<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
AEROCENTURY CORP.
(Exact name of registrant as specified in its charter)
DELAWARE [TO COME]
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1440 CHAPIN AVENUE
BURLINGAME, CALIFORNIA 94010
(Address of principal executive offices) (Zip Code)
If this form relates to the If this form relates to the
registration of a class of registration of a class of securities
securities pursuant to Section 12(b) pursuant to Section 12(g) of the
of the Exchange Act and is effective Exchange Act and is effective pursuant
pursuant to General Instruction A.(c), to General Instruction A.(d),
please check the following box. [X] please check the following box. [ ]
Securities Act registration statement file number to which this form relates:
Not Applicable
Securities to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
<S> <C>
Preferred Stock Purchase Rights American Stock Exchange
(Title of class)
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
None
<PAGE> 2
ITEM 1. Description of Registrant's Securities to Be Registered.
On April 8, 1998, the Board of Directors of AeroCentury Corp. (the
"Company") authorized and declared a dividend distribution of one Right for each
outstanding share of its Common Stock, par value $.001 per share (the "Company
Common Stock"), to stockholders of record at the close of business on April 23,
1998 (the "Record Date"), and authorized the issuance of one Right with each
share of Company Common Stock issued (including shares distributed from
Treasury) by the Company thereafter between the Record Date and the Distribution
Date (as defined below). Each Right entitles the registered holder, subject to
the terms of the Rights Agreement (as defined below), to purchase from the
Company one one-hundredth of a share (a "Unit") of Series A Preferred Stock, par
value $.001 per share (the "Preferred Stock"), at a purchase price of $66 per
Unit, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement between the Company and Continental Stock Transfer &
Trust Company, as Rights Agent, dated as of April 8, 1998, as amended from time
to time (the "Rights Agreement").
The Rights Agreement
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon the earlier of (i) ten business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
has acquired or otherwise obtained beneficial ownership of 15% or more of the
then outstanding shares of Company Common Stock (an "Acquiring Person"), and
(ii) ten business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning 15% or more of the then outstanding
shares of Company Common Stock. Until the Distribution Date, (i) the Rights will
be evidenced by Company Common Stock certificates and will be transferred with
and only with such Company Common Stock certificates, (ii) new Company Common
Stock certificates issued after the Record Date (also including shares
distributed from Treasury) will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any certificates
representing outstanding Company Common Stock will also constitute the transfer
of the Rights associated with the Company Common Stock represented by such
certificates.
An "Acquiring Person" does not include (A) the Company; (B) any
Subsidiary of the Company; (C) any employee benefit plan maintained by the
Company or any of its Subsidiaries; (D) any trustee or fiduciary with respect to
such employee benefit plan acting in such capacity or a trustee or fiduciary
holding shares of Company Common Stock for the purpose of funding any such plan
or employee benefits; (E) any Person if the Board of Directors of the Company
determines in good faith that such Person who
<PAGE> 3
would otherwise be an "Acquiring Person" became such inadvertently (including,
without limitation, because (x) such Person was unaware that it beneficially
owned a percentage of Company Common Stock that would otherwise cause such
Person to be an "Acquiring Person" or (y) such Person was aware of the extent of
its Beneficial Ownership of Company Common Stock but had no actual knowledge of
the consequences of such Beneficial Ownership under this Agreement) and without
any intention of changing or influencing control of the Company, and if such
Person does not acquire any additional shares of Company Common Stock and as
promptly as practicable divested or divests itself of Beneficial Ownership of a
sufficient number of shares of Company Common Stock so that such Person would no
longer be an "Acquiring Person;" or (F) any Person who becomes the Beneficial
Owner of 15% or more of the then outstanding shares of Company Common Stock as a
result of the acquisition of shares of Company Common Stock directly from the
Company in one or more transactions approved by a majority of the Board of
Directors, and (ii) no Person shall be deemed an "Acquiring Person" as a result
of the acquisition of shares of Company Common Stock by the Company which, by
reducing the number of shares of Company Common Stock outstanding, increases the
proportional number of shares beneficially owned by such Person; provided,
however, that if (A) a Person would become an Acquiring Person (but for the
operation of this subclause (ii)) as a result of the acquisition of shares of
Company Common Stock by the Company and (B) after such share acquisition by the
Company, such Person becomes the Beneficial Owner of any additional shares of
Company Common Stock, then such Person shall be deemed an Acquiring Person
unless upon becoming the Beneficial Owner of such additional shares such Person
is the Beneficial Owner of less than 15% of the then outstanding shares of
Company Common Stock.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed or exchanged by the Company as described below. Under
certain circumstances the exercisability of the Rights may be suspended. In no
event, however, will the Rights be exercisable prior to the expiration of the
period in which the Rights may be redeemed.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that a person becomes an Acquiring Person, then, in such
case, each holder of a Right will thereafter have the right to receive, upon
exercise, shares of Company Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the exercise price of the Right. The exercise price is the purchase price
multiplied by the number of Units of Preferred Stock issuable upon exercise of a
Right prior to the event described in this paragraph. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in
<PAGE> 4
this paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person will
be null and void.
In the event that, at any time following the date that any person
becomes an Acquiring Person, (i) the Company is acquired in a merger or other
business combination transaction and the Company is not the surviving
corporation, (ii) any person merges with the Company and all or part of the
Company Common Stock is converted or exchanged for securities, cash or property
of the Company or any other person or (iii) 50% or more of the Company's assets
or earning power is sold or transferred, each holder of a Right (except Rights
which previously have been voided as described above) shall thereafter have the
right to receive, upon exercise, common stock of the Acquiring Person having a
value equal to two times the exercise price of the Right.
The purchase price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments amount to at least 1% of the purchase
price. The Company is not required to issue fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock which may be evidenced by depositary receipts). In lieu
thereof, an adjustment in cash may be made based on the current market price of
a share of Preferred Stock on the day of exercise.
At any time until ten business days following the Stock Acquisition
Date, a majority of the Board of Directors (including, following the date on
which there is an Acquiring Person, the majority of the Independent Directors)
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(subject to adjustment in certain events) (the "Redemption Price") payable, at
the election of the majority of the Board of Directors (including a majority of
the Independent Directors), in cash or shares of Company Common Stock.
Immediately upon the action of a majority of the Board of Directors (including,
following the date on which there is an Acquiring Person, a majority of the
Independent Directors) ordering the redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The Company may at any time after there is an Acquiring Person, by
action of a majority of the Board of Directors (including a majority of the
Independent Directors), exchange all or part of the then outstanding and
exercisable Rights (other than Rights that
<PAGE> 5
shall have become null and void) for shares of Company Common Stock pursuant to
a one-for-one exchange ratio, as adjusted.
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 or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust (i) the time period governing redemption
shall be made at such time as the Rights are not redeemable or (ii) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the Rights of and/or benefiting, the holders of Rights. In
addition, after a person becomes an Acquiring Person, no amendment or supplement
may be made without the approval of a majority of the Board of Directors
(including a majority of the Independent Directors).
Description of Preferred Stock
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.
Each Unit of Preferred Stock will have a minimum preferential quarterly
dividend of $.01 per Unit or any higher per share dividend declared on the
Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $.01 per
Unit and the per share amount paid in respect of a share of the Company Common
Stock.
Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
<PAGE> 6
The rights of holders of the Preferred Stock with respect to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of Company Common Stock.
ITEM 2. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
1. Rights Agreement, dated as of April 8, 1998, between the Company
and Continental Stock Transfer & Trust Company together with:
Exhibit A Form of Rights Certificate; Exhibit B Summary of Rights
to Purchase Preferred Stock; and Exhibit C Form of Certificate of
Designation of the Series A Preferred Stock.
</TABLE>
<PAGE> 7
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.
AEROCENTURY CORP.
Date: April 16, 1998
By: Toni M. Perrazo
Vice President, Finance
<PAGE> 8
EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
1. Rights Agreement, dated as of April 8, 1998, between the Company
and Continental Stock Transfer & Trust Company together with:
Exhibit A Form of Rights Certificate; Exhibit B Summary of Rights
to Purchase Preferred Stock; and Exhibit C Form of Certificate of
Designation of the Series A Preferred Stock.
</TABLE>
<PAGE> 1
EXHIBIT 1
TO FORM 8-A
AEROCENTURY CORP.
and
Continental Stock Transfer & Trust Company
as Rights Agent
RIGHTS AGREEMENT
Dated as of April 8, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
Section 1. Certain Definitions........................................................................1
Section 2. Appointment of Rights Agent................................................................6
Section 3. Issue of Rights Certificates...............................................................6
Section 4. Form of Rights Certificates................................................................8
Section 5. Countersignature and Registration..........................................................8
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates..............................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..............................9
Section 8. Cancellation and Destruction of Rights Certificates.......................................11
Section 9. Reservation and Availability of Capital Stock.............................................11
Section 10. Preferred Stock Record Date...............................................................13
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights..........................................................................13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares................................21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power......................22
Section 14. Fractional Rights and Fractional Shares...................................................25
Section 15. Rights of Action..........................................................................26
Section 16. Agreement of Rights Holders...............................................................26
Section 17. Rights Certificate Holder Not Deemed a Stockholder........................................27
Section 18. Concerning the Rights Agent...............................................................27
Section 19. Merger or Consolidation or Change of Name of Rights Agent.................................28
Section 20. Duties of Rights Agent....................................................................28
Section 21. Change of Rights Agent....................................................................31
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 22. Issuance of New Rights Certificates.......................................................31
Section 23. Redemption and Termination................................................................32
Section 24. Notice of Certain Events..................................................................33
Section 25. Notices...................................................................................34
Section 26. Supplements and Amendments................................................................34
Section 27. Successors................................................................................35
Section 28. Determinations and Actions by the Board of Directors, etc.................................35
Section 29. Benefits of this Agreement................................................................35
Section 30. Severability..............................................................................35
Section 31. Governing Law.............................................................................36
Section 32. Counterparts..............................................................................36
Section 33. Descriptive Headings......................................................................36
Section 34. Exchange..................................................................................36
Exhibit A Form of Rights Certificate................................................................A-1
Exhibit B Form of Summary of Rights.................................................................B-1
Exhibit C Certificate of Designation................................................................C-1
</TABLE>
ii
<PAGE> 4
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of April 8, 1998 (the "Agreement"), between
AeroCentury Corp., a Delaware corporation (the "Company"), and Continental Stock
Transfer & Trust Company, a New York corporation (the "Rights Agent").
