disinterested
Directors" are directors of the Company who are not officers of
the Company and who are not Acquiring Persons or affiliates or
associates thereof, or representatives of any of them, or any
person who was directly or indirectly proposed or nominated as a
director of the Company by a Transaction Person (as hereinafter
defined).
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the holders of
all of the outstanding Common Shares immediately prior to the
consummation of the transaction are not the holders of all of the
surviving corporation's voting power, or (ii) more than 50% of
the Company's assets or earning power is sold or transferred, in
either case with or to an Acquiring Person or any affiliate or
associate thereof, or any other person in which such Acquiring
Person, affiliate or associate has an interest, or any person
acting on behalf of or in concert with such Acquiring Person,
affiliate or associate, or, if in such transaction all holders of
Common Shares are not treated alike, any other person, then each
holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, common shares of
the acquiring company having a value equal to two times the
Purchase Price. The holder of a Right will continue to have the
Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.
The Purchase Price payable, and the number of one-
thousandths of a Preferred Share or other securities issuable,
upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred
Shares of certain rights or warrants to subscribe for or purchase
Preferred Shares at a price, or securities convertible into
Preferred Shares with a conversion price, less than the then
current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than
those referred to above).
The Purchase Price is also subject to adjustment in the
event of a stock split of the Common Shares, or a stock dividend
on the Common Shares payable in Common Shares, or subdivisions,
consolidations or combinations of the Common Shares occurring, in
any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
one-thousandths of a Preferred Share will be issued, and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise.
Preferred Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment of
$10.00 per share but, if greater, will be entitled to an
aggregate dividend per share of 1,000 times the dividend declared
per Common Share. In the event of liquidation, the holders of
the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100.00, provided that they will be
entitled to an aggregate payment per share of at least 1,000
times the aggregate payment made per Common Share. Each
Preferred Share will have one thousand votes, voting together
with the Common Shares. These rights are protected by customary
antidilution provisions. In the event that the amount of accrued
and unpaid dividends on the Preferred Shares is equivalent to at
least six full quarterly dividends, the holders of the Preferred
Shares shall have the right, voting as a class, to elect two
directors in addition to the directors elected by the holders of
the Common Shares until all dividends in default on the Preferred
Shares have been paid in full and dividends for the current
dividend period declared and funds therefor set apart.
At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration of the
Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"),
which redemption shall be effective upon the action of the Board
of Directors of the Company. Additionally, the Company may
redeem the then outstanding Rights in whole, but not in part, at
the Redemption Price after the triggering of the Flip-In Right
and before the expiration of any period during which the Flip-In
Right may be exercised in connection with a merger or other
business combination transaction or series of transactions
involving the Company in which all holders of Common Shares are
treated alike but not involving a Transaction Person (as
hereinafter defined). Upon the effective date of the redemption
of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive
the Redemption Price.
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. While the distribution of the Rights will not be
taxable to stockholders of the Company, stockholders may,
depending upon the circumstances, recognize taxable income should
the Rights become exercisable or upon the occurrence of certain
events thereafter.
Attached hereto as Exhibit 1 and incorporated herein by
reference is a form of the Rights Agreement, dated as of June 12,
1997, between NextLevel Systems, Inc. and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, specifying the terms of the
Rights, including the exhibits thereto, as follows: Exhibit A --
Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock of NextLevel Systems, Inc.;
Exhibit B -- Form of Right Certificate; and Exhibit C -- Summary
of Rights to Purchase Preferred Shares. The foregoing
description of the Rights is qualified by reference to the Rights
Agreement and the exhibits thereto.
Item 2. Exhibits.
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1. Rights Agreement, dated as of June 12,
1997 between NextLevel Systems, Inc. and
ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, which includes,
as Exhibit A thereto, the Certificate of
Designation, Preferences and Rights of
Series A Junior Participating Preferred
Stock of NextLevel Systems, Inc., as
Exhibit B thereto, the Form of Right
Certificate and as Exhibit C thereto,
the Summary of Rights to Purchase
Preferred Shares.
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
NEXTLEVEL SYSTEMS, INC.
By: /s/ Keith A. Zar
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Name: Keith A. Zar
Title: Vice President and
General Counsel
Dated: June 30, 1997
EXHIBIT INDEX
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Exhibit Description
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1. Rights Agreement, dated as of June 12, 1997
between NextLevel Systems, Inc. and
ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent, which includes, as
Exhibit A thereto, the Certificate of
Designation, Preferences and Rights of
Series A Junior Participating Preferred
Stock of NextLevel Systems, Inc., as
Exhibit B thereto, the Form of Right
Certificate and as Exhibit C thereto, the
Summary of Rights to Purchase Preferred
Shares.
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Exhibit 1
NEXTLEVEL SYSTEMS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. as
Rights Agent
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Rights Agreement
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Dated as of June 12, 1997
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TABLE OF CONTENTS
Page
SECTION 1. Certain Definitions. 2
SECTION 2. Appointment of Rights Agent. 7
SECTION 3. Issue of Right Certificates. 8
SECTION 4. Form of Right Certificate. 11
SECTION 5. Countersignature and Registration. 12
SECTION 6. Transfer, Split-Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificate. 13
SECTION 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. 14
SECTION 8. Cancellation and Destruction of Right
Certificates. 18
SECTION 9. Reservation and Availability of Capital
Stock. 18
SECTION 10. Preferred Shares Record Date. 20
SECTION 11. Adjustment of Purchase Price, Number
and Kind of Shares or Number of
Rights. 21
SECTION 12. Certificate of Adjusted Purchase Price
or Number of Shares. 33
SECTION 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. 33
SECTION 14. Fractional Rights and Fractional
Shares. 37
SECTION 15. Rights of Action. 40
SECTION 16. Agreement of Right Holders. 40
SECTION 17. Right Certificate Holder Not Deemed a
Stockholder. 41
SECTION 18. Concerning the Rights Agent. 42
SECTION 19. Merger or Consolidation or Change of
Name of Rights Agent. 43
SECTION 20. Duties of Rights Agent. 44
SECTION 21. Change of Rights Agent. 47
SECTION 22. Issuance of New Right Certificates. 48
SECTION 23. Redemption and Termination. 49
SECTION 24. Exchange. 51
SECTION 25. Notice of Certain Events. 53
SECTION 26. Notices. 54
SECTION 27. Supplements and Amendments. 55
SECTION 28. Determination and Actions by the
Board, etc. 56
SECTION 29. Successors. 57
SECTION 30. Benefits of this Agreement. 57
SECTION 31. Severability. 58
SECTION 32. Governing Law. 58
SECTION 33. Counterparts. 58
SECTION 34. Descriptive Headings. 58
EXHIBIT A - Form of NextLevel Systems, Inc. Certificate of Designation,
Preferences and Rights of Series A Junior Participating
Preferred Stock
EXHIBIT B - Form of Right Certificate
EXHIBIT C - Summary of Rights to Purchase Preferred Shares
DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person Section 1(a)
Act Section 1(b)
Adjusted Number of Shares Section 11(a)
Adjusted Purchase Price Section 11(a)
Adjustment Shares Section 11(a)
Affiliate Section 1(c)
Agreement Preface
Associate Section 1(c)
beneficially own Section 1(d)
Beneficial Owner Section 1(d)
Board Preface
Business Day Section 1(e)
capital stock equivalent Section 11(a)
Close of Business Section 1(f)
Common Shares Section 1(g)
Company Preface
current per share market price Section 11(d)
Disinterested Directors Section 1(h)
Distribution Date Section 3(a)
equivalent preferred shares Section 11(b)
Exchange Act Section 1(c)
Exchange Ratio Section 24(a)
Final Expiration Date Section 7(a)
FLC Entity Section 1(i)
Interested Stockholder Section 1(j)
NASDAQ Section 11(d)
Permitted Offer Section 1(k)
Person Section 1(l)
Preferred Shares Section 1(m)
Principal Party Section 13(b)
Proration Factor Section 11(a)
Purchase Price Section 4(a)
Record Date Preface
Redemption Date Section 7(a)
Redemption Price Section 23(a)
Summary of Rights Section 3(b)
Right Preface
Right Certificate Section 3(a)
Rights Agent Preface
Rights Agreement Section 3(c)
Section 11(a)(ii) Event Section 1(n)
Section 13 Event Section 1(o)
Security Section 11(d)
Shares Acquisition Date Section 1(p)
Subsidiary Section 1(q)
Summary of Rights Section 3(b)
then outstanding Section 1(d)
Trading Day Section 11(d)
Transaction Section 1(r)
Transaction Person Section 1(s)
Triggering Event Section 1(t)
voting securities Section 13(a)
RIGHTS AGREEMENT, dated as of June 12, 1997,
between NextLevel Systems, Inc., a Delaware corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a
New Jersey limited liability company ("Rights Agent").
The Board of Directors of the Company (the
"Board") (i) authorized and declared a dividend distribution
of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company
outstanding at the Close of Business on the first Business
Day (the "Record Date") after the date to be set by the
Board of Directors of General Instrument Corporation, a
Delaware corporation ("GI"), for the distribution of Common
Shares to the holders of shares of common stock, par value
$.01 per share, of GI, as contemplated by the Distribution
Agreement, dated as of June 12, 1997 and as amended from
time to time, among GI, the Company and CommScope, Inc., and
(ii) authorized the issuance of one Right (subject to
adjustment as provided herein) for each Common Share that
shall become outstanding between the Record Date and the
Distribution Date (as such term is defined herein), with
each Right initially representing the right to purchase one
one-thousandth (subject to adjustment as provided herein) of
a Preferred Share (as hereinafter defined) upon the terms
and subject to the conditions provided herein.
