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PINNACLE HOLDINGS INC.
and
FIRST UNION NATIONAL BANK,
a national banking institution
Rights Agent
RIGHTS AGREEMENT
Dated as of December 22, 2000
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TABLE OF CONTENTS
Page
Section 1. Certain Definitions.............................................1
Section 2. Appointment of Rights Agent.....................................5
Section 3. Issue of Rights Certificates....................................5
Section 4. Form of Rights Certificates.....................................7
Section 5. Countersignature and Registration...............................7
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 10. Preferred Stock Record Date....................................12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares,
and Number of Rights......................................13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....20
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or
Earning Power.............................................21
Section 14. Fractional Rights and Fractional Shares........................23
Section 15. Rights of Action...............................................25
Section 16. Agreement of Rights Holders....................................25
Section 17. Rights Certificate Holder Not Deemed a Shareholder.............26
Section 18. Concerning the Rights Agent....................................26
Section 19. Merger or Consolidation or Change of Name of Rights Agent......27
Section 20. Duties of Rights Agent.........................................27
Section 21. Change of Rights Agent.........................................29
Section 22. Issuance of New Rights Certificates............................30
Section 23. Redemption and Termination.....................................31
Section 24. Exchange.......................................................31
Section 25. Notice of Certain Events.......................................33
Section 26. Notices........................................................33
Section 27. Supplements and Amendments.....................................34
Section 28. Successors.....................................................35
Section 29. Determinations and Actions by the Board of Directors...........35
Section 30. Benefits of this Agreement.....................................35
Section 31. Severability...................................................35
Section 32. Governing Law..................................................36
Section 33. Counterparts...................................................36
Section 34. Descriptive Headings...........................................36
Exhibit A - Form of Certificate of Designation
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 22, 2000 (the "Agreement"),
between PINNACLE HOLDINGS INC., a Delaware corporation (the "Company"), and
FIRST UNION NATIONAL BANK, a national banking institution, (the "Rights
Agent").
Effective December 22, 2000 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of Common Stock outstanding at the
Close of Business on January 12, 2001 (the "Record Date"), and has authorized
the issuance of one Right (subject to adjustment as provided herein) for each
share of Common Stock issued between the Record Date and the Distribution Date,
each Right initially representing the right to purchase one one-hundredth of
one share of Preferred Stock of the Company upon the terms and subject to the
conditions set forth herein (the "Rights").
Accordingly, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, other than as the result
of an offer for all outstanding shares of Common Stock determined by the Board
of Directors to be fair to and otherwise in the best interests of the Company
and its stockholders, but shall not include an Exempt Person. Notwithstanding
the foregoing: (i) no Person shall become an "Acquiring Person" as a result of
an acquisition of Common Stock by the Company that , by reducing the aggregate
number of shares of Common Stock outstanding, increases the percentage of the
total number of shares of Common Stock outstanding that are beneficially owned
by such Person to 15% or more; however, if a Person shall become the Beneficial
Owner of 15% or more of the Common Stock then outstanding by reason of
purchases of Common Stock by the Company and such Person shall, after such
share purchases by the Company, become the Beneficial Owner of additional
shares of Common Stock totaling 1% or more of the shares of Common Stock then
outstanding, then such Person shall constitute an "Acquiring Person" and (ii)
if the Board of Directors of the Company determines in good faith that a Person
who would otherwise be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently and
in good faith, and, if requested by the Board of Directors, such Person agrees
to divest himself of a sufficient number of shares of Common Stock so that such
Person would no longer be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be
deemed to be an "Acquiring Person" for any purposes of this Agreement."
(b) "Act" means the Securities Act of 1933, as amended and as in
effect on the date of this Agreement.
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(c) "Adjustment Share Amount" shall have the meaning set forth in
Section 11(a)(ii).
(d) "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").
(e) "Agreement" shall have the meaning set forth in the preface
at the beginning of this Agreement.
(f) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(i) that 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) pursuant to
any agreement, arrangement, or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise. A Person shall not, however, be
deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (B) securities issuable upon exercise of
Rights at any time before the occurrence of a Triggering Event, or (C)
securities issuable upon exercise of Rights from and after the occurrence of a
Triggering Event if the Rights were acquired by such Person or any of such
Person's Affiliates or Associates before the Distribution Date or pursuant to
Section 3(a) or Section 22 (the "Original Rights") or pursuant to Section 11(i)
in connection with an adjustment made with respect to any Original Rights;
(ii) that such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing; that a
Person shall not be deemed, however, the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement, or understanding to vote such security if such
agreement, arrangement, or understanding: (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act and (B) is not also then reportable by such
Person on pursuant to Regulation 13D-G under the Exchange Act (or any
comparable or successor regulation); or
(iii) that are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement,
arrangement, or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant
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to a revocable proxy as described in the proviso to subparagraph (ii) of this
paragraph (f)), or disposing of any voting securities of the Company. Nothing
in this paragraph (f), however, 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.