WHEREAS, effective April 8, 1998 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company (i) authorized and declared a
dividend distribution of one Right for each share of Common Stock, par value
$.001 per share, of the Company (the "Company Common Stock") outstanding at the
Close of Business on April 23, 1998 (the "Record Date"), and (ii) authorized the
issuance of one Right (as such number may hereinafter be adjusted pursuant
hereto) for each share of Company Common Stock issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and, except
as otherwise provided in Section 22, the Distribution Date, each Right initially
representing the right to purchase upon the terms and subject to the conditions
hereinafter set forth one Unit of Series A Preferred Stock (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates or Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Company Common Stock
then outstanding. Notwithstanding the foregoing: (i) an "Acquiring
Person" shall not include: (A) the Company; (B) any Subsidiary of the
Company; (C) any employee benefit plan maintained by the Company or any
of its Subsidiaries; (D) any trustee or fiduciary with respect to such
employee benefit plan acting in such capacity or a trustee or fiduciary
holding shares of Company Common Stock for the purpose of funding any
such plan or employee benefits; (E) any Person who has reported or is
required to report such ownership on Schedule 13G under the Exchange
Act (or any comparable or successor report), but only so long as (x)
such Person is eligible to report such ownership on Schedule 13(G)
under the Exchange Act (or any comparable or successor report), (y)
such Person has not reported and is not required to report such
ownership on Schedule 13(D) under the Exchange Act (or any comparable
or successor report), and (z) such Person does not beneficially own 20%
or more of the shares of Company Common Stock then outstanding; (F) any
Person if the Board of Directors of the Company determines in good
faith that such Person who would otherwise be an "Acquiring Person"
became such inadvertently (including, without limitation, because (x)
such Person was unaware that it beneficially owned a percentage of
Company Common Stock that would otherwise cause such Person to be an
"Acquiring Person" or (y) such Person was aware of the extent of its
Beneficial Ownership of Company Common Stock but had no actual
knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or
1
<PAGE> 5
influencing control of the Company, and if such Person does not acquire
any additional shares of Company Common Stock and as promptly as
practicable divested or divests itself of Beneficial Ownership of a
sufficient number of shares of Company Common Stock so that such Person
would no longer be an "Acquiring Person;" or (G) any Person who becomes
the Beneficial Owner of 15% or more of the then outstanding shares of
Company Common Stock as a result of the acquisition of shares of
Company Common Stock directly from the Company in one or more
transactions approved by a majority of the Board of Directors, and (ii)
no Person shall be deemed an "Acquiring Person" as a result of the
acquisition of shares of Company Common Stock by the Company which, by
reducing the number of shares of Company Common Stock outstanding,
increases the proportional number of shares beneficially owned by such
Person; provided, however, that if (A) a Person would become an
Acquiring Person (but for the operation of this subclause (ii)) as a
result of the acquisition of shares of Company Common Stock by the
Company and (B) after such share acquisition by the Company, such
Person becomes the Beneficial Owner of any additional shares of Company
Common Stock, then such Person shall be deemed an Acquiring Person
unless upon becoming the Beneficial Owner of such additional shares
such Person is the Beneficial Owner of less than 15% of the then
outstanding shares of Company Common Stock. Each Person identified in
subclauses (A), (B), (C) and (D) of this Section (1)(a) is individually
an "Exempt Person" and collectively "Exempt Persons."
(b) "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 (the
"Exchange Act"), as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to have "Beneficial Ownership" of and to "beneficially
own", any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates is considered to be a "beneficial
owner" under Rule 13d-3 of the General Rules and Regulations
under the Exchange Act (the "Exchange Act Regulations") as in
effect on the date hereof; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"beneficially own", any securities under this subparagraph (i)
as a result of an agreement, arrangement or understanding to
vote such securities if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy or
consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the Exchange Act
Regulations, and (B) is not reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or
successor report);
(ii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
of such other Person) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for
the purpose of
2
<PAGE> 6
acquiring, holding, voting (except pursuant to a revocable
proxy or consent as described in the proviso to subparagraph
(i) of this paragraph (c)) or disposing of such securities; or
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the
satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise;
provided, however, that under this paragraph (c) a Person shall not be
deemed the "Beneficial Owner" of, to have "Beneficial Ownership" of, or
to "beneficially own", (A) securities tendered pursuant to a tender or
exchange offer made in accordance with Exchange Act Regulations by such
Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, (B)
securities that may be issued upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (C) securities that may be
issued upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(c) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights; and further
provided, however, that (x) nothing in this paragraph (c) shall cause a
Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities
acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the
date of such acquisition, (y) no decision reached, or action taken, by
the Board of Directors of the Company or any committee thereof shall
cause any Person (or any Affiliate or Associate of such Person) who is
a member of the Board of Directors of the Company or such committee to
be deemed, for the purposes of this Agreement, to be a Beneficial Owner
of any securities beneficially owned by any other Person (or any
Affiliate or Associate of such Person) who is a member of the Board of
Directors of the Company or any committee thereof solely by reason of
such membership of the Board of Directors or any committee thereof or
participation in the decisions or actions thereof on the part of either
or both of such Persons and (z) no Person who is an officer, director
or employee of an Exempt Person shall be deemed, solely by reason of
such Person's status or authority as such, to be the "Beneficial Owner"
of, to have "Beneficial Ownership" of or to "beneficially own" any
securities that are "beneficially owned" (as defined in this paragraph
(c)), including, without limitation, in a fiduciary capacity, by an
Exempt Person or by any other such officer, director or employee of an
Exempt Person.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the city of San
Francisco, California is authorized or obligated by law or executive
order to close.
3
<PAGE> 7
(e) "Close of Business" on any given date shall mean 5:00
P.M., California time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., California time, on
the next succeeding Business Day.
(f) "Common Stock" of any Person other than the Company shall
mean the capital stock of such Person with the greatest voting power,
or, if such Person shall have no capital stock, the equity securities
or other equity interest having power to control or direct the
management of such Person.
(g) "Company" means AeroCentury Corp., a Delaware corporation,
and also means a Principal Party to the extent provided in Section
13(a).
(h) "Company Common Stock" has the meaning set forth in the
Whereas Clause.
(i) "Distribution Date" has the meaning set forth in Section
3(a).
(j) "Expiration Date" has the meaning set forth in Section
7(a).
(k) "Independent Director" shall mean a member of the Board of
Directors of the Company who is not, and has never been, an officer or
employee of the Company, who is not an Acquiring Person or an Affiliate
or Associate of an Acquiring Person and who either (i) was a member of
the Board of Directors of the Company immediately prior to the first
occurrence of a Section 11(a)(ii) Event or (ii) subsequently became a
director of the Company and whose election or nomination for election
is approved or recommended by a vote of a majority of the Board of
Directors of the Company, which majority includes a majority of the
Independent Directors then on the Board of Directors.
(l) "Person" shall mean any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act as in effect on the date hereof.
(m) "Preferred Stock" shall mean the Series A Preferred Stock,
par value $.001 per share, of the Company having the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions
described in the Certificate of Designation set forth as Exhibit C
hereto and as amended from time to time.
(n) "Purchase Price" has the meaning set forth in Section
7(b).
(o) "Record Date" has the meaning set forth in the Whereas
Clause.
(p) "Right" has the meaning set forth in the Whereas Clause.
(q) "Rights Certificate" has the meaning set forth in Section
3(a).
4
<PAGE> 8
(r) "Rights Dividend Declaration Date" has the meaning set
forth in the Whereas Clause.
(s) "Section 11(a)(ii) Event" shall mean the event described
in Section 11(a)(ii) hereof.
(t) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(u) "Stock Acquisition Date" shall mean the first date of
public announcement (including, without limitation, the filing of any
report pursuant to Section 13(d) of the Exchange Act (or any comparable
or successor report)) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(v) "Subsidiary" shall mean, with reference to any Person, any
other Person of which an amount of voting securities or equity
interests sufficient to elect at least a majority of the directors or
equivalent governing body of such other Person is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such
first-mentioned Person.
(w) "Summary of Rights" has the meaning set forth in Section
3(b).
(x) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
(y) "Unit" has the meaning set forth in Section 7(b).