Accordingly, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby
agree as follows:
SECTION 1. Certain Definitions. For purposes
of this Agreement, the following terms shall have the
meanings indicated:
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of
such Person, shall be the Beneficial Owner of 15% or more of
the then outstanding Common Shares (other than as a result
of a Permitted Offer) or was such a Beneficial Owner at any
time after the date hereof, whether or not such person
continues to be the Beneficial Owner of 15% or more of the
then outstanding Common Shares. Notwithstanding the
foregoing, (i) the term "Acquiring Person" shall not include
(A) the Company, (B) any Subsidiary of the Company, (C) any
employee benefit plan of the Company or of any Subsidiary of
the Company, (D) any Person or entity organized, appointed
or established by the Company for or pursuant to the terms
of any such plan acting in such capacity or (E) any FLC
Entity, provided that the FLC Entities may acquire the
Beneficial Ownership of additional Common Shares to the
extent that the percentage of Common Shares Beneficially
Owned by them in the aggregate, after giving effect to such
acquisition, does not exceed 20% of the then Outstanding
Common Shares of the Company; and (ii) no Person shall
become an "Acquiring Person" (x) as a result of the
acquisition of Common Shares by the Company which, by
reducing the number of Common Shares outstanding, increases
the proportional number of shares beneficially owned by such
Person together with all Affiliates and Associates of such
Person, provided, that if (1) a Person would become an
Acquiring Person (but for the operation of this clause (x))
as a result of the acquisition of Common Shares by the
Company, and (2) after such share acquisition by the
Company, such Person, or an Affiliate or Associate of such
Person, becomes the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed an Acquiring
Person, or (y) if (1) within five Business Days after such
Person would otherwise have become or, if such Person did so
inadvertently, after such Person discovers that such Person
would otherwise have become, an Acquiring Person (but for
the operation of this clause (y)), such Person notifies the
Board that such Person did so inadvertently, and (2) within
two Business Days after such notification (or such greater
period of time as may be determined by action of the Board,
but in no event greater than five Business Days), such
Person divests itself of a sufficient number of Common
Shares so that such Person is the Beneficial Owner of such
number of Common Shares that such Person no longer would be
an Acquiring Person.
(b) "Act" shall mean the Securities Act of 1933,
as amended and as in effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended and as in effect on the
date of this Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "beneficially own" any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns,
directly or indirectly;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or
exchange, or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange
Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide
public offering of securities) relating to the
acquisition, holding, voting (except to the extent
contemplated by the proviso to Section l(d)(ii)(B)) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of a
Beneficial Owner to the contrary, the phrase "then
outstanding", when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and
outstanding together with the number of such securities not
then actually issued and outstanding which such Person would
be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than
a Saturday, Sunday, U.S. federal holiday or any day on which
banking institutions in New York are authorized or obligated
by law or executive order to close.
(f) "Close of Business" on any given date shall
mean 5:00 P.M., New York time, on such date; provided,
however, that if such date is not a Business Day it shall
mean 5:00 P.M., New York time, on the next succeeding
Business Day.
(g) "Common Shares" when used without reference
or with reference to the Company shall mean the shares of
Common Stock, par value of $.01 per share, of the Company
or, in the event of a subdivision, combination or
consolidation with respect to such shares of Common Stock,
the shares of Common Stock resulting from such subdivision,
combination or consolidation. "Common Shares" when used
with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the
greatest combined economic and voting power of such other
Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such
first-mentioned Person.
(h) "Disinterested Directors" shall mean the
members of the Board who are not (i) employees of the
Company, (ii) Acquiring Persons or their Affiliates or
Associates or representatives of any of them, or (iii) any
Person who was directly or indirectly proposed or nominated
as a director of the Company by a Transaction Person.
(i) "FLC Entities" shall mean Instrument
Partners, a New York limited partnership, Forstmann Little &
Co. Subordinated Debt and Equity Management Buyout
Partnership-IV, a New York limited partnership, Theodore J.
Forstmann, Nicholas C. Forstmann, Wm. Brian Little, Winston
W. Hutchins, Steven B. Klinsky, Sandra J. Horbach and
Thomas H. Lister, and their Affiliates and Associates who or
which shall be considered as one Person and references to
the FLC Entities shall include any or all such persons.
(j) "Interested Stockholder" shall mean any
Acquiring Person or any Affiliate or Associate of an
Acquiring Person or any other Person in which any such
Acquiring Person, Affiliate or Associate has an interest
which represents in excess of 5% of the total combined
economic or voting power of such Person, or any other Person
acting directly or indirectly on behalf of, or in concert
with, any such Acquiring Person, Affiliate or Associate.
(k) "Permitted Offer" shall mean a tender or
exchange offer for all outstanding Common Shares which is at
a price and on terms determined, prior to the purchase of
such shares under such tender or exchange offer, by at least
a majority of the Disinterested Directors, to be adequate
and otherwise in the best interests of the Company and its
stockholders (other than the Person, or any Affiliate or
Associate thereof, on whose behalf the offer is being made)
taking into account all factors that such Disinterested
Directors may deem relevant.
(l) "Person" shall mean any individual, firm,
partnership, corporation, trust, association, joint venture
or other entity, and shall include any successor (by merger
or otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of
Series A Junior Participating Preferred Stock, par value
$.01 per share, of the Company having the relative rights,
preferences and limitations set forth in the Form of
Certificate of Designation, Preferences and Rights attached
to this Agreement as Exhibit A.
(n) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii) hereof.
(o) "Section 13 Event" shall mean any event
described in clause (i), (ii) or (iii) of Section 13(a)
hereof.
(p) "Shares Acquisition Date" shall mean the
first date of public announcement (which, for purposes of
this definition, shall include, without limitation, a report
filed pursuant to the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(q) "Subsidiary" of any Person shall mean any
corporation or other Person of which a majority of the
voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
(r) "Transaction" shall mean any merger,
consolidation or sale of assets described in Section 13(a)
hereof or any acquisition of Common Shares of the Company
which would result in a Person becoming a Transaction
Person.
(s) "Transaction Person" with respect to a
Transaction shall mean (i) any Person who (A) is or will
become an Acquiring Person if the Transaction were to be
consummated and (B) directly or indirectly proposed or
nominated a director of the Company which director is in
office at the time of consideration of the Transaction, or
(ii) an Affiliate or Associate of such a Person.
(t) "Triggering Event" shall mean any
Section 11(a)(ii) Event or any Section 13 Event.
SECTION 2. Appointment of Rights Agent. The
Company hereby appoints the Rights Agent to act as agent for
the Company in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
SECTION 3. Issue of Right Certificates.
(a) The Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates
for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and
the right to receive Right Certificates will be transferable
only in connection with the transfer of the underlying
Common Shares (including a transfer to the Company) until
the earlier to occur of (i) the Shares Acquisition Date or
(ii) the Close of Business on the tenth Business Day (or
such later date as may be determined by action of the Board)
after the date of the commencement by any Person (other than
the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the
Company or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of
any such plan) of, or of the first public announcement of
the intention of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person or
entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan) to commence
(which intention to commence remains in effect for five (5)
Business Days after such announcement), a tender or exchange
offer the consummation of which would result in any Person
becoming an Acquiring Person (including, in the case of both
clauses (i) and (ii) of this Section 3(a), any such date
which is after the date of this Agreement and prior to the
issuance of the Rights), the earlier of such dates being
herein referred to as the "Distribution Date"; provided,
however, that if the tender offer is terminated prior to the
occurrence of a Distribution Date, then no Distribution Date
shall occur as a result of such tender offer. As soon as
practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign and
send, or cause to be sent, by first-class, insured, postage
prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company,
a Right Certificate, substantially in the form of Exhibit B
hereto (a "Right Certificate"), evidencing one Right for
each Common Share so held. As of and after the Distribution
Date, the Rights will be evidenced solely by such Right
Certificates.
(b) As promptly as practicable following the
Record Date, the Company shall send a copy of a Summary of
Rights to Purchase Preferred Shares, in substantially the
form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Record
Date, at the address of such holder shown on the records of
the Company. Upon the execution and delivery of this
Agreement, or as soon as practicable thereafter, the Company
shall file the full text of this Agreement and the Summary
of Rights with the Securities and Exchange Commission. With
respect to certificates for Common Shares outstanding as of
the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates registered in the
names of the holders thereof together with a copy of the
Summary of Rights attached thereto. Until the Distribution
Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record
Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the
Rights associated with such Common Shares. As a result of
the execution of this Agreement on June 12, 1997, each
Common Stock outstanding as of the Close of Business on the
Record Date shall, subject to the terms and conditions of
this Agreement, also represent one Right and shall, subject
to the terms and conditions of this Agreement, represent the
right to purchase one one-thousandth of a share of Preferred
Stock.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired
Common Shares referred to in the last sentence of this
Section 3(c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date shall be deemed also to be
certificates for Rights and from and after the date hereof
shall bear the following legend:
This certificate also evidences and
entitles the holder hereof to certain
rights as set forth in a Rights
Agreement between NextLevel Systems,
Inc. and ChaseMellon Shareholder
Services, L.L.C., dated as of June 12,
1997 (the "Rights Agreement"), the terms
of which are hereby incorporated herein
by reference and a copy of which is on
file at the principal executive offices
of NextLevel Systems, Inc.. Under
certain circumstances, as set forth in
the Rights Agreement, such Rights will
be evidenced by separate certificates
and will no longer be evidenced by this
certificate. NextLevel Systems, Inc.
will mail to the holder of this
certificate a copy of the Rights
Agreement without charge after receipt
of a written request therefor from such
holder. Under certain circumstances set
forth in the Rights Agreement, Rights
issued to, or held by, any Person who
is, was or becomes an Acquiring Person
or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and
certain related persons, whether
currently held by or on behalf of such
Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated
with the Common Shares represented by such certificates
shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed canceled
and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which
are no longer outstanding.