(g) "Business Day" means any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Florida are
authorized or obligated by law or executive order to close.
(h) "Close of Business" on any given date means 5:00
p.m., eastern time, on such date. If such date is not a Business Day, however,
it means 5:00 p.m., eastern time, on the next succeeding Business Day.
(i) "Common Stock" means the common stock, par value
$.001 per share, of the Company, except that "common stock" when used with
reference to any Person other than, the Company means the capital stock of such
Person with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(j) "Company" shall have the meaning set forth in the
preface above.
(k) "Current market price" shall have the meaning set
forth in Section 11(d).
(l) "Current Value" shall have the meaning set forth in
Section 11(a)(iii).
(m) "Distribution Date" shall have the meaning set forth
in Section 3(a).
(n) "Common Stock Equivalent" shall have the meaning set
forth in Section 11(a)(iii).
(o) "Equivalent Preferred Stock" shall have the meaning
set forth in Section 11(b).
(p) "Exchange Act" shall have the meaning set forth in
Section 1(d) above.
(q) "Exchange Ratio" shall have the meaning set forth in
Section 24(a).
(r) "Exempt Person" means the Company, any subsidiary of
the Company, any employee benefit plan of the Company or of any subsidiary of
the Company or any Person or entity organized, appointed, or established by the
Company for or pursuant to the terms of any such plan.
(s) "Expiration Date" shall have the meaning set forth
in Section 7(a).
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(t) "Final Expiration Date" shall have the meaning set
forth in Section 7(a).
(u) "NASDAQ" shall mean The Nasdaq Stock Market.
(v) "Original Rights" shall have the meaning set forth
in Section 1(f)(i).
(w) "Person" means any individual, firm, corporation,
partnership, or other entity.
(x) "Preferred Stock" means the Series C Preferred
Stock, $.001 par value of the Company having the rights and preferences set
forth in the Certificate of Designation attached to this Agreement as Exhibit
A.
(y) "Principal Party" shall have the meaning set forth
in Section 13(b).
(z) "Purchase Price" shall have the meaning set forth in
Section 4(a).
(aa) "Record Date" shall have the meaning set forth in
the preface at the beginning of this Agreement.
(bb) "Redemption Price" shall have the meaning set forth
in Section 23(a).
(cc) "Rights" shall have the meaning set forth in the
preface at the beginning of this Agreement.
(dd) "Rights Agent" shall have the meaning set forth in
the preface at the beginning of this Agreement.
(ee) "Rights Certificates" shall have the meaning set
forth in Section 3(a).
(ff) "Rights Dividend Declaration Date" shall have the
meaning set forth in the preface at the beginning of this Agreement.
(gg) "Section 11(a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii).
(hh) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii).
(ii) "Section 13 Event" means any event described in
clauses (x), (y), or (z) of Section 13(a).
(jj) "Spread" shall have the meaning set forth in Section
11(a)(iii).
(kk) "Stock Acquisition Date" means the first date of
public announcement (that, for purposes of this definition, shall include, a
report filed pursuant to the Exchange
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Act) by the Company or an Acquiring Person that an Acquiring Person has become
an Acquiring Person.
(ll) "Subsidiary" means, with reference to any Person,
any corporation or other entity of which an amount of voting securities
sufficient to elect at least a majority of the directors of such corporation is
beneficially owned, directly or indirectly, by such Person, or that is
otherwise controlled by such Person.
(mm) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii).
(nn) "Summary of Rights" shall have the meaning set forth
in Section 3(b).
(oo) "Trading Day" shall have the meaning set forth in
Section 11(d)(i).