In addition, the following terms are defined in the Sections
indicated below:
<TABLE>
<CAPTION>
Defined Term Section Number
------------ --------------
<S> <C>
Adjustment Shares 11(a)(ii)
Adjustment Spread 34(a)
common stock equivalents 11(a)(iii)
Current Value 11(a)(iii)
Depositary Agent 7(c)
Distribution Date 3(a)
Equivalent Preferred Stock 11(b)
Exchange Act 1(b)
Exchange Act Regulations 1(c)
Exchange Ratio 34(a)
Exempt Person 1(a)
Expiration Date 7(a)
Final Expiration Date 7(a)
Nasdaq 11(d)(i)
Original Rights 1(c)
Purchase Price 7(b)
Redemption Price 23(a)
Registered Common Stock 13(b)(ii)
</TABLE>
5
<PAGE> 9
<TABLE>
<S> <C>
Registration Date 9(c)
Registration Statement 9(c)
Rights Certificates 3(a)
Section 11(a)(ii) Event 11(a)(ii)(C)
Section 11(a)(iii) Trigger Date 11(a)(iii)
Section 13 Event 13(a)
Securities Act 9(c)
Spread 11(a)(iii)
Summary of Rights 3(b)
Trading Day 11(d)(i)
Unit 7(b)
</TABLE>
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. With
the consent of the Rights Agent, the Company may from time to time appoint such
co-rights agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates. (a) Until the earlier of (i)
the Close of Business on the tenth Business Day after the Stock Acquisition
Date, and (ii) the Close of Business on the tenth Business Day (or such later
date as may be determined by action of a majority of the Board of Directors of
the Company prior to the occurrence of a Section 11(a)(ii) Event) after the date
that a tender or exchange offer by any Person (other than an Exempt Person) is
first published or sent or given within the meaning of Rule 14d-4(a) of the
Exchange Act Regulations or any successor rule, if upon consummation thereof
such Person would be an Acquiring Person (including, in the case of both clause
(i) and (ii), any such date which is after the date of this Agreement and prior
to the issuance of the Rights)(the earlier of (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for shares of
Company Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Company Common Stock including a transfer to the Company; provided, however,
that if a tender or exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such
tender or exchange offer. As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of shares of Company Common Stock as of the Close of Business
on the Distribution Date, at the address of such holder shown on the records of
the Company, one or more rights certificates, in substantially the form of
Exhibit A hereto (the "Rights Certificates"), evidencing one Right for each
share of Company Common Stock so held, subject to adjustment as provided herein.
In the event that an adjustment in the number of Rights per share of
Company Common Stock has been made pursuant to Section 11(p) hereof, at the time
of distribution of the Rights Certificates, the Company may make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole
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<PAGE> 10
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of shares of Company
Common Stock as of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Company. With respect to certificates
for Company Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with the Summary of Rights. Until
the Distribution Date (or, if earlier, the Expiration Date), the surrender for
transfer of any such certificate for Company Common Stock outstanding as of the
Record Date, with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Company Common Stock
represented thereby.
(c) Rights shall, without any further action, be issued in
respect of all shares of Company Common Stock which are issued (including any
shares of Company Common Stock held in treasury) after the Record Date but prior
to the earlier of the Distribution Date and the Expiration Date. Certificates,
representing such shares of Company Common Stock, issued after the Record Date
shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between AeroCentury
Corp. (the "Company") and Continental Stock Transfer & Trust Company
(the "Rights Agent") dated as of April 8, 1998, as amended from time to
time (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal office of the stock transfer administration office of the
Rights Agent. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of
a written request therefor. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS
OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD
BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME
NULL AND VOID.
With respect to certificates representing shares of Company Common Stock that
bear the foregoing legend until the earlier of the Distribution Date and the
Expiration Date, the Rights associated with the shares of Company Common Stock
represented by such certificates shall be evidenced by such certificates alone
and registered holders of the shares of Company Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
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<PAGE> 11
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.
Section 4. Form of Rights Certificates. (a) The Rights Certificates
(and the forms of election to purchase, assignment and certificate to be printed
on the reverse thereof) shall each be substantially in the form set forth in
Exhibit A hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or any rule or
regulation thereunder or with any rule or regulation of any stock exchange or
automated quotation system on which the Rights may from time to time be listed
or to conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to purchase such
number of Units of Preferred Stock as shall be set forth therein at the price
set forth therein, but the amount and type of securities, cash or other assets
that may be acquired upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration . (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman, the President or one
of its Vice Presidents under its corporate seal reproduced thereon attested by
its Secretary, Treasurer or one of its Assistant Secretaries. The signature of
any of these officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of the
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature of such Rights Certificates or
did not hold such offices at the date of such Rights Certificates. No Rights
Certificate shall be entitled to any benefit under this Agreement or be valid
for any purpose unless there appears on such Rights Certificate a
countersignature duly executed by the Rights Agent by manual signature of an
authorized signatory, and such countersignature upon any Rights Certificate
shall be conclusive evidence, and the only evidence, that such Rights
Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the name and
address of each holder of the Rights Certificates, the number of Rights
evidenced on its face by each Rights Certificate and the date of each Rights
Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Sections 4, 7(e) and 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of Units
of Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder to purchase. Any
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<PAGE> 12
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and executed the certificate set forth in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) of the
Rights represented by such Rights Certificate or Affiliates or Associates
thereof as the Company shall reasonably request; whereupon the Rights Agent
shall, subject to the provisions of Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Subject to Section 7(e) hereof, if a Rights Certificate
shall be mutilated, lost, stolen or destroyed, upon request by the registered
holder of the Rights represented thereby and upon payment to the Company and the
Rights Agent of all reasonable expenses incident thereto, there shall be issued,
in exchange for and upon cancellation of the mutilated Rights Certificate, or in
substitution for the lost, stolen or destroyed Rights Certificate, a new Rights
Certificate, in substantially the form of the prior Rights Certificate, of like
tenor and representing the equivalent number of Rights, but, in the case of
loss, theft or destruction, only upon receipt of evidence satisfactory to the
Company and the Rights Agent of such loss, theft or destruction of such Rights
Certificate and, if requested by the Company or the Rights Agent, indemnity also
satisfactory to it.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Prior to the earlier of (i) the Close of Business on the tenth
anniversary hereof (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof and (iii) the time at which
the Rights are exchanged as provided in Section 34 hereof (the earlier of (i),
(ii) and (iii) being the "Expiration Date"), the registered holder of any Rights
Certificate may, subject to the provisions of Sections 7(e) and 9(c) hereof,
exercise the Rights evidenced thereby, in whole or in part, at any time after
the Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price (as
hereinafter defined) for the number of Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
for which such surrendered Rights are then exercisable.
(b) The purchase price for each one one-hundredth of a share
(each such one one-hundredth of a share being a "Unit") of Preferred Stock upon
exercise of Rights shall be $66.00, subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof (such purchase price, as so adjusted,
being the "Purchase Price"), and shall be payable in accordance with paragraph
(c) below.
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(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with the Rights Agent or other
corporation in good standing organized under the laws of the United States or
any State of the United States, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority (such institution being the
"Depositary Agent"), certificates representing the shares of Preferred Stock
that may be acquired upon exercise of the Rights and shall cause such Depositary
Agent to enter into an agreement pursuant to which the Depositary Agent shall
issue receipts representing interests in the shares of Preferred Stock so
deposited. Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price for the Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) to be purchased thereby as
set forth below and an amount equal to any applicable transfer tax or evidence
satisfactory to the Company of payment of such tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) requisition from the
Depositary Agent depositary receipts representing such number of Units of
Preferred Stock as are to be purchased and the Company will direct the
Depositary Agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue Company Common Stock, other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such Company Common Stock, other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate. The
payment of the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) may be made in cash or by certified or bank check or money
order payable to the order of the Company.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of any Section 11(a)(ii) Event,
any Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or any such Associate or Affiliate) or to
any Person
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<PAGE> 14
with whom the Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer which
the Board of Directors has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall be null and void without any further action, and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
hereof are complied with, but shall have no liability to any holder of Rights or
any other Person as a result of its failure to make any determination under this
Section 7(e) with respect to an Acquiring Person or its Affiliates, Associates
or transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a) The
Company shall at all times prior to the Expiration Date cause to be reserved and
kept available, out of its authorized and unissued shares of preferred stock,
the number of shares of Preferred Stock that, as provided in this Agreement,
will be sufficient to permit the exercise in full of all outstanding Rights.
Upon the occurrence of any events resulting in an increase in the aggregate
number of shares of Preferred Stock (or other equity securities of the Company)
issuable upon exercise of all outstanding Rights above the number then reserved,
the Company shall make appropriate increases in the number of shares so reserved
to the extent practicable.
(b) If the shares of Preferred Stock to be issued and
delivered upon the exercise of the Rights may be listed on any national
securities exchange or automated quotation system, the Company shall during the
period from the Distribution Date through the Expiration Date use its
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best efforts to cause all securities reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) as soon as
practicable following the occurrence of a Section 11(a)(ii) Event and a
determination by the Company in accordance with Section 11(a)(iii) hereof of the
consideration to be delivered by the Company upon exercise of the Rights or, if
so required by law, as soon as practicable following the Distribution Date (such
date being the "Registration Date"), to file a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities that may be acquired upon exercise of the
Rights (the "Registration Statement"), (ii) to cause the Registration Statement
to become effective as soon as practicable after such filing, (iii) to cause the
Registration Statement to continue to be effective (and to include a prospectus
complying with the requirements of the Securities Act) until the earlier of (A)
the date as of which the Rights are no longer exercisable for the securities
covered by the Registration Statement, and (B) the Expiration Date and (iv) to
take as soon as practicable following the Registration Date such action as may
be required to ensure that any acquisition of securities upon exercise of the
Rights complies with any applicable state securities or "blue sky" laws. The
Company may temporarily suspend, for a period of time not to exceed one hundred
twenty (120) days after the date set forth in clause (i) of the first sentence
of this Section 9(c), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if the Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration statement has
been declared effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.