SECTION 4. Form of Right Certificate.(a) The
Right Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof)
shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or
designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as
are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Sections 11 and 22
hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a
Preferred Share as shall be set forth therein at the price
per one one-thousandth of a Preferred Share set forth
therein (the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Right Certificate issued pursuant to
Section 3(a) or 22 hereof that represents Rights which are
null and void pursuant to Section 7(e) hereof and any Right
Certificate issued pursuant to Section 6 or 11 hereof upon
transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right
Certificate are or were beneficially
owned by a Person who was or became an
Acquiring Person or an Affiliate or
Associate thereof (as such terms are
defined in the Rights Agreement).
Accordingly, this Right Certificate and
the Rights represented hereby are null
and void.
Provisions of Section 7(e) hereof shall be operative whether
or not the foregoing legend is contained on any such Right
Certificate.
SECTION 5. Countersignature and
Registration. The Right Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice
Presidents, or its Treasurer, either manually or by
facsimile signature, shall have affixed thereto the
Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right
Certificates shall be countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any
of the Right Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right
Certificates may nevertheless be countersigned by the Rights
Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf
of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate,
although at the date of the execution of this Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its office designated as
the appropriate place for surrender of such Right
Certificate for transfer, books for registration and
transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and
the certificate number and the date of each of the Right
Certificates.
SECTION 6. Transfer, Split-Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificate. Subject to the provisions of
Sections 4(b), 7(e) and 14 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior
to the Close of Business on the earlier of the Redemption
Date or the Final Expiration Date, any Right Certificate or
Right Certificates may be transferred, split-up, combined or
exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a
like number of one one-thousandths of a Preferred Share (or,
following a Triggering Event, other securities, as the case
may be) as the Right Certificate or Right Certificates
surrendered then entitled such holder (or former holder in
the case of a transfer) to purchase. Any registered holder
desiring to transfer, split-up, combine or exchange any
Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be
transferred, split-up, combined or exchanged at the
principal office or offices of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed
and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and
shall have provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall,
subject to the provisions of Sections 4(b), 7(e) and 14
hereof, countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer,
split-up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the
Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the
registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Subject to Section 7(e)
hereof, the registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase and the certificate on
the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the
aggregate Purchase Price for the total number of one
one-thousandths of a Preferred Share (or other securities,
as the case may be) as to which such surrendered Rights are
exercised, at or prior to the earliest of (i) the Close of
Business on June 12, 2007 (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided
in Section 23 hereof (the "Redemption Date"), (iii) the time
at which the Rights are exchanged as provided in Section 24
hereof, or (iv) the consummation of a transaction
contemplated by Section 13(d) hereof.
(b) From and after the date hereof, the Purchase
Price for each one-thousandth of a Preferred Share pursuant
to the exercise of a Right shall be $85.00, subject to
adjustment from time to time as provided in the third
sentence of this Section 7(b) and in Sections 11 and 13(a)
hereof. The Purchase Price shall be payable in accordance
with Section 7(c) below. Anything in this Agreement to the
contrary notwithstanding, in the event that at any time
after the date hereof and prior to the Distribution Date,
the Company shall (i) declare or pay any dividend on the
Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment of
dividends in Common Shares) into a greater or lesser number
of Common Shares, then in any such case, each Common Share
outstanding following such subdivision, combination or
consolidation shall continue to have one Right (subject to
adjustment as provided herein) associated therewith and the
Purchase Price following any such event shall be
proportionately adjusted to equal the result obtained by
multiplying the Purchase Price immediately prior to such
event by a fraction the numerator of which shall be the
total number of Common Shares outstanding immediately prior
to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding
immediately following the occurrence of such event. The
adjustment provided for in the preceding sentence shall be
made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is
effected.
(c) Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election
to purchase and the certificate duly executed, accompanied
by payment of the Purchase Price for the Preferred Shares
(or other securities, as the case may be) to be purchased
and an amount equal to any applicable transfer tax required
to be paid by the holder of such Right Certificate in
accordance with Section 6 hereof by certified check,
cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly
(i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or
(B) requisition from the depositary agent (if the Company,
in its sole discretion, shall have elected to deposit the
Preferred Shares issuable upon exercise of the Rights
hereunder into a depositary) depositary receipts
representing such number of one one-thousandths of a
Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary
agent to comply with such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid
in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after
receipt thereof, deliver such cash to or upon the order of
the registered holder of such Right Certificate. In the
event that the Company is obligated to issue other
securities (including Common Shares) of the Company pursuant
to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when
appropriate.
In addition, in the case of an exercise of the
Rights by a holder pursuant to Section 11(a)(ii) hereof, the
Rights Agent shall return such Right Certificate to the
registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by
such Right Certificate no longer include the rights provided
by Section 11(a)(ii) hereof and if less than all the Rights
represented by such Right Certificate were so exercised, the
Rights Agent shall indicate on the Right Certificate the
number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii) hereof.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such
Right Certificate or to his duly authorized assigns, subject
to the provisions of Section 14 hereof, or the Rights Agent
shall place an appropriate notation on the Right Certificate
with respect to those Rights exercised.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a
Section 11(a)(ii) Event, any Rights beneficially owned by
(i) an Acquiring Person or an Affiliate or Associate
thereof, (ii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person
to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has a
continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board has
determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of
this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under
any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of
Right Certificates or other Person as a result of its
failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall
be obligated to undertake any action with respect to a
registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase
set forth on the reverse side of the Right Certificate
surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. Cancellation and Destruction of
Right Certificates. All Right Certificates surrendered for
the purpose of exercise (other than a partial exercise),
transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Right Certificates shall be issued
in lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
SECTION 9. Reservation and Availability of
Capital Stock. The Company covenants and agrees that at all
time prior to the occurrence of a Section 11(a)(ii) Event it
will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares, or any authorized
and issued Preferred Shares held in its treasury, the number
of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights and, after the
occurrence of a Section 11(a)(ii) Event, shall, to the
extent reasonably practicable, so reserve and keep available
a sufficient number of Common Shares (and/or other
securities) which may be required to permit the exercise in
full of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the
occurrence of a Section 11(a)(ii) Event, Common Shares, or
any other securities, as the case may be) issuable upon the
exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts
to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance
upon such exercise.
The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all
Preferred Shares (or Common Shares and/or other securities,
as the case may be) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares
or other securities (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully
paid and nonassessable shares or securities.
The Company further covenants and agrees that it
will pay when due and payable any and all U.S. federal and
state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to
a person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Shares
(or Common Shares and/or other securities, as the case may
be) in a name other than that of, the registered holder of
the Right Certificate evidencing Rights surrendered for
exercise, or to issue or to deliver any certificates or
depositary receipts for Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the
exercise of any Rights, until any such tax shall have been
paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no
such tax is due.
The Company shall use its best efforts to
(i) file, as soon as practicable following the Shares
Acquisition Date (or, if required by law, at such earlier
time following the Distribution Date as so required), a
registration statement under the Act with respect to the
securities purchasable upon exercise of Rights on an
appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing,
and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act and the rules and regulations
thereunder) until the date of the expiration of the rights
provided by Section 11(a)(ii) hereof. The Company will also
take such action as may be appropriate under the blue sky
laws of the various states.
SECTION 10. Preferred Shares Record Date. Each
Person in whose name any certificate for Preferred Shares
(or Common Shares and/or other securities, as the case may
be) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of
the Preferred Shares (or Common Shares and/or other
securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the
Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however,
that, if the date of such surrender and payment is a date
upon which the Preferred Shares (or Common Shares and/or
other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day
on which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the
Company are open.
SECTION 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights. The Purchase
Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any
time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivide the outstanding Preferred Shares,
(C) combine the outstanding Preferred Shares into a
smaller number of Preferred Shares or (D) issue any
shares of its capital stock in a reclassification of
the Preferred Shares (including any such
reclassification in connection with a consolidation or
merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in
this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such
subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on
such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall
be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time
when the Preferred Shares transfer books of the Company
were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of
one Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person, alone or
together with its Affiliates and Associates, shall
become an Acquiring Person, then proper provision shall
be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall, for a
period of sixty (60) days after the later of (i) the
occurrence of any such event or (ii) the effective date
of an appropriate registration statement under the Act
pursuant to Section 9 hereof, have a right to receive,
upon exercise thereof at a price equal to the then
current Purchase Price, in accordance with the terms of
this Agreement, such number of Common Shares (or, in
the discretion of the Board, one one-thousandths of a
Preferred Share) as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the
then number of one one-thousandths of a Preferred Share
for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event and
(B) dividing that product by 50% of the then current
per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the
date of such first occurrence (such number of shares
being referred to as the "Adjustment Shares");
provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then
only the provisions of Section 13 hereof shall apply
and no adjustment shall be made pursuant to this
Section 11(a)(ii).