(pp) "Triggering Event" means any Section 11(a)(ii) Event
or any Section 13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints First Union National Bank, a national banking institution, to act as
agent for the Company and the holders of the Rights (who, in accordance with
Section 3 shall before the Distribution Date also be the holders of Common
Stock) in accordance with the terms and conditions of this Agreement, and the
Rights Agent hereby accepts such appointment. The Company may from time to time
appoint such co-rights agents as it may deem necessary or desirable. The Rights
Agent shall have no duty to supervise, and shall in no event be liable for, the
acts or omissions of any such co-rights agent. In the event the Company
appoints one or more co-rights agents, the respective duties of the Rights
Agents and any co-rights agents will be as the Company may determine.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earliest of (i) the Close of Business on the tenth
day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business on the
Record Date), or (ii) the Close of Business on the tenth Business Day (or such
later date as may be determined by the Company's Board of Directors) 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-2(a)
of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding (the earlier of (i) or (ii) are
referred to in this Agreement as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the outstanding certificates for the Common Stock and not by separate
certificates, and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company). As soon as practicable after the Distribution Date the Rights
Agent will send by first-class, insured, postage-prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Distribution
Date,
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at the address of such holder shown on the records of the Company, one or more
right certificates, in substantially the form of Exhibit A (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided in this Agreement. If an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p), at the time of distribution of the Rights Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in accordance
with Section 14(a)) so that Rights Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any fractional Rights. As
of the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a summary of Rights, in substantially the form of
Exhibit C (the "Summary of Rights"), by first-class, postage-prepaid mail, to
each record holder of the 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 the Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date, the transfer of any
certificates representing shares of Common Stock in respect of which Rights
have been issued shall also constitute the transfer of the Rights associated
with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common
Stock that are issued after the Record Date but before the earlier of the
Distribution Date or the Expiration Date. Certificates representing such shares
of Common Stock shall also be deemed to be certificates for Rights, and 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 Pinnacle Holdings
Inc. (the "Company") and First Union National Bank, a national banking
institution, (the "Rights Agent") dated as of December 22, 2000 (the "Rights
Agreement"), the terms of which are incorporated herein by reference and a copy
of which is on file at the principal offices of the Company. Under
circumstances described 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, without charge promptly after receipt of a written request therefor.
Under circumstances described in the Rights Agreement, Rights issued to, or
held by, any Person who is, was, or becomes an Acquiring Person, an Adverse
Person, or any Affiliate or Associate thereof (as those 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 containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by them shall be evidenced
by the certificates alone and registered holders of Common Stock shall also be
the registered holders of the associated
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Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B 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
applicable law or rule or with any rule of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22, the Rights Certificates, whenever distributed, shall
be dated as of the Record Date and on their face shall entitle the holders
thereof to purchase such number of one-hundredths of a share of Preferred Stock
as shall be set forth therein at the price set forth therein (such exercise
price per share, the "Purchase Price"), but the amount and kind of securities
purchasable upon the exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided in this Agreement.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 that represents Rights beneficially owned by: (i) an Acquiring
Person, or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee before or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement, or understanding regarding the transferred
Rights or (B) a transfer that the Board has determined is part of a plan,
arrangement, or understanding that has as a primary purpose or effect avoidance
of Section 7(e), and any Rights Certificate issued pursuant to Section 6 or
Section 11 upon transfer, exchange, replacement, or adjustment of any other
Rights Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend):
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified in
Section 7(e) of such agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, President, Chief Operating Officer, or
any Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof that shall be
attested by the Secretary or an Assistant Secretary of the
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Company, either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. If an officer of the Company signs any of
the Rights Certificates and then ceases to be an officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates nevertheless may be countersigned by the Rights Agent
and issued and delivered by the Company with the same effect as though the
person who signed such Rights Certificates had not ceased to be an officer of
the Company. Any Rights Certificates may be signed on behalf of the Company by
any person who is a proper officer of the Company to sign such Rights
Certificate at the actual date of the execution of such Rights Certificate.
(b) Following the Distribution Date, the Rights Agent will keep
at its office designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates issued under this Agreement. Those books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates, and
the date of each of the Rights Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION, AND EXCHANGE OF
RIGHTS CERTIFICATES: MUTILATED, DESTROYED, LOST, OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e), and
Section 14, at any time after the Close of Business on the Distribution Date,
and at or before 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 shares 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 entitle
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine, or exchange any
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 principal office or
offices of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), and Section 14, countersign and deliver to the Person
entitled thereto a Rights Certificate or 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.
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(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or mutilation
of a Rights Certificate, and, in case of loss, theft, or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights Certificate
if mutilated, the Company will execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed,
or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS.
(a) Subject to Section 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as this Agreement
otherwise provides), 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 of the Rights Certificate duly
executed, to the Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the aggregate
Purchase Price with respect to the total number of one-hundredths of a share of
Preferred Stock (or other securities, cash, or assets, as the case may be) as
to which such surrendered Rights are then exercisable, at or before the earlier
of (i) the Close of Business on the tenth anniversary of the Record Date (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23, or (iii) the time at which such Rights are exchanged as
provided in Section 24, (the earlier of (i), (ii), and (iii) is referred to in
this Agreement as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth share of
Preferred Stock pursuant to the exercise of a Right shall initially be $60.00,
and shall be subject to adjustment from time to time as provided in Sections 11
and 13(a) and shall be payable in accordance with paragraph (c) below.