(d) The Company shall take such action as may be necessary to
ensure that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall be, at the time of delivery of the certificates or depositary
receipts for such securities (subject to payment of the Purchase Price), duly
and validly authorized and issued and fully paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer
tax imposed in connection with the issuance or delivery of the Rights
Certificates or upon the exercise of Rights; provided, however, the Company
shall not be required to pay any such tax imposed in connection with the
issuance or delivery of Units of Preferred Stock, or any certificates or
depositary receipts for such Units of Preferred Stock (or, following the
occurrence of a Triggering Event, any
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<PAGE> 16
other securities, cash or assets, as the case may be) to any person other than
the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or deliver
any certificates or depositary receipts for Units of Preferred Stock (or,
following the occurrence of a Triggering Event, any other securities, cash or
assets, as the case may be) to, or in a name other than that of, the registered
holder upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate or depositary receipt for Units of Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) transfer books of the Company are open and,
further provided, however, that if delivery of Units of Preferred Stock is
delayed pursuant to Section 9(c) hereof, such Persons shall be deemed to have
become the record holders of such Units of Preferred Stock only when such Units
first become deliverable. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to securities for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of securities
purchasable upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or capital stock, as the
case may be, issuable on such date upon exercise of the Rights, shall
be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date,
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<PAGE> 17
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 the 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 shall become an Acquiring Person,
other than pursuant to any transaction set forth in Section 13(a)
hereof, then, immediately upon the occurrence of such event (a "Section
11(a)(ii) Event"), proper provision shall be made so that each holder
of a Right (except as provided below and in Section 7(e) hereof) shall,
subject to Section 34 hereof, thereafter have the right to receive,
upon exercise of such Right at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of the number of
Units of Preferred Stock for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event (whether or
not such Right was then exercisable), such number of Units of Preferred
Stock as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of Units of Preferred Stock
for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (whether or not such Right was
then exercisable) (such product thereafter being, for all purposes of
this Agreement, other than Section 13 hereof, the "Purchase Price"),
and (y) dividing that product by 50% of the then current market price
(determined pursuant to Section 11(d) hereof) per Unit of Preferred
Stock on the date of such first occurrence (such Units of Preferred
Stock being the "Adjustment Shares"); provided, however, that the
Purchase Price and the number of Units of Preferred Stock so receivable
upon exercise of a Right shall, following the Section 11(a)(ii) Event,
be subject to further adjustment as appropriate in accordance with
Section 11 hereof. Notwithstanding the foregoing, the Rights shall not
be exercisable pursuant to this Section 11(a)(ii) until the time period
during which the Rights may be redeemed pursuant to Section 23 hereof
shall have expired.
(iii) The Company, by the vote of a majority of the Board of
Directors (including, following a Section 11(a)(ii) Event, a majority
of the Independent Directors), may at its option substitute for a Unit
of Preferred Stock issuable upon the exercise of Rights in accordance
with the foregoing subparagraph (ii), shares of Company Common Stock or
fractions thereof having a current market price (as determined by
Section 11(d) hereof) equal to the current market price of a Unit of
Preferred Stock on the date of the Section 11(a)(ii) Event. In the
event that the number of shares of Preferred Stock which are authorized
by the Company's Restated Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph (ii) of
this Section 11(a), the Company, by the vote of a majority of the Board
of Directors (including, following a Section 11(a)(ii) Event, a
majority of the Independent Directors), shall to the extent permitted
by applicable law and any material agreements
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<PAGE> 18
then in effect to which the Company is a party or by which it is bound:
(A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess being the "Spread"), and (B) with
respect to each Right (other than Rights which have become void
pursuant to Section 7(e)), make adequate provision to substitute, in
whole or in part, for such Adjustment Shares, upon exercise of a Right
and payment of the applicable Purchase Price, (1) cash, (2) a reduction
in the Purchase Price, (3) shares of Company Common Stock or other
equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock (such other shares being
"common stock equivalents")), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing, having an
aggregate value which, when added to the value of the Units of
Preferred Stock actually issued upon exercise of such Right, shall have
an aggregate value equal to the Current Value (less the amount of any
reduction in such Purchase Price), where such aggregate value has been
determined by a majority of the Board of Directors (including,
following a Section 11(a)(ii) Event, a majority of the Independent
Directors), after receiving advice from a nationally recognized
investment banking firm; provided, however, that if the Company shall
not have made adequate provision to deliver value pursuant to clause
(B) above within thirty days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the "Section
11(a)(iii) Trigger Date"), then, subject to Section 34 hereof, the
Company shall be obligated (to the extent permitted by applicable law
and any material agreements then in effect to which the Company is a
party or by which it is bound) to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, Units of Preferred Stock (to the extent available) and then, if
necessary, shares (or fractions of shares, at the discretion of the
Board) of Company Common Stock, cash or a combination thereof, which
Units of Preferred Stock, shares (or fractions of shares) of Company
Common Stock and/or cash shall have an aggregate value equal to the
Spread; further provided, however, that if the Company is unable to
comply with the immediately foregoing provision within such thirty day
period, then the Company shall (to the extent permitted by law) take
all such action as may be necessary to comply with such provision,
including the calling of a meeting of stockholders to authorize
additional shares of Preferred Stock or Company Common Stock. To the
extent that the Company determines that some action need be taken
pursuant to the first sentence of this Section 11(a)(iii), the Company
shall provide, subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights. For purposes of this Section
11(a)(iii), the value of a Unit of Preferred Stock or share of Company
Common Stock shall be the current market price (as determined pursuant
to Section 11(d) hereof) per Unit of Preferred Stock or share of
Company Common Stock, as the case may be, on the Section 11(a)(iii)
Trigger Date and the value of any common stock equivalent shall be
deemed to have the same value as the Preferred Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five calendar days after such record date) shares
of
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<PAGE> 19
Preferred Stock (or shares having substantially the same rights,
privileges and preferences as shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or
per share of Equivalent Preferred Stock (or having a conversion price
per share, if a security convertible into Preferred Stock or Equivalent
Preferred Stock) less than the current market price (as determined
pursuant to Section l1(d) hereof) per share of Preferred Stock 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 sum of the number of shares of Preferred Stock
outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/or Equivalent Preferred Stock so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market
price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock
to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In
case such subscription price may be paid by delivery of consideration
part or all of which may be in a form other than cash, the value of
such consideration shall be as determined in good faith by a majority
of the Board of Directors (including a majority of the Independent
Directors), whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Shares of Preferred Stock owned by or held for
the account of the Company or any Subsidiary shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in
the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of shares of Preferred Stock (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash (other than a regular quarterly cash
dividend paid out of funds legally available therefor), assets (other
than a dividend payable in shares of Preferred Stock, but including any
dividend payable in stock other than Preferred Stock) or subscription
rights, options 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 current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date
less the fair market value (as determined in good faith by a majority
of the Board of Directors (including, following a Section 11(a)(ii)
Event, a majority of the Independent Directors), whose determination
shall be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holder of the Rights) of the
cash, assets or evidences of indebtedness so to be distributed or of
such subscription rights,
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<PAGE> 20
options or warrants distributable in respect of a share of Preferred
Stock and the denominator of which shall be such current market price
(as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current market price" per share of Company Common Stock or Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such shares for the ten consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, if prior to the expiration of such requisite
ten Trading Day period the issuer announces either (A) a dividend or
distribution on such shares payable in such shares or securities
convertible into such shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such shares, then,
following the ex-dividend date for such dividend or the record date for
such subdivision, combination or reclassification, as the case may be,
the "current market price" shall be properly adjusted to take into
account such event. The closing price for each day shall be, if the
shares are listed and admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which such shares are listed or
admitted to trading or, if such shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the Nasdaq National Market
("Nasdaq") or such other system then in use, or, if on any such date
such shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in such shares selected by a majority of the
Board of Directors (including, following a Section 11(a)(ii) Event, a
majority of the Independent Directors). If on any such date no market
maker is making a market in such shares, the fair value of such shares
on such date as determined in good faith by a majority of the Board of
Directors (including, following a Section 11(a)(ii) Event, a majority
of the Independent Directors) shall be used. If such shares are not
publicly held or not so listed or traded, "current market price" per
share shall mean the fair value per share as determined in good faith
by a majority of the Board of Directors (including, following a Section
11(a)(ii) Event, a majority of the Independent Directors), whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. The term "Trading Day"
shall mean, if such shares are listed or admitted to trading on any
national securities exchange, a day on which the principal national
securities exchange on which such shares are listed or admitted to
trading is open for the transaction of business or, if such shares are
not so listed or admitted, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined
in the same manner as set forth above for Company Common Stock in
clause (i) of this Section 11(d) (other than the fourth
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<PAGE> 21
sentence thereof). If the current market price per share of Preferred
Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the "current market
price" per share of Preferred Stock shall be conclusively deemed to be
an amount equal to 100 (as such amount may be appropriately adjusted
for such events as stock splits, stock dividends and recapitalizations
with respect to Company Common Stock occurring after the date of this
Agreement) multiplied by the current market price per share of Company
Common Stock. If neither Company Common Stock nor Preferred Stock is
publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as
determined in good faith by a majority of the Board of Directors
(including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors) whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. For all purposes of this
Agreement, the "current market price" of a Unit of Preferred Stock
shall be equal to the "current market price" of one share of Preferred
Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or
to the nearest one-hundredth of a share of Company Common Stock or
Common Stock or other share or ten-thousandth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the
transaction which mandates such adjustment and (ii) the Expiration
Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c),
(d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of Units
of Preferred Stock (or other securities or amount of cash or
combination thereof) that may be acquired from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as
provided herein.
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<PAGE> 22
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of Units of Preferred Stock (calculated to
the nearest one ten-thousandth of a Unit) obtained by (i) multiplying
(x) the number of Units of Preferred Stock covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of Units of Preferred Stock that
may be acquired upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of Units of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one
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 Rights Certificates have been issued,
shall be at least ten days later than the date of such public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified
in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Units of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per Unit
and the number of Units of Preferred Stock which were expressed in the
Initial Rights Certificates issued hereunder.
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<PAGE> 23
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value of the number of
Units of Preferred Stock issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and
legally issue such fully paid and non-assessable number of Units of
Preferred Stock 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 of that number of Units of Preferred
Stock and shares of other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of Units
of Preferred Stock and shares of other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their good
faith judgment a majority of the Board of Directors (including,
following a Section 11(a)(ii) Event, a majority of the Independent
Directors) shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the
current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into
or exchangeable for shares of Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this Section
11, hereafter made by the Company to holders of its Preferred Stock,
shall not be taxable to such holders or shall reduce the taxes payable
by such holders.