(iii) In the event that there shall not
be sufficient treasury shares or authorized but
unissued (and unreserved) Common Shares to permit the
exercise in full of the Rights in accordance with the
foregoing Section 11(a)(ii) and the Rights become so
exercisable (and the Board has determined to make the
Rights exercisable into fractions of a Preferred
Share), notwithstanding any other provision of this
Agreement, to the extent necessary and permitted by
applicable law, each Right shall thereafter represent
the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of
this Agreement, (A) a number of (or fractions of)
Common Shares (up to the maximum number of Common
Shares which may permissibly be issued) and (B) a
number of one one-thousandths of a Preferred Share or a
number of (or fractions of) other equity securities of
the Company (or, in the discretion of the Board, debt)
which the Board has determined to have the same
aggregate current market value (determined pursuant to
Sections 11(d)(i) and 11(d)(ii) hereof, to the extent
applicable) as one Common Share (such number of (or
fractions of) Preferred Shares (or other equity
securities or debt of the Company) being referred to as
a "capital stock equivalent"), equal in the aggregate
to the number of Adjustment Shares; provided, however,
if sufficient Common Shares and/or capital stock
equivalents are unavailable, then the Company shall, to
the extent permitted by applicable law, take all such
action as may be necessary to authorize additional
Common Shares or capital stock equivalents for issuance
upon exercise of the Rights, including the calling of a
meeting of stockholders; and provided, further, that if
the Company is unable to cause sufficient Common Shares
and/or capital stock equivalents to be available for
issuance upon exercise in full of the Rights, then each
Right shall thereafter represent the right to receive
the Adjusted Number of Shares upon exercise at the
Adjusted Purchase Price (as such terms are hereinafter
defined). As used herein, the term "Adjusted Number of
Shares" shall be equal to that number of (or fractions
of) Common Shares (and/or capital stock equivalents)
equal to the product of (A) the number of Adjustment
Shares and (B) a fraction, the numerator of which is
the number of Common Shares (and/or capital stock
equivalents) available for issuance upon exercise of
the Rights and the denominator of which is the
aggregate number of Adjustment Shares otherwise
issuable upon exercise in full of all Rights (assuming
there were a sufficient number of Common Shares
available) (such fraction being referred to as the
"Proration Factor"). The "Adjusted Purchase Price"
shall mean the product of the Purchase Price and the
Proration Factor. The Board may, but shall not be
required to, establish procedures to allocate the right
to receive Common Shares and capital stock equivalents
upon exercise of the Rights among holders of Rights.
(b) In case the Company shall fix a record date
for the issuance of rights (other than the Rights), options
or warrants to all holders of Preferred Shares entitling
them (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase
Preferred Shares (or shares having the same rights and
privileges as the Preferred Shares ("equivalent preferred
shares") or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share
or equivalent preferred share (or having a conversion price
per share, if a security convertible into Preferred Shares
or equivalent preferred shares) less than the then current
per share market price of the Preferred Shares (as
determined pursuant to Section 11(d) hereof) on such record
date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current
per share market price, and the denominator of which shall
be the number of Preferred Shares outstanding on such record
date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription
or purchase (or into which the convertible securities so to
be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon
the exercise of one Right. In case such subscription price
may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration
shall be 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.
Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in
the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date
for the making of a distribution to all holders of the
Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Preferred
Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which
shall be the then current per share market price (as
determined pursuant to Section 11(d) hereof) of the
Preferred Shares on such record date, less the fair market
value (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)
of the portion of the assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of
which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of
one Right. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that
such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation
hereunder, the "current per share market price" of any
security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days
(as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that
the current per share market price of the Security is
determined during a period following the announcement
by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such
Security or securities convertible into such shares, or
(B) any subdivision, combination or reclassification of
such Security, and prior to the expiration of thirty
(30) Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and
in each such case, the current per share market price
shall be appropriately adjusted to reflect the current
per share market price equivalent of such Security.
The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the
Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect
to securities listed on the principal national
securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed
or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then
in use, or, if on any such date the Security is not
quoted by any such organization, the average of the
closing bid and asked prices as furnished by a
professional market maker, selected by the Board,
making a market in the Security. If on any such date
no such market maker is making a market in the
Security, the fair value of the Security on such date
as determined in good faith by the Board shall be used.
The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the
Security is listed or admitted to trading is open for
the transaction of business or, if the Security is not
listed or admitted to trading on any national
securities exchange, a Business Day. Subject to
Section 11(d)(ii) hereof, if any Security is not
publicly held or so listed or traded, "current per
share market price" of such Security shall mean the
fair market 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.
(ii) For the purpose of any computation
hereunder, the "current per share market price" of the
Preferred Shares shall be determined in accordance with
the method set forth in the foregoing Section 11(d)(i).
If the Preferred Shares are not publicly traded, the
current per share market price of the Preferred Shares
shall be conclusively deemed to be the current per
share market price of the Common Shares as determined
pursuant to the foregoing Section 11(d)(i)
(appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after
the date hereof), multiplied by one thousand (1,000).
If neither the Common Shares nor the Preferred Shares
are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share
as determined in good faith by the Board, whose
determination shall be described in a statement filed
with the Rights Agent and shall be binding on the
Rights Agent.
(e) Notwithstanding anything herein to the
contrary, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-thousandth of a
Preferred Share or one hundred-thousandth of any other share
or security, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of
(i) three (3) years from the date of the transaction which
mandates such adjustment or (ii) the Final Expiration Date.
(f) If, as a result of an adjustment made
pursuant to Section 11(a)(ii) or 13(a) hereof, the holder of
any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other
than Preferred Shares, thereafter the number of other shares
so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Sections 11(a)
through 11(c) hereof, inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one-thousandths of a
Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and 11(c) hereof, 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 one
one-thousandths of a Preferred Share (calculated to the
nearest one hundred-thousandth of a Preferred Share)
obtained by (i) multiplying (A) the number of Preferred
Shares covered by a Right immediately prior to this
adjustment of the Purchase Price by (B) 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 one
one-thousandths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable
for the number of one one-thousandths of a Preferred Share
for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If
Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on
such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof,
if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in
the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in
the Purchase Price or the number of one one-thousandths of a
Preferred Share issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par
value, if any, of the number of one one-thousandths of a
Preferred Share, Common Shares or other securities 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 number of fully paid and nonassessable
one one-thousandths of a Preferred Share, Common Shares or
other securities at such adjusted Purchase Price.
(1) 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 the number of one one-thousandths of
a Preferred Share, Common Shares or other securities of the
Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a Preferred Share,
Common Shares or other securities of the Company, if any,
issuable upon exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the
event requiring such adjustment.
(m) Notwithstanding anything in this Section 11
to the contrary, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly
for cash of Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or
exchangeable for Preferred Shares, (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 Preferred Shares shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it
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 does not
violate Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a
transaction which does not violate Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which does
not violate Section 11(o) hereof), if (A) at the time of or
immediately after such consolidation, merger, sale or
transfer there are any charter or by-law provisions or any
rights, warrants or other instruments or securities
outstanding or agreements in effect or other actions taken,
which would materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (B) prior
to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates. The Company
shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such other
Person shall have executed and delivered to the Rights Agent
a supplemental agreement evidencing compliance with this
Section 11(n).
(o) The Company covenants and agrees that, after
the Distribution Date, it will not, except as permitted by
Section 23 or 27 hereof, take (or permit any Subsidiary to
take) any action the purpose of which is to, or if at the
time such action is taken it is reasonably foreseeable that
the effect of such action is to, materially diminish or
otherwise eliminate the benefits intended to be afforded by
the Rights.
(p) The exercise of Rights under
Section 11(a)(ii) hereof shall only result in the reduction
of rights under Section 11(a)(ii) hereof to the extent so
exercised and shall not otherwise affect the rights
represented by the Rights under this Agreement, including
the rights represented by Section 13 hereof.
SECTION 12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is made
as provided in Section 11 or 13 hereof, the Company shall
promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting
for such adjustment, (b) file with the Rights Agent and with
each transfer agent for the Common Shares and the Preferred
Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in
accordance with Section 26 hereof. 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 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, on or following the Shares Acquisition Date, directly
or indirectly, (i) the Company shall consolidate with, or
merge with and into, any Interested Stockholder or, if in
such merger or consolidation all holders of Common Shares
are not treated alike, any other Person, (ii) the Company
shall consolidate with, or merge with, any Interested
Stockholder or, if in such merger or consolidation all
holders of Common Shares are not treated alike, any other
Person, and the Company shall be the continuing or surviving
corporation of such consolidation or merger (other than, in
a case of any transaction described in clause (i) or (ii)
above of this Section 13(a), a merger or consolidation which
would result in all of the securities generally entitled to
vote in the election of directors ("voting securities") of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of
the voting securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation and the holders (and relative percentage
holdings of each such holder) of such securities not having
changed as a result of such merger or consolidation), or
(iii) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Interested
Stockholder or Stockholders or, if in such transaction all
holders of Common Shares are not treated alike, any other
Person, (other than the Company or any Subsidiary of the
Company in one or more transactions each of which does not
violate Section 11(o) hereof), then, and in each such case
(except as provided in Section 13(d) hereof), proper
provision shall be made so that (A) each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter
have the right to receive, upon the exercise thereof at a
price equal to the then current Purchase Price, in
accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of freely tradable Common
Shares of the Principal Party (as hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall equal the result obtained
by (1) multiplying the then current Purchase Price by the
number of one one-thousandths of a Preferred Share for which
a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii)
hereof) and dividing that product by (2) 50% of the then
current per share market price of the Common Shares of such
Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such Section 13
Event; (B) 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; (C) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following
the first occurrence of a Section 13 Event; and (D) such
Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its
Common Shares) in connection with the consummation of any
such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in clause (i) or (ii) of the first sentence of
Section 13(a) hereof, the Person that is the issuer of
any securities into which Common Shares of the Company
are converted in such merger or consolidation, and if
no securities are so issued, the Person that is the
other party to such merger or consolidation (including,
if applicable, the Company if it is the surviving
corporation); and
(ii) in the case of any transaction described
in clause (iii) of the first sentence of Section 13(a)
hereof, the Person that is the party receiving the
greatest portion of the assets or earning power
transferred pursuant to such transaction or
transactions;
provided, however, that in any of the foregoing cases,
(1) if the Common Shares of such Person are not at such
time, and have not been continuously over the preceding
twelve (12) month period, registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are
and have been so registered, "Principal Party" shall refer
to such other Person; (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of two or more of which are and have been
so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the
greatest aggregate market value; and (3) in case such Person
is owned, directly or indirectly, by a joint venture formed
by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in
clauses (1) and (2) above of this Section 13(b) shall apply
to each of the chains of ownership having an interest in
such joint venture as if such party were a "Subsidiary" of
both or all of such joint venturers, and the Principal
Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct
or indirect interests in such Person bear to the total of
such interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized
Common Shares 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 Sections 13(a) and
13(b) hereof and further providing that, as soon as
practicable after the date of any consolidation, merger,
sale or transfer mentioned in Section 13(a) hereof, the
Principal Party at its own expense shall:
(i) prepare and file a registration
statement under the Act with respect to the Rights and
the securities purchasable upon exercise of the Rights
on an appropriate form, and use its best efforts to
cause such registration statement to (A) become
effective as soon as practicable after such filing, and
(B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final
Expiration Date;
(ii) use its best efforts to qualify or
register the Rights and the securities purchasable upon
exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party
which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or
other transfers. The rights under this Section 13 shall be
in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) hereof and shall survive any
exercise thereof.