(n) The Company shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a wholly owned
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a
wholly owned Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or
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<PAGE> 24
immediately after such consolidation, merger or sale, the Person which
constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have distributed or otherwise transferred to
its shareholders or other persons holding an equity interest in such
Person Rights previously owned by such Person or any of its Affiliates
and Associates; provided, however, this Section 11(n) shall not affect
the ability of any wholly owned Subsidiary of the Company to
consolidate with, merge with or into, or sell or transfer assets or
earning power to, any other wholly owned Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except
as permitted by Section 23, Section 26 or Section 34 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Company Common
Stock payable in shares of Company Common Stock, (ii) subdivide the
outstanding shares of Company Common Stock, (iii) combine the
outstanding shares of Company Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a
reclassification of Company Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), the number of
Rights associated with each share of Company Common Stock then
outstanding, or issued or delivered thereafter prior to the
Distribution Date or in accordance with Section 22 hereof, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Company Common Stock following any such
event shall equal the result obtained by multiplying the number of
Rights associated with each share of Company Common Stock immediately
prior to such event by a fraction the numerator of which shall be the
total number of shares of Company Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall
be the total number of shares of Company Common Stock outstanding
immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Company Common Stock) in accordance with Section 25 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 any
such adjustment unless and until it shall have received such certificate.
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<PAGE> 25
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the first occurrence of a
Section 11(a)(ii) Event, directly or indirectly, either (x) the Company shall
consolidate with, or merge with and into, any other Person (other than a wholly
owned Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a wholly
owned Subsidiary of the Company in a transaction which compiles with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Company Common Stock shall be changed
into or exchanged for stock or other securities of the Company or any other
Person or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer)
to any Person or Persons (other than the Company or any of its wholly owned
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), in one or more transactions, assets or earning power aggregating
50% or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) (any such event being a "Section 13 Event"), then, and in
each such case, proper provision shall be made so that: (i) each holder of a
Right, (other than Rights which have become void as provided in Section 7(e)
hereof), shall thereafter have the right to receive, upon the exercise thereof
at the then current Purchase Price, in accordance with this Agreement and in
lieu of Units of Preferred Stock or shares of Company Common Stock, such number
of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), which shares shall not be subject to any liens,
encumbrances, rights of call or first refusal, transfer restrictions or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of Units of Preferred Stock for which
a Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such Units for which
a Right would be exercisable hereunder but for the occurrence of such Section
11(a)(ii) Event by the Purchase Price which would be in effect hereunder but for
such first occurrence) and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be the "Purchase Price" for all purposes
of this Agreement) by 50% of the current market price (determined pursuant to
Section 11(d) hereof) per share of the Common Stock of such Principal Party on
the date of consummation of such Section 13 Event, provided, however, that the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof) and the number of shares of Common Stock of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof to reflect any events
occurring in respect of the Common Stock of such Principal Party after the
occurrence of such Section 13 Event; (ii) such Principal Party shall thereafter
be liable for, and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party in all
respects; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9 hereof) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions of this
Agreement shall thereafter be applicable, as nearly as reasonably may be, in
relation to its
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<PAGE> 26
shares of Common Stock thereafter deliverable upon the exercise of the Rights,
to its shares of Common Stock; provided, however, that, upon the subsequent
occurrence of any merger, consolidation, sale of all or substantially all of the
assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price, such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had it, at the
time of such transaction, owned the shares of Common Stock of the Principal
Party purchasable upon the exercise of a Right, and such Principal Party shall
take such steps (including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants and
other property; and (v) the provisions of Section 11(a)(ii) hereof shall be of
no further effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described
in clause (x) or (y) of the first sentence of Section 13(a),
(A) the Person that is the issuer of any securities into which
shares of Company Common Stock are converted in such merger or
consolidation, or, if there is more than one such issuer, the
issuer of Common Stock that has the highest aggregate current
market price (determined pursuant to Section 11(d) hereof) and
(B) if no securities are so issued, the Person that is the
other party to such merger or consolidation, or, if there is
more than one such Person, the Person the Common Stock of
which has the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and
(ii) in the case of any transaction
described in clause (z) of the first sentence of Section 13(a)
hereof, the Person that is the party receiving the largest
portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same
portion of the assets or earning power transferred pursuant to
such transaction or transactions or if the Person receiving
the largest portion of the assets or earning power cannot be
determined, whichever Person the Common Stock of which has the
highest aggregate current market price (determined pursuant to
Section 11(d) hereof); provided, however, that in any such
case, (1) if the Common Stock of such Person is not at such
time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the
Exchange Act ("Registered Common Stock"), or such Person is
not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other
Person; (2) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation,
and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another
Person which has Registered Common Stock outstanding,
"Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person; (3)
23
<PAGE> 27
if the Common Stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever of
such other Persons is the issuer of the Registered Common
Stock having the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and (4) if the
Common Stock of such Person is not Registered Common Stock or
such Person is not a corporation, and such Person is directly
or indirectly controlled by more than one Person, and none of
such other Persons have Registered Common Stock outstanding,
"Principal Party" shall refer to whichever ultimate parent
entity is the corporation having the greatest shareholders
equity or, if no such ultimate parent entity is a corporation,
shall refer to whichever ultimate parent entity is the entity
having the greatest net assets
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have
not been issued or reserved for issuance to permit the exercise in full
of the Rights in accordance with this Section 13, and unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for
the terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that the Principal Party, at its own expense, shall:
(i) (A) file on an appropriate form, as soon as
practicable following the execution of such agreement, a
registration statement under the Securities Act with respect
to the Common Stock that may be acquired upon exercise of the
Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the
requirements of the Securities Act) until the Expiration Date,
and (C) as soon as practicable following the execution of such
agreement, take such action as may be required to assure that
any acquisition of such Common Stock upon the exercise of the
Rights complies with any applicable state securities or "blue
sky" laws; and
(ii) as soon as practicable following the execution
of such agreement, deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of
its authorized securities or in its Certificate of Incorporation or
By-laws or other instrument governing its corporate affairs, which
provision would have the effect of (i) causing such Principal Party to
issue, in connection with, or as a consequence of, the consummation of
a transaction referred to in this Section 13, shares of Common Stock of
such Principal Party at less than the then current market price per
share (determined pursuant to Section 11(d) hereof) or securities
exercisable for,
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or convertible into, Common Stock of such Principal Party at less than
such then current market price (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of this
Section 13; then, in such event, the Company shall not consummate any
such transaction unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that
the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In
the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have not
theretofore been exercised shall thereafter become exercisable, in the
manner and for the securities described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of issuing such
fractional Rights, there shall be paid to the Persons to which such fractional
Rights would otherwise be issuable, an amount in cash equal to such fraction of
the market value of a whole Right. For purposes of this Section 14(a), the
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any day shall
be, if the Rights are listed or admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by a majority
of the Board of Directors (including, following a Section 11(a)(ii) Event, a
majority of the Independent Directors). If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by a majority of the Board of Directors (including,
following a Section 11(a)(ii) Event, a majority of the Independent Directors)
shall be used and such determination shall be described in a statement filed
with the Rights Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence such fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth of
a share of Preferred Stock); provided, however, that in lieu of fractions of
shares of Preferred Stock which are integral multiples of one one-hundredth of a
share of Preferred Stock, the
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<PAGE> 29
Company may provide for the issuance of depositary receipts pursuant to Section
7(c) hereof. In lieu of such fractional shares of Preferred Stock that are not
integral multiples of one one-hundredth of a share, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the then
current market price of a share of Preferred Stock on the day of exercise,
determined in accordance with Section 11(d) hereof.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate representing shares of Company Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of a certificate representing shares of Company Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Company Common
Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name a Rights Certificate (or, prior to the Distribution Date, the
associated Company Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Company Common Stock certificate made by
anyone other than the Company or the Rights Agent)
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<PAGE> 30
for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7 (e) hereof, shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or any other Person as a result of
its inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use
its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as promptly as practicable.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24 hereof, to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof. This Section 17 shall also apply to
holders, as such, of Rights prior to the issuance of Rights Certificates.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for, and hold it harmless against, any loss, liability, or
expense, incurred without gross 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 reasonable costs and expenses of defending against any claim of
liability hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document
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<PAGE> 31
believed by it to be genuine and to have been signed, executed and, where
necessary, verified or acknowledged by the proper Person or Persons.
(c) The indemnity provided herein shall survive the expiration
of the Rights and the termination of this Agreement. In no case will the Rights
Agent be liable for special, indirect, incidental or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Rights Agent has been advised of the possibility of such loss or damage.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or shareholder services businesses of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(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
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<PAGE> 32
limitation, the identity of any Acquiring Person and the determination
of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be specified herein) may be
deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; provided, however, that so long as any Person is
an Acquiring Person hereunder, such certificate shall be signed and
delivered by a majority of the Board of Directors (including a majority
of the Independent Directors); 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 Rights Certificates or be required to verify the same (except
as to its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by
the Company only.
(e) The Rights Agent shall not have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or for the validity or
execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of
any covenant or failure by the Company to satisfy conditions contained
in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section
11 or Section 13 hereof or for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt by the Rights
Agent of the certificate describing any such adjustment contemplated by
Section 12); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any shares of Preferred Stock or any other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Preferred Stock or any other securities will, when so
issued, be validly authorized and issued, fully paid and
non-assessable.
(f) The Company shall perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further acts, instruments and assurances as may reasonably be
required by the Rights Agent for the performance by the Rights Agent of
its duties under this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board,
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<PAGE> 33
the Chief Executive Officer, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer; provided, however,
that so long as any Person is an Acquiring Person hereunder, the Rights
Agent shall accept such instructions and advice only from a majority of
the Board of Directors (including a majority of the Independent
Directors) and shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with such instructions of
the majority of the Board of Directors (including a majority of the
Independent Directors). Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Rights Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective.