(d) Notwithstanding anything in this Agreement to
the contrary, the provisions of this Section 13 shall not be
applicable to a transaction described in clause (i) or (ii)
of Section 13(a) hereof if (A) such transaction is
consummated with a Person or Persons who acquired Common
Shares pursuant to a Permitted Offer (or a wholly owned
Subsidiary of any such Person or Persons), (B) the price per
Common Share offered in such transaction is not less than
the price per Common Share paid to all holders of Common
Shares whose shares were purchased pursuant to such
Permitted Offer, and (C) the form of consideration offered
in such transaction is the same as the form of consideration
paid pursuant to such Permitted Offer. Upon consummation of
any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
SECTION 14. Fractional Rights and Fractional
Shares. (a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value
of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any day
shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker, selected by the Board, making a
market in the Rights. 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.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which
are one one-thousandths or integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the
Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are
one one-thousandths or integral multiples of one
one-thousandth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth
of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by
it, provided that such agreement shall provide that the
holders of such depositary receipts shall have the rights,
privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by
such depositary receipts. In lieu of fractional Preferred
Shares that are not one one-thousandths or integral
multiples of one one-thousandth of a Preferred Share, the
Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of
a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of one of the
transactions or events specified in Section 11 hereof giving
rise to the right to receive Common Shares, capital stock
equivalents (other than Preferred Shares) or other
securities upon the exercise of a Right, the Company shall
not be required to issue fractions of shares or units of
such Common Shares, capital stock equivalents or other
securities upon exercise of the Rights or to distribute
certificates which evidence fractions of such Common Shares,
capital stock equivalents or other securities. In lieu of
fractional shares or units of such Common Shares, capital
stock equivalents or other securities, the Company may pay
to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market value
of a share or unit of such Common Shares, capital stock
equivalents or other securities. For purposes of this
Section 14(c), the current market value shall be determined
in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise
and, if such capital stock equivalent is not traded, each
such capital stock equivalent shall have the value of one
one-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of
the Right expressly waives his right to receive any
fractional Rights or any fractional share upon exercise of a
Right (except as provided above).
SECTION 15. Rights of Action. All rights of
action in respect of this Agreement, excepting the rights of
action given to the Rights Agent under Section 18 hereof,
are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered
holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the
consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of
the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and will be entitled to
specific performance of the obligations under, and
injunctive relief against actual or threatened violations of
the obligations of any Person subject to, this Agreement.
SECTION 16. Agreement of Right Holders. Every
holder of a Right, by accepting the same, consents and
agrees with the Company and the Rights Agent and with every
other holder of a Right that:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
the Common Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the principal office or
offices of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate form fully executed;
(c) subject to Sections 6 and 7(f) hereof, the
Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the
associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent,
subject to the last sentence of Section 7(e) hereof, shall
be required to 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 a beneficial
interest in a Right or other Person as a result of its
inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
SECTION 17. Right Certificate Holder Not Deemed
a Stockholder. No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or
other distributions, or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
SECTION 18. Concerning the Rights Agent. The
Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this
Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending
against any claim of liability in the premises. In no case
shall the Rights Agent be liable for special, indirect,
incidental or consequential loss or damage of any kind
whatsoever, even if the Rights Agent has been advised of the
likelihood of such loss or damage.
The Rights Agent shall be protected and shall
incur no liability for, or in respect of any action taken,
suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Shares or for other
securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or
acknowledged by the proper Person or Persons.
SECTION 19. Merger or Consolidation or Change
of Name of Rights Agent. Any corporation into which the
Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party,
or any corporation succeeding to the stock transfer or all
or substantially all of the corporate trust business of the
Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided, that such
corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In
case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver
such Right Certificates so countersigned, and in case at
that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the
predecessor or in the name of the successor Rights Agent.
In all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right
Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so
countersigned, and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its
prior name or in its changed name. In all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights
Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Right Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel (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 the current per share market price of
any Security) be proved or established by the Company prior
to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of
the Chairman of the Board, the Chief Executive 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; 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 hereunder
only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for, or
by reason of, any of the statements of fact or recitals
contained in this Agreement or in the Right Certificates or
be required to verify the same (except its countersignature
thereof). All such statements and recitals are, and shall
be deemed to have been made, by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required
under the provisions of Section 11 or 13 hereof or
responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates
after receipt of the certificate described in Section 12
hereof); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or
reservation of any Preferred Shares or Common Shares or
other securities to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preferred Shares
or Common Shares or other securities will, when issued, be
validly authorized and issued, fully paid and nonassessable;
nor shall it be under any duty to make any independent
investigation or determination of the identity of any
Acquiring Person or any Affiliate or Associate thereof, but
shall be entitled to rely, in the absence of instructions
identifying any such Person, on representations made by
holders of Right Certificates.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this
Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from any one of the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the
Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be
liable for any action taken or suffered by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy,
sell or deal in any of the Rights or other securities of the
Company, or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or
lend money to the Company, or otherwise act as fully and
freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of its
rights hereunder if there shall be 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 Right Certificates
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 not been
completed, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer
without first consulting with the Company.
SECTION 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Preferred Shares or Common
Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent
upon sixty (60) days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Preferred Shares or Common
Shares by registered or certified mail, and to holders of
the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such
appointment within a period of sixty (60) days after giving
notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be either (i) a
corporation organized and doing business under the laws of
the United States or of the State of New York or the State
of Illinois (or of any other state of the United States so
long as such corporation is authorized to do business as a
banking institution in the State of New York or the State of
Illinois), in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment
as Rights Agent a combined capital and surplus of at least
$50,000,000 (or such lower number as approved by the Board)
or (ii) an affiliate of such a corporation. After
appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further
act or deed, but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of
the Preferred Shares or Common Shares and mail a notice
thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
SECTION 22. Issuance of New Right
Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price and
the number or kind or class of shares or other securities or
property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
In addition, in connection with the issuance or
sale of Common Shares following the Distribution Date and
prior to the earliest of the Redemption Date, the Final
Expiration Date and the consummation of a transaction
contemplated by Section 13(d) hereof, the Company (a) shall,
with respect to Common Shares 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, notes or debentures issued by the Company, and
(b) may, in any other case, if deemed necessary or
appropriate by the Board, issue Right Certificates
representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that no Right
Certificates 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) (i) The Board may, at its option, redeem
all, but not less than all, of the then outstanding Rights
at a redemption price of $.01 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 hereinafter referred to
as the "Redemption Price"), at any time prior to the earlier
of (A) the occurrence of a Section 11(a)(ii) Event or
(B) the Final Expiration Date, and the Company may, at its
option, pay the Redemption Price either in Common Shares
(based on the "current per share market price", as defined
in Section 11(d) hereof, of the Common Shares at the time of
redemption) or cash; provided, however, that if the Company
elects to pay the Redemption Price in Common Shares, the
Company shall not be required to issue any fractional Common
Shares, and the number of Common Shares issuable to each
holder of Rights shall be rounded down to the next whole
share.
(ii) In addition, the Board may, at its option, at
any time following a Shares Acquisition Date but prior to
any Section 13 Event redeem all, but not less than all, of
the then outstanding Rights at the Redemption Price (x) in
connection with any merger, consolidation or sale or other
transfer (in one transaction or in a series of related
transactions) of assets or earning power aggregating 50% or
more of the earning power of the Corporation and its
subsidiaries (taken as a whole) (A) in which all holders of
Common Shares are treated alike and (B) not involving (other
than as a holder of Common Shares being treated like all
other such holders) an Interested Stockholder, or (y)(A) if
and for so long as the Acquiring Person is not thereafter
the Beneficial Owner of 5% of the Common Shares, and (B) at
the time of redemption no other Persons are Acquiring
Persons.
(b) In the case of a redemption permitted under
Section 23(a)(i) hereof, immediately upon the date for
redemption set forth in (or determined in the manner
specified in) a resolution of the Board ordering the
redemption of the Rights, evidence of which shall have been
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. In the case of a redemption permitted only
under Section 23(a)(ii) hereof, evidence of which shall have
been filed with the Rights Agent, the right to exercise the
Rights will terminate and represent only the right to
receive the Redemption Price upon the later of ten (10)
Business Days following the giving of notice or the
expiration of any period during which the rights under
Section 11(a)(ii) hereof may be exercised. The Company
shall promptly give public notice of any such redemption;
provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such date for
redemption set forth in a resolution of the Board ordering
the redemption of the Rights, the Company shall mail a
notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer
agent for the Common Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any
of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23
and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
(c) In the case of a redemption permitted under
Section 23(a)(i) hereof, the Company may, at its option,
discharge all of its obligations with respect to the Rights
by (i) issuing a press release announcing the manner of
redemption of the Rights in accordance with this Agreement
and (ii) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as
they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the
Transfer Agent of the Common Shares, and upon such action,
all outstanding Rights and Right Certificates shall be null
and void without any further action by the Company.
SECTION 24. Exchange. (a) The Board may, at
its option, at any time after the time that any Person
becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the
provisions of Sections 7(e) and 11(a)(ii) hereof) for Common
Shares of the Company at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction involving
either the Common Shares or the Preferred Shares occurring
after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board shall not be empowered to effect such
exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, any entity
holding Common Shares for or pursuant to the terms of any
such plan or any trustee, administrator or fiduciary of such
a plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board
ordering the exchange of any Rights pursuant to
Section 24(a) hereof and without any further action and
without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares
equal to the number of such rights held by such holder
multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The
Company shall promptly mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as
they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights
will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of
Rights (other than Rights which have become void pursuant to
the provisions of Sections 7(e) and 11(a)(ii) hereof) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24,
the Company, at its option, may substitute Preferred Shares
(or equivalent preferred shares, as such term is defined in
Section 11(b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of
one-thousandth of a Preferred Share (or equivalent preferred
share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred
Shares pursuant to the terms thereof, so that the fraction
of a Preferred Share delivered in lieu of each Common Share
shall have the same voting rights as one Common Share.
(d) The Board shall not authorize any exchange
transaction referred to in Section 24(a) hereof unless at
the time such exchange is authorized there shall be
sufficient Common Shares or Preferred Shares issued but not
outstanding, or authorized but unissued, to permit the
exchange of Rights as contemplated in accordance with this
Section 24.
SECTION 25. Notice of Certain Events. (a) In
case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its
Preferred Shares or to make any other distribution to the
holders of its Preferred Shares (other than a regularly
quarterly cash dividend), (ii) to offer to the holders of
its Preferred Shares rights or warrants to subscribe for or
to purchase any additional Preferred Shares or shares of
stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving
only the subdivision of outstanding Preferred Shares),
(iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a
transaction which does not violate Section 11(o) hereof), or
to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of
the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which does
not violate Section 11(o) hereof), 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 Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action to the extent feasible and
file a certificate with the Rights Agent to that effect,
which shall specify the record date for the purposes of such
stock dividend or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is
to take place and the date of participation therein by the
holders of the Preferred Shares, if any such date is to be
fixed. Such notice shall be so given in the case of any
action covered by clause (i) or (ii) above of this
Section 25(a) at least twenty (20) days prior to the record
date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the
taking of such proposed action or the date of participation
therein by the holders of the Preferred Shares, whichever
shall be the earlier.
(b) In case of a Section 11(a)(ii) Event, then
(i) the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences
of such event to holders of Rights under Section 11(a)(ii)
hereof and (ii) all references in the foregoing
Section 25(a) to Preferred Shares shall be deemed thereafter
to refer also, if appropriate, to Common Shares and/or, if
appropriate, other securities of the Company.
SECTION 26. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Right Certificate to or
on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, and addressed (until
another address is filed in writing with the Rights Agent)
as follows:
NextLevel Systems, Inc.
8770 West Bryn Mawr Avenue
Suite 1300
Chicago, Illinois 60631
Attention: Secretary
Subject to the provisions of Section 21 hereof,
any notice or demand authorized by this Agreement to be
given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid,
and addressed (until another address is filed in writing
with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
450 West 33rd Street, 15th floor
New York, NY 10001
Attention: Account Administrator
Notices or demands authorized by this Agreement to
be given or made by the Company or the Rights Agent to the
holder of any Right Certificate or, if prior to the
Distribution Date, to the holder of certificates
representing Common Shares, shall be sufficiently given or
made if sent by first-class mail, postage prepaid, and
addressed to such holder at the address of such holder as
shown on the registry books of the Company.
SECTION 27. Supplements and Amendments. Prior
to the Distribution Date, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any
holders of certificates representing Common Shares. From
and after the Distribution Date, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Right
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 Right Certificates (other than
an Acquiring Person or an Affiliate or Associate thereof);
provided, however, that this Agreement may not be
supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to
when the Rights may be redeemed at such time as the Rights
are not then redeemable, or (B) any other time period unless
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 which states that the
proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute
such supplement or amendment, provided that such supplement
or amendment does not adversely affect the rights or
obligations of the Rights Agent under Section 18 or 20 of
this Agreement. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common
Shares.
SECTION 28. Determination and Actions by the
Board, etc. 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 the
Company, or as may be necessary or advisable in the
administration of this Agreement, including, without
limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including, without
limitation, a determination to redeem or not redeem the
Rights or to amend this Agreement and whether any proposed
amendment adversely affects the interests of the holders of
Right Certificates). For all purposes of this Agreement,
any calculation of the number of Common Shares or other
securities outstanding at any particular time, including for
purposes of determining the particular percentage of such
outstanding Common Shares or any other securities of which
any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of
the General Rules and Regulations under the Exchange Act as
in effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect
to the foregoing) which are done or made by the Board in
good faith, shall (x) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Right
Certificates and all other parties, and (y) not subject the
Board to any liability to the holders of the Right
Certificates.
SECTION 29. 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 30. Benefits of this Agreement. This
Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the
Right Certificates (and, prior to the Distribution Date, the
Common Shares), and 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 Right
Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim
under this Agreement.
SECTION 31. Severability. If any term,
provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
SECTION 32. Governing Law. This Agreement,
each Right and each Right Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State
of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely
within such State.
SECTION 33. Counterparts. This Agreement may
be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together
constitute but one and the same instrument.
SECTION 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and attested, all as of
the date and year first above written.
NEXTLEVEL SYSTEMS, INC.
By:
----------------------------
Name:
Title:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.,
the Rights Agent
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
EXHIBIT A
FORM OF
NEXTLEVEL SYSTEMS, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
(Pursuant to Section 151
of the General Corporation Law of the State of Delaware)
We, Keith A. Zar, Vice President and General
Counsel, and Susan M. Meyer, Vice President, Deputy General
Counsel and Secretary of NextLevel Systems, Inc., a
corporation organized and existing under the General
Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of
Section 103 thereof, do hereby certify:
That pursuant to the authority conferred upon the
Board of Directors by the Corporation's Certificate of
Incorporation (the "Certificate of Incorporation"), the
Board of Directors on June 10, 1997, adopted the following
resolution creating a series of 400,000 shares of Preferred
Stock designated as Series A Junior Participating Preferred
Stock:
WHEREAS, the Certificate of Incorporation provides
that the Corporation is authorized to issue 20,000,000
shares of preferred stock, none of which are outstanding,
now therefore it is.
RESOLVED, that pursuant to the authority vested in
the Board of Directors of the Corporation by Article FOURTH
of the Certificate of Incorporation, a series of Preferred
Stock of the Corporation be, and it hereby is, created out
of the authorized but unissued shares of the capital stock
of the Corporation, such series to be designated Series A
Junior Participating Preferred Stock (the "Participating
Preferred Stock"), to consist of four hundred thousand
(400,000) shares, par value $.01 per share, of which the
preferences and relative and other rights, and the
qualifications, limitations or restrictions thereof, shall
be as follows:
1. Future Increase or Decrease. Subject of
paragraph 4(e) of this resolution, the number of shares of
said series may at any time or from time to time be
increased or decreased by the Board of Directors
notwithstanding that shares of such series may be
outstanding at such time of increase or decrease.
2. Dividend Rate.
-------------
(a) The holders of shares of Participating
Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in
cash on the first day of each November, February, May and
August in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Participating
Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $10.00 or
(b) 1,000 times the aggregate per share amount of all cash
dividends and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on
the Common Stock, par value $.01 per share, of the
Corporation (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of
Participating Preferred Stock.
(b) On or after the first issuance of any
share or fractional share of Participating Preferred Stock,
no dividend on Common Stock shall be declared unless
concurrently therewith a dividend or distribution is
declared on the Participating Preferred Stock as provided in
paragraph (a) above; and the declaration of any such
dividend on the Common Stock shall be expressly conditioned
upon payment or declaration of and provision for a dividend
on the Participating Preferred Stock as above provided. 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 $10.00 per
share on the Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(c) Dividends shall begin to accrue and be
cumulative on outstanding shares of Participating Preferred
Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Participating
Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the
determination of holders of shares of Participating
Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. The
Board of Directors may fix a record date for the
determination of holders of shares of Participating
Preferred Stock entitled to receive payment of a dividend
distribution declared thereon, which record date shall be no
more than 30 days prior to the date fixed for the payment
thereof.
3. Dissolution, Liquidation and Winding Up. In
the event of any voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation
(hereinafter referred to as a "Liquidation"), the holders of
Participating Preferred Stock shall receive at least $100.00
per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the
holders of shares of Participating Preferred Stock shall be
entitled to receive at least an aggregate amount per share
equal to 1,000 times the aggregate amount to be distributed
per share to holders of Common Stock (the "Participating
Preferred Liquidation Preference").
4. Voting Rights. The holders of shares of
Participating Preferred Stock shall have the following
voting rights:
(a) Each share of Participating Preferred
Stock shall entitle the holder thereof to one
thousand (1,000) votes on all matters submitted to a vote of
the stockholders of the Corporation.