The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application
(which date shall not be less than five Business Days after the date
any such officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier
date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to
be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or have a pecuniary interest in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties or in the exercise of
its rights hereunder if the Rights Agent shall have reasonable grounds
for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been completed, not signed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested
exercise or transfer without first consulting
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with the Company. If such certificate has been completed and signed and
shows a negative response to clauses 1 and 2 of such certificate,
unless previously instructed otherwise in writing by the Company (which
instructions may impose on the Rights Agent additional ministerial
responsibilities, but no discretionary responsibilities), the Rights
Agent may assume without further inquiry that the Rights Certificate is
not owned by a Person described in Section 7(e) hereof and shall not be
charged with any knowledge to the contrary.
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 days' prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' prior notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Preferred Stock and the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or any state of the United
States in good standing, shall be authorized under applicable laws to exercise
corporate trust or stock transfer powers and shall be subject to supervision or
examination by federal or state authorities or (b) an Affiliate of a corporation
described in clause (a). 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 Stock and the Company Common Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by a majority of the Board of Directors (including, following a
Section 11(a)(ii) Event, a majority of the Independent Directors) to reflect any
adjustment or change made in accordance with the provisions of this
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<PAGE> 35
Agreement in the Purchase Price or the number or kind or class of shares or
other securities or property that may be acquired under the Rights Certificates.
In addition, in connection with the issuance or sale of shares of Company Common
Stock following the Distribution Date and prior to the Expiration Date, the
Company (a) shall, with respect to shares of Company Common Stock so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by a majority of the Board of Directors (including,
following a Section 11(a)(ii) Event, a majority of the Independent Directors),
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) Subject to Section 30
hereof, the Company may, at its option, by action of a majority of the Board of
Directors (including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors), at any time prior to the earlier of (i) the Close of
Business on the tenth Business Day following the Stock Acquisition Date or (ii)
the Final Expiration Date, 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 the
"Redemption Price"). The Company may, at its option, by action of a majority of
the Board of Directors (including, following a Section 11(a)(ii) Event, a
majority of the Independent Directors), pay the Redemption Price either in
shares of Company Common Stock (based on the "current market price", as defined
in Section 11(d) hereof, of the shares of Company Common Stock at the time of
redemption) or cash and the redemption of the Rights shall be effective on the
basis and with such conditions as the Board of Directors (including, following a
Section 11(a)(ii) Event, a majority of the Independent Directors) may in its
sole discretion establish.
(b) Immediately upon the action of a majority of the Board of
Directors (including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors) ordering the redemption of the Rights, evidence of which
shall be filed with the Rights Agent, and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. 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. Promptly after the
action of a majority of the Board of Directors (including, following a Section
11(a)(ii) Event, a majority of the Independent Directors) ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Company Common
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<PAGE> 36
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
Section 24. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend paid out of funds legally available therefor), (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), (iv) to effect
any consolidation or merger into or with any other Person, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than a transfer by the Company and/or any
of its wholly owned Subsidiaries in one or more transactions each of which
complies with 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 Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock 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 shares of Preferred
Stock whichever shall be the earlier; provided, however, no such notice shall be
required pursuant to this Section 24, if any wholly owned Subsidiary of the
Company effects a consolidation or merger with or into, or effects a sale or
other transfer of assets or earnings power to, any other wholly owned Subsidiary
of the Company.
(b) In case any Triggering Event shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
11(a)(ii) or Section 13 hereof, as the case may be.
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<PAGE> 37
Section 25. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:
AeroCentury Corp.
1440 Chapin Avenue
Suite 310
Burlingame, CA 94010
Attention: President
and if to the Rights Agent, at its address at:
Continental Stock Transfer & Trust Company
Two Broadway
New York, NY 10004
Attention: Compliance Department
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of
certificates representing shares of Company Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates
in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person); provided, however, that
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) subject to Section 30 hereof, 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 or, so long as any Person is an Acquiring
Person hereunder, from the majority of the Board of Directors (including a
majority of the Independent Directors) which states that the proposed supplement
or amendment is in compliance with the terms of this Section 26, the Rights
Agent shall execute such supplement or
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amendment. Notwithstanding anything contained in this Agreement to the contrary,
(i) no supplement or amendment shall be made which changes the Redemption Price,
the Purchase Price, the Expiration Date or the number of Units of Preferred
Stock or other securities or assets for which a Right is exercisable without the
approval of a majority of the Board of Directors (including, following a Section
11(a)(ii) Event, a majority of the Independent Directors), and (ii) following
the occurrence of a Section 11(a)(ii) Event, no supplement or amendment
whatsoever shall be made without the approval of the Board of Directors,
including a majority of the Independent Directors. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Company Common Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors of the Company (including, where so
provided, a majority of the Independent Directors) shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board (including, where so provided, a
majority of the Independent Directors) or to the Company, or as may be necessary
or advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
(including, where so provided, a majority of the Independent Directors) in good
faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the
Board or any member thereof to any liability to the holders of the Rights.
Wherever in this Agreement a vote of a majority of the Independent Directors is
required, there shall be present in office at least one Independent Director.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or
35
<PAGE> 39
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and a majority of the Board of Directors
(including, following a Section 11(a)(ii) Event, a majority of the Independent
Directors) determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement and the Rights shall not then be redeemable, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth Business Day following the date
of such determination by a majority of the Board of Directors (including,
following a Section 11(a)(ii) Event, a majority of the Independent Directors).
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and
to be performed entirely in such State.
Section 32. Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
Section 33. Descriptive Headings. The headings contained in this
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 34. Exchange. (a) The Company, upon resolution of a majority of
the Board of Directors (including a majority of the Independent Directors) may,
at its option, at any time after the first occurrence of a Section 11(a)(ii)
Event, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to Section 7(e)
hereof) for Units of Preferred Stock or shares of Company Common Stock (at the
election of the Board of Directors (including a majority of the Independent
Directors)) at an exchange ratio of one Unit of Preferred Stock or one share of
Company Common Stock, as the case may be, per Right, as appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of shares of Company Common Stock aggregating 50% or more of
the shares of Company Common Stock then outstanding. From and after the
occurrence of a Section 13(a) Event, any Rights that theretofore have not been
exchanged pursuant to this Section 34(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
34(a). The exchange of the Rights by the Board of Directors (including a
majority of the Independent Directors) may be made effective at such time, on
such basis and with such conditions as the Board of Directors (including a
majority of the Independent Directors) in its sole discretion may establish.
36
<PAGE> 40
(b) Immediately upon the action of a majority of the Board of
Directors (including a majority of the Independent Directors) ordering the
exchange of any Rights pursuant to Section 34(a) and without any further action
and without any notice, the right to exercise such Rights shall terminate and
the only right thereafter of a holder of such Rights shall be to receive that
number of Units of Preferred Stock or shares of Company Common Stock, as the
case may be, equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
shall state the method by which the exchange of Units of Preferred Stock or
shares of Company Common Stock, as the case may be, for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that the number of shares of Preferred Stock
or Company Common Stock, as the case may be, which are authorized by the
Company's Restated Certificate of Incorporation but not outstanding or reserved
for issuance for purposes other than upon exercise of the Rights are not
sufficient to permit any exchange of Rights as contemplated in accordance with
this Section 34, the Company, upon a resolution of a majority of the Board of
Directors (including a majority of the Independent Directors), shall take all
such action as may be necessary to authorize additional shares of Preferred
Stock or Company Common Stock, as the case may be, for issuance upon exchange of
the Rights or make adequate provision to substitute, in whole or in part, (1)
cash, (2) other equity securities of the Company, (3) debt securities of the
Company, (4) other assets, or (5) any combination of the foregoing, having an
aggregate value for each Right to be exchanged equal to the per share market
price of one Unit of Preferred Stock or share of Company Common Stock, as the
case may be (determined pursuant to Section 11(d) hereof) as of the date of a
Section 11(a)(ii) Event, where such aggregate value has been determined by a
majority of the Board of Directors (including a majority of the Independent
Directors).
(d) The Company shall not be required to issue fractions of
Units of Preferred Stock or fractions of shares of Company Common Stock or to
distribute certificates which evidence fractional Units or fractional shares. In
lieu of issuing fractional Units or fractional shares, the Company may pay to
the registered holders of Rights Certificates at the time such Rights are
exchanged as herein provided an amount in cash equal to the same fraction of the
current market price (determined pursuant to Section 11(d) hereof) of one Unit
of Preferred Stock or one share of Company Common Stock, as the case may be, on
the Trading Day immediately prior to the date of exchange pursuant to this
Section 34.
37
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
AeroCentury Corp.
By: /s/ Neal D. Crispin By: /s/ Toni M. Perazzo
--------------------------- ---------------------------
Neal D. Crispin Toni M. Perazzo
President Secretary
Continental Stock Transfer & Trust Company
By: /s/ Roger Bernhammer By: /s/ Steven Nelson
--------------------------- ---------------------------
Roger Bernhammer Steven Nelson
Vice President Secretary
38
<PAGE> 42
EXHIBIT A
TO RIGHTS AGREEMENT
FORM OF RIGHTS CERTIFICATE
Certificate No. ______ ______ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY
OWNED BY ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Rights Certificate
AEROCENTURY CORP.
This certifies that ______________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of April 8, 1998, as amended from time to time
(the "Rights Agreement"; terms defined therein are used herein with the same
meaning unless otherwise defined herein) between AeroCentury Corp., a Delaware
corporation (the "Company"), and Continental Stock Transfer & Trust Company, as
Rights Agent (which term shall include any successor Rights Agent under the
Rights Agreement), to purchase from the Company at any time after the
Distribution Date and prior to the Expiration Date at the office of the Rights
Agent, one one-hundredth of a fully paid and nonassessable share of Series A
Preferred Stock, par value $.001 per share (the "Preferred Stock"), of the
Company at the Purchase Price initially of $66.00 per one one-hundredth share of
Preferred Stock (each such one one-hundredth of a share being a "Unit"), upon
presentation and surrender of this Rights Certificate with the Election to
Purchase and related certificate duly executed. The number of Rights evidenced
by this Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per Unit set forth
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of April 8, 1998 based on the Preferred Stock as constituted
at such date. The Company reserves the right to require prior to the occurrence
of a Triggering Event (as such term is defined in the Rights Agreement) that a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.
UPON THE OCCURRENCE OF A SECTION 11(a)(II) EVENT, IF THE RIGHTS
EVIDENCED BY THIS RIGHTS CERTIFICATE ARE BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF ANY SUCH ACQUIRING PERSON OR, UNDER
CERTAIN CIRCUMSTANCES
A-1
<PAGE> 43
DESCRIBED IN THE RIGHTS AGREEMENT, A TRANSFEREE OF ANY SUCH ACQUIRING PERSON,
ASSOCIATE OR AFFILIATE, 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.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase capital
stock of an entity other than the Company or receive common stock, cash or other
assets, all as provided in the Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including a Triggering Event.
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates, 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 office of the Rights Agent and are
available from the Rights Agent upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company under certain circumstances
at its option at a redemption price of $.01 per Right, at any time prior to the
earlier of the close of business on (i) the tenth business day following the
Stock Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement), other than a Stock Acquisition Date that occurs as a result
of a Qualifying Offer, and (ii) the Final Expiration Date. In addition, the
Rights may be exchanged, in whole or in part, for shares of the Common Stock of
the Company. Immediately upon the action of the Board of Directors of the
Company authorizing any such exchange, and without any further action or any
notice, the Rights (other than Rights which are not subject to such exchange)
will terminate and the Rights will only enable holders to receive the shares
issuable upon such
A-2
<PAGE> 44
exchange. Under certain circumstances set forth in the Rights Agreement, the
decision to redeem the Rights shall require the concurrence of a majority of the
Independent Directors.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock or
depositary receipts representing such fractions), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities 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 of subscription rights, or otherwise, until
the Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
A-3
<PAGE> 45
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of _________________, 19__.
AEROCENTURY CORP.
By:
-----------------------------------
Name:
Title: President
By:
-----------------------------------
Name:
Title: Secretary
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
as Rights Agent
By:
-----------------------------------
Name:
Title:
A-4
<PAGE> 46
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Rights Certificate.)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and
transfers unto:___________________________________________________________
(Please print name and address of transferee)
___________________________________ this Rights Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint _____________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated
----------------
--------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes in
(1) and (2) that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated
----------------
--------------------------------
Signature
Signature Guaranteed:
A-5
<PAGE> 47
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
A-6
<PAGE> 48
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Rights Certificate.)
To: AEROCENTURY CORP.
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Rights Certificate to purchase the Units of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to:_______________________________________________
________________________________________________________________________ (Please
print name and address) _______________________________ (Please insert social
security or other identifying number).
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:_____________________
(Please print name and address) ______________________________________________
(Please insert social security or other identifying number).
Dated
----------------
--------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes in
(1) and (2) that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated
----------------
--------------------------------
Signature
Signature Guaranteed:
A-7
<PAGE> 49
NOTICE
The signature in the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
A-8
<PAGE> 50
EXHIBIT B
TO RIGHTS AGREEMENT
UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN THE RIGHTS AGREEMENT),
RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS
(AS DEFINED IN THE RIGHTS AGREEMENT)
OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On April 8, 1998, the Board of Directors of AeroCentury Corp. (the
"Company") authorized and declared a dividend distribution of one Right for each
outstanding share of its Common Stock, par value $.001 per share (the "Company
Common Stock"), to stockholders of record at the close of business on April 23,
1998 (the "Record Date"), and authorized the issuance of one Right with each
share of Company Common Stock issued (including shares distributed from
Treasury) by the Company thereafter between the Record Date and the Distribution
Date (as defined below). Each Right entitles the registered holder, subject to
the terms of the Rights Agreement (as defined below), to purchase from the
Company one one-hundredth of a share (a "Unit") of Series A Preferred Stock, par
value $.001 per share (the "Preferred Stock"), at a purchase price of $66.00 per
Unit, subject to adjustment. The purchase price is payable in cash or by
certified or bank check or money order payable to the order of the Company. The
description and terms of the Rights are set forth in a Rights Agreement between
the Company and Continental Stock Transfer & Trust Company, as Rights Agent,
dated as of April 8, 1998, as amended from time to time (the "Rights
Agreement").
Copies of the Rights Agreement and the Certificate of Designation for
the Preferred Stock have been filed with the Securities and Exchange Commission
as exhibits to a Registration Statement on Form 8-A dated April 13, 1998. Copies
of the Rights Agreement and the Certificate of Designation are available free of
charge from the Company. This summary description of the Rights and the
Preferred Stock does not purport to be complete and is qualified in its entirety
by reference to all of the provisions of the Rights Agreement and the
Certificate of Designation, including the definitions therein of certain terms,
which Rights Agreement and Certificate of Designation are incorporated herein by
reference.
The Rights Agreement
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon the earlier of (i) ten business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a
1
<PAGE> 51
person or group of affiliated or associated persons has acquired or otherwise
obtained beneficial ownership of 15% or more of the then outstanding shares of
Company Common Stock (an "Acquiring Person"), and (ii) ten business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person becomes an Acquiring Person) following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 15% or more of the then outstanding shares of
Company Common Stock. Until the Distribution Date, (i) the Rights will be
evidenced by Company Common Stock certificates and will be transferred with and
only with such Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after the Record Date (also including shares distributed
from Treasury) will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates representing
outstanding Company Common Stock will also constitute the transfer of the Rights
associated with the Company Common Stock represented by such certificates.
An "Acquiring Person" does not include (A) the Company; (B) any
Subsidiary of the Company; (C) any employee benefit plan maintained by the
Company or any of its Subsidiaries; (D) any trustee or fiduciary with respect to
such employee benefit plan acting in such capacity or a trustee or fiduciary
holding shares of Company Common Stock for the purpose of funding any such plan
or employee benefits; (E) any Person who has reported or is required to report
such ownership on Schedule 13G under the Exchange Act (or any comparable or
successor report), but only so long as (x) such Person is eligible to report
such ownership on Schedule 13(G) under the Exchange Act (or any comparable or
successor report), (y) such Person has not reported and is not required to
report such ownership on Schedule 13(D) under the Exchange Act (or any
comparable or successor report), and (z) such Person does not beneficially own
20% or more of the shares of Company Common Stock then outstanding; (F) any
Person if the Board of Directors of the Company determines in good faith that
such Person who would otherwise be an "Acquiring Person" became such
inadvertently (including, without limitation, because (x) such Person was
unaware that it beneficially owned a percentage of Company Common Stock that
would otherwise cause such Person to be an "Acquiring Person" or (y) such Person
was aware of the extent of its Beneficial Ownership of Company Common Stock but
had no actual knowledge of the consequences of such Beneficial Ownership under
this Agreement) and without any intention of changing or influencing control of
the Company, and if such Person does not acquire any additional shares of
Company Common Stock and as promptly as practicable divested or divests itself
of Beneficial Ownership of a sufficient number of shares of Company Common Stock
so that such Person would no longer be an "Acquiring Person;" or (G) any Person
who becomes the Beneficial Owner of 15% or more of the then outstanding shares
of Company Common Stock as a result of the acquisition of shares of Company
Common Stock directly from the Company in one or more transactions approved by a
majority of the Board of Directors, and (ii) no Person shall be deemed an
"Acquiring Person" as a result of the acquisition of shares of Company Common
Stock by the Company which, by reducing the number of shares of Company Common
Stock outstanding, increases the proportional number of shares beneficially
owned by such Person; provided, however,
2
<PAGE> 52
that if (A) a Person would become an Acquiring Person (but for the operation of
this subclause (ii)) as a result of the acquisition of shares of Company Common
Stock by the Company and (B) after such share acquisition by the Company, such
Person becomes the Beneficial Owner of any additional shares of Company Common
Stock, then such Person shall be deemed an Acquiring Person unless upon becoming
the Beneficial Owner of such additional shares such Person is the Beneficial
Owner of less than 15% of the then outstanding shares of Company Common Stock.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed or exchanged by the Company as described below. Under
certain circumstances the exercisability of the Rights may be suspended. In no
event, however, will the Rights be exercisable prior to the expiration of the
period in which the Rights may be redeemed.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that a person becomes an Acquiring Person, then, in such
case, each holder of a Right will thereafter have the right to receive, upon
exercise, shares of Company Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the exercise price of the Right. The exercise price is the purchase price
multiplied by the number of Units of Preferred Stock issuable upon exercise of a
Right prior to the event described in this paragraph. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this paragraph,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void.
In the event that, at any time following the date that any person
becomes an Acquiring Person, (i) the Company is acquired in a merger or other
business combination transaction and the Company is not the surviving
corporation, (ii) any person merges with the Company and all or part of the
Company Common Stock is converted or exchanged for securities, cash or property
of the Company or any other person or (iii) 50% or more of the Company's assets
or earning power is sold or transferred, each holder of a Right (except Rights
which previously have been voided as described above) shall thereafter have the
right to receive, upon exercise, common stock of the Acquiring Person having a
value equal to two times the exercise price of the Right.