(b) Except as otherwise provided herein, or
by law, the Certificate of Incorporation or the Amended and
Restated By-laws of the Corporation (the "By-laws"), the
holders of shares of Participating Preferred Stock and the
holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of stockholders of
the Corporation.
(c) If and whenever dividends on the
Participating Preferred Stock shall be in arrears in an
amount equal to six quarterly dividend payments, then and in
such event the holders of the Participating Preferred Stock,
voting separately as a class (subject to the provisions of
subparagraph (d) below), shall be entitled at the next
annual meeting of the stockholders or at any special meeting
to elect two (2) directors. Each share of Participating
Preferred Stock shall be entitled to one vote, and holders
of fractional shares shall have the right to a fractional
vote. Upon election, such directors shall become additional
directors of the Corporation and the authorized number of
directors of the Corporation shall thereupon be
automatically increased by such number of directors. Such
right of the holders of Participating Preferred Stock to
elect directors may be exercised until all dividends in
default on the Participating Preferred Stock shall have been
paid in full, and dividends for the current dividend period
declared and funds therefor set apart, and when so paid and
set apart, the right of the holders of Participating
Preferred Stock to elect such number of directors shall
cease, the term of such directors shall thereupon terminate,
and the authorized number of directors of the Corporation
shall thereupon return to the number of authorized directors
otherwise in effect, but subject always to the same
provisions for the vesting of such special voting rights in
the case of any such future dividend default or defaults.
The fact that dividends have been paid and set apart as
required by the preceding sentence shall be evidenced by a
certificate executed by the President and the chief
financial officer of the Corporation and delivered to the
Board of Directors. The directors so elected by holders of
Participating Preferred Stock shall serve until the
certificate described in the preceding sentence shall have
been delivered to the Board of Directors or until their
respective successors shall be elected or appointed and
qualify.
At any time when such special voting rights have
been so vested in the holders of the Participating Preferred
Stock, the Secretary of the Corporation may, and upon the
written request of the holders of record of 10% or more of
the number of shares of the Participating Preferred Stock
then outstanding addressed to such Secretary at the
principal office of the Corporation in the State of
Illinois, shall, call a special meeting of the holders of
the Participating Preferred Stock for the election of the
directors to be elected by them as hereinabove provided, to
be held in the case of such written request within
forty (40) days after delivery of such request, and in
either case to be held at the place and upon the notice
provided by law and in the By-laws of the Corporation for
the holding of meetings of stockholders; provided, however,
that the Secretary shall not be required to call such a
special meeting (i) if any such request is received less
than ninety (90) days before the date fixed for the next
ensuing annual or special meeting of stockholders or (ii) if
at the time any such request is received, the holders of
Participating Preferred Stock are not entitled to elect such
directors by reason of the occurrence of an event specified
in the third sentence of subparagraph (d) below.
(d) if, at any time when the holders of
Participating Preferred Stock are entitled to elect
directors pursuant to the foregoing provisions of this
paragraph 4, the holders of any one or more additional
series of Preferred Stock are entitled to elect directors by
reason of any default or event specified in the Certificate
of Incorporation, as in effect at the time of the
certificate of designation for such series, and if the terms
for such other additional series so permit, the voting
rights of the two or more series then entitled to vote shall
be combined (with each series having a number of votes
proportional to the aggregate liquidation preference of its
outstanding shares). In such case, the holders of
Participating Preferred Stock and of all such other series
then entitled so to vote, voting as a class, shall elect
such directors. If the holders of any such other series
have elected such directors prior to the happening of the
default or event permitting the holders of Participating
Preferred Stock to elect directors, or prior to a written
request for the holding of a special meeting being received
by the Secretary of the Corporation from the holders of not
less than 10% of the then outstanding shares of
Participating Preferred Stock, then such directors so
previously elected will be deemed to have been elected by
and on behalf of the holders of Participating Preferred
Stock as well as such other series, without prejudice to the
right of the holders of Participating Preferred Stock to
vote for directors if such previously elected directors
shall resign, cease to serve or fail to stand for reelection
while the holders of Participating Preferred Stock are
entitled to vote. If the holders of any such other series
are entitled to elect in excess of two (2) directors, the
Participating Preferred Stock shall not participate in the
election of more than two (2) such directors, and those
directors whose terms first expire shall be deemed to be the
directors elected by the holders of Participating Preferred
Stock; provided that, if at the expiration of such terms the
holders of Participating Preferred Stock are entitled to
vote in the election of directors pursuant to the provisions
of this paragraph 4, then the Secretary of the Corporation
shall call a meeting (which meeting may be the annual
meeting or special meeting of stockholders referred to in
subparagraph (c)) of holders of Participating Preferred
Stock for the purpose of electing replacement directors (in
accordance with the provisions of this paragraph 4) to be
held on or prior to the time of expiration of the expiring
terms referred to above.
(e) Except as otherwise set forth herein or
required by law, the Certificate of Incorporation or the
By-laws, holders of Participating Preferred Stock shall have
no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for the
taking of any corporate action. No consent of the holders
of outstanding shares of Participating Preferred Stock at
any time outstanding shall be required in order to permit
the Board of Directors to: (i) increase the number of
authorized shares of Participating Preferred Stock or to
decrease such number to a number not below the sum of the
number of shares of Participating Preferred Stock then
outstanding and the number of shares with respect to which
there are outstanding rights to purchase; or (ii) to issue
Preferred Stock which is senior to the Participating
Preferred Stock, junior to the Participating Preferred Stock
or on a parity with the Participating Preferred Stock.
5. Redemption. The shares of Participating
Preferred Stock shall not be redeemable.
6. Conversion Rights. The Participating
Preferred Stock is not convertible into Common Stock or any
other security of the Corporation.
IN WITNESS WHEREOF, the undersigned Vice President
and General Counsel, and Vice President, Deputy General
Counsel and Secretary of the Corporation each declares under
penalty or perjury the truth, to the best of his or her
knowledge, of this Certificate of Designation, Preferences
and Rights of Series A Junior Participating Preferred Stock.
Executed this th day of June, 1997 in Chicago,
Illinois
By:
--------------------------
Keith A. Zar
Vice President and General
Counsel
Attest:
- ----------------------------
Susan M. Meyer
Vice President, Deputy General
Counsel and Secretary
EXHIBIT B
Form of Right Certificate
Certificate No. R- Rights
------
NOT EXERCISABLE AFTER JUNE 12, 2007, OR
EARLIER IF REDEEMED BY THE CORPORATION.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, OR HELD BY,
ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE THEREOF (AS DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN RELATED
PERSONS, WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER, SHALL BECOME NULL AND
VOID.
Right Certificate
NEXTLEVEL SYSTEMS, INC.
This certifies that , or registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the
Rights Agreement, dated as of June 12, 1997 (the "Rights
Agreement"), between NextLevel Systems, Inc., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company
(the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., New York, New
York time, on June 12, 2007, unless the Rights evidenced
hereby shall have been previously redeemed by the Company,
at the principal office or offices of the Rights Agent
designated for such purpose, or at the office of its
successor as Rights Agent, one one-thousandth of a fully
paid non-assessable share of Series A Junior Participating
Preferred Stock, $.01 par value per share (the "Preferred
Shares"), of the Company, at a purchase price of $
per one one-thousandth of a Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths of a
Preferred Share which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of , based
on the Preferred Shares as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event
(as such term is defined in the Rights Agreement), if the
Rights evidenced by this Right Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate who becomes a transferee after the
Acquiring Person becomes such, or (iii) under certain
circumstances specified in the Rights Agreement, a
transferee of any such Acquiring Person, Associate or
Affiliate who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such, 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.
As provided in the Rights Agreement, the Purchase
Price and the number of one one-thousandths of a Preferred
Share or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the
happening of certain events, including Triggering Events (as
such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement,
which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and
to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Right
Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights
under the specific circumstances set forth in the Rights
Agreement. Copies of the Rights Agreement are on file at
the principal executive offices of the Company and the
principal office or offices of the Rights Agent.
This Right Certificate, with or without other
Right Certificates, upon surrender at the principal office
of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares or other securities as
the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Certificate may be redeemed by
the Company at a redemption price of $.01 per Right (subject
to adjustment as provided in the Rights Agreement) payable
in Common Shares or cash.
The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value
of a whole Right as defined in the Rights Agreement.
The Company will not be required to issue
fractions of Preferred Shares (other than fractions which
are one one-thousandths or integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the
Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are
one one-thousandths or integral multiples of one
one-thousandth of a Preferred Share). In lieu of fractional
Preferred Shares other than fractions that are multiples of
one one-thousandth of a Preferred Share, the Company will
pay to the registered holders of Right Certificates at the
time such Rights are exercised an amount in cash equal to
the same fraction of the current market value of one
Preferred Share as defined in the Rights Agreement.
No holder of this Right Certificate shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of the Preferred Shares or of any other
securities of the Company which may at any time be issuable
on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or other
distributions or to exercise any preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by
this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the signature of the proper officers of
the Company and its corporate seal. Dated as of ,
.
[SEAL]
ATTEST: NEXTLEVEL SYSTEMS, INC.
Attest:
By By
- ---------------------------- ----------------------------
Name: Name:
Title: Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C.
By
------------------------------
Authorized Signatory
Name:
Title:
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
------------------------------------------
hereby sells, assigns and transfers unto
-------------------
- ------------------------------------------------------------
(Please print name and address of transferee)
- ------------------------------------------------------------
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with
full power of substitution.
Dated: ------------, ----
--------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of
a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a
commercial bank, savings association, credit union or trust
company having an office or correspondent in the United
States or other eligible guarantor institution which is a
participant in a signature guarantee medallion program.