The purchase price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less
3
<PAGE> 53
than the current market price of the Preferred Stock, or (iii) upon the
distribution to the holders of the Preferred Stock of evidences of indebtedness,
cash or assets (excluding regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments amount to at least 1% of the purchase
price. The Company is not required to issue fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock which may be evidenced by depositary receipts). In lieu
thereof, an adjustment in cash may be made based on the current market price of
a share of Preferred Stock on the day of exercise.
At any time until ten business days following the Stock Acquisition
Date, a majority of the Board of Directors (including, following the date on
which there is an Acquiring Person, the majority of the Independent Directors)
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(subject to adjustment in certain events) (the "Redemption Price") payable, at
the election of the majority of the Board of Directors (including a majority of
the Independent Directors), in cash or shares of Company Common Stock.
Immediately upon the action of a majority of the Board of Directors (including,
following the date on which there is an Acquiring Person, a majority of the
Independent Directors) ordering the redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The Company may at any time after there is an Acquiring Person, by
action of a majority of the Board of Directors (including a majority of the
Independent Directors), exchange all or part of the then outstanding and
exercisable Rights (other than Rights that shall have become null and void) for
shares of Company Common Stock pursuant to a one-for-one exchange ratio, as
adjusted.
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 or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust (i) the time period governing redemption
shall be made at such time as the Rights are not redeemable or (ii)
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<PAGE> 54
any other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the Rights of and/or benefiting, the holders of Rights.
In addition, after a person becomes an Acquiring Person, no amendment or
supplement may be made without the approval of a majority of the Board of
Directors (including a majority of the Independent Directors).
Description of Preferred Stock
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.
Each Unit of Preferred Stock will have a minimum preferential quarterly
dividend of $.01 per Unit or any higher per share dividend declared on the
Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $.01 per
Unit and the per share amount paid in respect of a share of the Company Common
Stock.
Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock with respect to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of Company Common Stock.
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<PAGE> 55
EXHIBIT C
TO RIGHTS AGREEMENT
AEROCENTURY CORP.
CERTIFICATE OF DESIGNATION
OF THE
SERIES A PREFERRED STOCK
-------------------------------------
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
-------------------------------------
The undersigned officers of AeroCentury Corp., 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
of the Corporation by its Restated Certificate of Incorporation (the
"Certificate"), the said Board of Directors, at a duly called meeting held on
April 8, 1998, at which a quorum was present and acted throughout, adopted the
following resolution, which resolution remains in full force and effect on the
date hereof creating a series of 100,000 shares of Preferred Stock having a par
value of $.001 per share, designated as Series A Preferred Stock (the "Series A
Preferred Stock") out of the class of 2,000,000 shares of preferred stock of the
par value of $.001 per share (the "Preferred Stock"):
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the provisions of its Certificate, the Board of
Directors does hereby create, authorize and provide for 100,000 shares of its
authorized Preferred Stock to be designated and issued as the Series A Preferred
Stock, having the voting powers, designation, relative, participating, optional
and other special rights, preferences and qualifications, limitations and
restrictions that are set forth as follows:
1. Dividends and Distributions. (A) Subject to the prior and superior
rights of the holders of any shares of any other series of Preferred Stock or
any other shares of stock of the Corporation ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, each holder of one
one-hundredth (1/100) of a share (a "Unit") of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for that purpose, (i) quarterly dividends payable in
cash on the last day of March, June, September and December in each year (each
such date being a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of such Unit of Series
A Preferred Stock, in an amount per Unit (rounded to the nearest cent) equal to
the greater of (a) $.01 or (b) subject to the provision for adjustment
hereinafter set forth, the aggregate per share amount of all cash dividends
declared on shares of the Common Stock since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of a Unit of Series A Preferred Stock, and (ii)
subject to the provision for adjustment hereinafter set forth, quarterly
distributions (payable in kind) on each Quarterly Dividend Payment Date in an
amount per Unit equal to the
<PAGE> 56
aggregate per share amount 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 shares of Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or with respect to the first Quarterly Dividend Payment Date,
since the first issuance of a Unit of Series A Preferred Stock. In the event
that the Corporation shall at any time after April 8, 1998 (the "Rights
Declaration Date") (i) declare any dividend on outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, then in each such case the amount to which the holder of a
Unit of Series A Preferred Stock was entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which shall be the number of shares of
Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on Units
of Series A Preferred Stock as provided in paragraph (A) above immediately after
it declares a dividend or distribution on the shares of Common Stock (other than
a dividend payable in shares of Common Stock); provided, however, that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per Unit on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on each
outstanding Unit of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issuance of such Unit of Series A Preferred
Stock, unless the date of issuance of such Unit is prior to the record date for
the first Quarterly Dividend Payment Date, in which case, dividends on such Unit
shall begin to accrue from the date of issuance of such Unit, or unless the date
of issuance is a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of Units of Series A Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on Units of Series A Preferred
Stock in an amount less than the aggregate amount of all such dividends at the
time accrued and payable on such Units shall be allocated pro rata on a
unit-by-unit basis among all Units of Series A Preferred Stock at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of Units of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
2. Voting Rights. The holders of Units of Series A Preferred Stock
shall have the following voting rights:
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<PAGE> 57
(A) Subject to the provision for adjustment hereinafter set forth, each
Unit of Series A Preferred Stock shall entitle the holder thereof to one vote on
all matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, then in
each such case the number of votes per Unit to which holders of Units of Series
A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which shall
be the number of shares of Common Stock outstanding immediately after such event
and the denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event; and
(B) Except as otherwise provided herein, in the Certificate or the
Bylaws of the Corporation or as required by law, the holders of Units of Series
A Preferred Stock and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders of the
Corporation, and such holders shall have no special voting rights and their
consents shall not be required for taking any corporate action.
3. Certain Restrictions. (A) Whenever quarterly dividends or other
dividends or distributions payable on Units of Series A Preferred Stock as
provided herein are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding Units of
Series A Preferred Stock shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration any shares of junior stock; (ii)
declare or pay dividends on or make any other distributions on any shares of
parity stock, except dividends paid ratably on Units of Series A Preferred Stock
and shares of all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of such Units and all
such shares are then entitled; (iii) redeem or purchase or otherwise acquire for
consideration shares of any parity stock, provided, however, that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any junior stock; (iv) purchase or
otherwise acquire for consideration any Units of Series A Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such Units.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 3,
purchase or otherwise acquire such shares at such time and in such manner.
4. Reacquired Shares. Any Units of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such Units
shall, upon their cancellation, become authorized but unissued shares (or
fractions of shares) of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
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<PAGE> 58
5. Liquidation, Dissolution or Winding Up. (A) Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of junior stock unless
the holders of Units of Series A Preferred Stock shall have received, subject to
adjustment as hereinafter provided in paragraph (B), the greater of either (a)
$.01 per Unit plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or declared, to the date of such
payment, or (b) the amount equal to the aggregate per share amount to be
distributed to holders of shares of Common Stock, or (ii) to the holders of
shares of parity stock, unless simultaneously therewith distributions are made
ratably on Units of Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of Units of Series
A Preferred Stock are entitled under clause (i)(a) of this sentence and to which
the holders of shares of such parity stock are entitled, in each case upon such
liquidation, dissolution or winding up.
(B) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock, or (iii) combine outstanding shares of Common Stock into a smaller number
of shares, then in each such case the aggregate amount to which holders of Units
of Series A Preferred Stock were entitled immediately prior to such event
pursuant to clause (i)(b) of paragraph (A) of this Section 5 shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common Stock
that were outstanding immediately prior to such event.
6. Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or converted into other stock or securities,
cash and/or any other property, then in any such case Units of Series A
Preferred Stock shall at the same time be similarly exchanged for or converted
into an amount per Unit (subject to the provision for adjustment hereinafter set
forth) equal to the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is converted or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock, or (iii) combine outstanding
Common Stock into a smaller number of shares, then in each such case the amount
set forth in the immediately preceding sentence with respect to the exchange or
conversion of Units of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which shall be the number of shares
of Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
7. Redemption. The Units of Series A Preferred Stock and shares of
Series A Preferred Stock shall not be redeemable.
8. Ranking. The Units of Series A Preferred Stock and shares of Series
A Preferred Stock shall rank junior to all other series of the Preferred Stock
and to any other class of Preferred
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<PAGE> 59
Stock that hereafter may be issued by the Corporation as to the payment of
dividends and the distribution of assets, unless the terms of any such series or
class shall provide otherwise.
9. Fractional Shares. The Series A Preferred Stock may be issued in
Units or other fractions of a share, which Units or fractions shall entitle the
holder, in proportion to such holder's units or fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Preferred Stock.
10. Certain Definitions. As used in this resolution with respect to the
Series A Preferred Stock, the following terms shall have the following meanings:
(A) The term "Common Stock" shall mean the class of stock designated as
the common stock, par value $.001 per share, of the Corporation at the date
hereof or any other class of stock resulting from successive changes or
reclassification of the common stock.
(B) The term "junior stock" (i) as used in Section 3 shall mean the
Common Stock and any other class or series of capital stock of the Corporation
hereafter authorized or issued over which the Series A Preferred Stock has
preference or priority as to the payment of dividends and (ii) as used in
Section 5, shall mean the Common Stock and any other class or series of capital
stock of the Corporation over which the Series A Preferred Stock has preference
or priority in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
(C) The term "parity stock" (i) as used in Section 3 shall mean any
class or series of stock of the Corporation hereafter authorized or issued
ranking pari passu with the Series A Preferred Stock as to dividends and (ii) as
used in Section 5, shall mean any class or series of capital stock ranking pari
passu with the Series A Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding up.
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IN WITNESS WHEREOF, AeroCentury Corp. has caused this Certificate to be
signed by its President and its Secretary this 10th day of April, 1998.
AEROCENTURY CORPORATION
By:
---------------------------------
Neal D. Crispin
President
By:
---------------------------------
Toni M. Perazzo
Secretary
6