- ------------------------------------------------------------
The undersigned hereby certifies that (1) the
Rights evidenced by this Right Certificate are not being
sold, assigned or transferred by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and (2) after due inquiry and to the best
knowledge of the undersigned, the undersigned did not
acquire the Rights evidenced by this Right Certificate from
any Person who is or was an Acquiring Person or an Affiliate
or Associate thereof (as such terms are defined in the
Rights Agreement).
--------------------
Signature
- ------------------------------------------------------------
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if such holder desires
to exercise Rights represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to
exercise Rights represented by this Right Certificate to
purchase the Preferred Shares, Common Shares or such other
securities issuable upon the exercise of such Rights at this
time as follows:
Please Insert
Number of Rights
To Be Exercised
---------------
(i) Preferred Shares Exercise
---
(ii) Section 11(a)(ii) Exercise
---
(iii) Section 13 Exercise
---
The undersigned requests that certificates for
such Preferred Shares, Common Shares or other securities be
issued in the name of:
Please insert social security
or other identifying number
-------------------------------
- ------------------------------------------------------------
(Please print name and address of transferee)
- ------------------------------------------------------------
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate
for the balance remaining of such Rights shall be registered
in the name of and delivered to:
Please insert social security
or other identifying number
--------------------------------
- ------------------------------------------------------------
(Please print name and address of transferee)
Form of Reverse Side of Right Certificate -- continued.
- ------------------------------------------------------------
Dated: ---------, 19--
--------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of
a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a
commercial bank, savings association, credit union or trust
company having an office or correspondent in the United
States or other eligible guarantor institution which is a
participant in a signature guarantee medallion program.
Form of Reverse Side of Right Certificate -- continued.
- ------------------------------------------------------------
The undersigned hereby certifies that (1) the
Rights evidenced by this Right Certificate are not being
exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) and (2)
after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights
evidenced by this Rights Certificate from any Person who is
or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement).
--------------------
Signature
- ------------------------------------------------------------
NOTICE
The signature on the foregoing Forms of Assignment
and Election and certificates must conform to the name as
written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in
the Form of Assignment or the Form of Election to Purchase,
as the case may be, is not completed, the Company and the
Rights Agent will deem the Beneficial Owner of the Rights
evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
EXHIBIT C
[ ], 1997
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON
WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT)
AND CERTAIN RELATED PERSONS, WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL
BECOME NULL AND VOID.
The Board of Directors of NextLevel Systems, Inc.,
a Delaware corporation (the "Company"), declared a dividend
of one preferred share purchase right (a "Right") for each
outstanding share of Common Stock, par value $.01 per share
(the "Common Shares"), of the Company. The dividend is
payable to the stockholders of record as of 5:00 P.M., New
York, New York time, on _________, 1997 (the "Record Date"),
and with respect to Common Shares issued thereafter until
the Distribution Date (as hereinafter defined) and, in
certain circumstances, with respect to Common Shares issued
after the Distribution Date. Except as set forth below,
each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Company one one-
thousandth of a share of Series A Junior Participating
Preferred Stock, par value $.01 per share (the "Preferred
Shares"), at a price of $85.00 per one one-thousandth of a
Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of June 12, 1997 (the
"Rights Agreement"), between the Company and ChaseMellon
Shareholder Services, L.L.C. (the "Rights Agent").
The Rights are attached to all certificates
representing outstanding Common Shares, and no separate
Right Certificates (as hereinafter defined) have been
distributed. The Rights will separate from the Common
Shares on the earliest to occur of (i) the first date of
public announcement that a person or "group" (other than FLC
Entities (as hereinafter defined) to the extent FLC
Entities, individually or as a group, beneficially own no
more than 20% of the then outstanding Common Shares) has
acquired beneficial ownership of 15% or more of the
outstanding Common Shares (except pursuant to a Permitted
Offer, as hereinafter defined); or (ii) ten (10) business
days (or such later date as the Board of Directors of the
Company may determine) following the commencement of, or
announcement of an intention to commence, a tender offer or
exchange offer the consummation of which would result in a
person or group becoming an Acquiring Person (as hereinafter
defined) (the earliest of such dates being called the
"Distribution Date"). A person or group whose acquisition
of Common Shares causes a Distribution Date pursuant to
clause (i) above is an "Acquiring Person". The first date
of public announcement that a person or group has become an
Acquiring Person is the "Shares Acquisition Date". "FLC
Entities" means Instrument Partners, a New York limited
partnership, Forstmann Little & Co. Subordinated Debt and
Equity Management Buyout Partnership-IV, a New York limited
partnership, Theodore J. Forstmann, Nicholas C. Forstmann,
Wm. Brian Little, Winston W. Hutchins, Steven B. Klinsky,
Sandra J. Horbach and Thomas H. Lister and their Affiliates
and Associates who or which are considered as one Person and
references to the FLC Entities include any or all such
persons.
The Rights Agreement provides that until the
Distribution Date the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon
transfer or new issuance of Common Shares have contained and
will continue to contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such
certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on
the Distribution Date (and to each initial record holder of
certain Common Shares issued after the Distribution Date),
and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the
Distribution Date and will expire at 5:00 P.M., New York,
New York time, on June 12, 2007, unless earlier redeemed by
the Company as described below.
In the event that any person becomes an Acquiring
Person (except pursuant to a Permitted Offer as hereinafter
defined), each holder of a Right will have (subject to the
terms of the Rights Agreement) the right (the "Flip-In
Right") to receive upon exercise the number of Common
Shares, or, in the discretion of the Board of Directors of
the Company, the number of one one-thousandths of a
Preferred Share (or, in certain circumstances, other
securities of the Company) having a value (immediately prior
to such triggering event) equal to two times the Purchase
Price. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that
are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person
or any affiliate or associate thereof will be null and void.
A "Permitted Offer" is a tender or exchange offer for all
outstanding Common Shares which is at a price and on terms
determined, prior to the purchase of shares under such
tender or exchange offer, by a majority of Disinterested
Directors (as hereinafter defined) to be adequate (taking
into account all factors that such Disinterested Directors
deem relevant) and otherwise in the best interests of the
Company and its stockholders (other than the person or any
affiliate or associate thereof on whose basis the offer is
being made) taking into account all factors that such
Disinterested Directors may deem relevant. "Disinterested
Directors" are directors of the Company who are not officers
of the Company and who are not Acquiring Persons or
affiliates or associates thereof, or representatives of any
of them, or any person who was directly or indirectly
proposed or nominated as a director of the Company by a
Transaction Person (as defined in the Rights Agreement).
In the event that, at any time following the
Shares Acquisition Date, (i) the Company is acquired in a
merger or other business combination transaction in which
the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are
not the holders of all of the surviving corporation's voting
power, or (ii) more than 50% of the Company's assets or
earning power is sold or transferred, in either case with or
to an Acquiring Person or any affiliate or associate
thereof, or any other person in which such Acquiring Person,
affiliate or associate has an interest, or any person acting
on behalf of or in concert with such Acquiring Person,
affiliate or associate, or, if in such transaction all
holders of Common Shares are not treated alike, any other
person, then each holder of a Right (except Rights which
previously have been voided as set forth above) shall
thereafter have the right (the "Flip-Over Right") to
receive, upon exercise, common shares of the acquiring
company having a value equal to two times the Purchase
Price. The holder of a Right will continue to have the Flip-
Over Right whether or not such holder exercises or
surrenders the Flip-In Right.
The Purchase Price payable, and the number of one-
thousandths of a Preferred Share or other securities
issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Shares, (ii) upon the
grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at
a price, or securities convertible into Preferred Shares
with a conversion price, less than the then current market
price of the Preferred Shares or (iii) upon the distribution
to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than
those referred to above).
The Purchase Price is also subject to adjustment
in the event of a stock split of the Common Shares, or a
stock dividend on the Common Shares payable in Common
Shares, or subdivisions, consolidations or combinations of
the Common Shares occurring, in any such case, prior to the
Distribution Date.
With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Purchase Price.
No fractional one-thousandths of a Preferred Share will be
issued, and in lieu thereof, an adjustment in cash will be
made based on the market price of the Preferred Shares on
the last trading day prior to the date of exercise.
Preferred Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend
payment of $10.00 per share but, if greater, will be
entitled to an aggregate dividend per share of 1,000 times
the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of
$100.00, provided that they will be entitled to an aggregate
payment per share of at least 1,000 times the aggregate
payment made per Common Share. Each Preferred Share will
have one thousand votes, voting together with the Common
Shares. These rights are protected by customary
antidilution provisions. In the event that the amount of
accrued and unpaid dividends on the Preferred Shares is
equivalent to at least six full quarterly dividends, the
holders of the Preferred Shares shall have the right, voting
as a class, to elect two directors in addition to the
directors elected by the holders of the Common Shares until
all dividends in default on the Preferred Shares have been
paid in full and dividends for the current dividend period
declared and funds therefor set apart.
At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration
of the Rights, the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective
upon the action of the Board of Directors of the Company.
Additionally, the Company may redeem the then outstanding
Rights in whole, but not in part, at the Redemption Price
after the triggering of the Flip-In Right and before the
expiration of any period during which the Flip-In Right may
be exercised in connection with a merger or other business
combination transaction or series of transactions involving
the Company in which all holders of Common Shares are
treated alike but not involving an Interested Stockholder
(as defined in the Rights Agreement). Upon the effective
date of the redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.
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. While the distribution of the Rights
will not be taxable to stockholders of the Company,
stockholders may, depending upon the circumstances,
recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events
thereafter.