(c) 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 per one one-hundredth share of Preferred Stock (or for such Common Stock
or other securities, cash, or assets, as the case may be) to be purchased as
set forth below and an amount equal to any applicable transfer tax, the Rights
Agent shall, subject to Section 20(k), thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for the
total number of shares of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests) or (B) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights under this
Agreement with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of shares of Preferred Stock as
are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent
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with the depositary agent) 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,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section 11
(a)(iii)) shall be made in cash or by certified bank check or bank draft
payable to the Company. If the Company is obligated to issue other securities
of the Company, pay cash, or distribute other property pursuant to Section
11(a), the Company will make all arrangements necessary so that such other
securities, cash, or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) If the registered holder of any Rights Certificate shall
exercise fewer than all the Rights evidenced thereby, the Rights Agent shall
issue and deliver a new Rights Certificate evidencing Rights equivalent to the
Rights remaining unexercised to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the contrary,
after the first occurrence of a 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
Associate or Affiliate thereof) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
Associate or Affiliate thereof) who becomes a transferee before or concurrently
with the Acquiring Person's becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement, or
understanding regarding the transferred Rights or (B) a transfer that the Board
of Directors of the Company has determined is part of a plan, arrangement, or
understanding that has the avoidance of this Section 7(e) as a primary purpose
or effect, shall become null and void without any further action and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) are complied with, but shall have no liability to any holder
of Rights Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person, or their respective
Affiliates, Associates, or transferees under this Agreement.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) completed and signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Rights
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Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination, or exchange shall, if surrendered to the Company or any
of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Subject to the terms of its certificate of incorporation, the
Company agrees that it will use its best efforts to cause to be reserved out of
its authorized and unissued Preferred Stock the number of shares of Preferred
Stock that will be sufficient to permit the exercise in full of all outstanding
Rights, and, after the occurrence of a Triggering Event shall so reserve a
number of shares of Preferred Stock (or other securities) that will be
sufficient to permit the exercise in full of all outstanding rights according
to Section 7.
(b) So long as the shares of Preferred Stock (and, after the
occurrence of a Triggering Event, any other securities) issuable upon the
exercise of Rights may be listed on any national securities exchange or quoted
on NASDAQ, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares of Preferred Stock or such
other securities reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company agrees that it will take all action that may be
necessary to ensure that all shares of Preferred Stock (or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for shares of Preferred Stock (or other securities) (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares (except as otherwise provided by a
corporation law applicable to the Company).
(d) The Company further agrees that it will pay when due any
federal or state transfer taxes and charges that may be payable in respect of
the issuance or delivery of the Rights Certificates or of any shares of
Preferred Stock (or other securities) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax that may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of certificates for shares of Preferred Stock
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(or other securities) in a name other than that of, the registered holder of
the Rights Certificate evidencing Rights surrendered for exercise, or to issue
or to deliver any certificates for shares of Preferred Stock (or other
securities) upon the exercise of any Rights until such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
(e) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event or an exchange pursuant to Section 24 on which the
consideration to be delivered by the Company upon exercise or exchange of the
Rights has been determined in accordance with Section 11(a) or Section 24, as
the case may be, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights or exchanged for the Rights
on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the
date of the expiration of the Rights. The Company will also take such action as
may be appropriate under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period not to exceed 90 days
after the date set forth in clause (i) of the first sentence of this Section
9(e), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any suspension
of the exercisability of the Rights referred to in this Section 9(e), the
Company shall issue a public announcement that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time
as the suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained.
SECTION 10. PREFERRED STOCK RECORD DATE. Each person in whose
name any certificate for a number of shares of Preferred Stock (or other
securities) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such shares of Preferred Stock
(or other securities) represented thereby, 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 all applicable transfer
taxes) was made. If the date of such surrender and payment is a date upon which
the Preferred Stock (or other securities) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business
Day on which the Preferred Stock (or other securities) transfer books of the
Company are open. Before 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 shares for which the Rights shall be
exercisable, and shall not be entitled to receive any notice of any proceedings
of the Company, except as provided in this Agreement.
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<PAGE> 15
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES, AND NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares
covered by each Right, and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) If the Company shall 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 reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e), the Purchase Price
in effect at the time of the Record Date for such dividend or of the effective
date of such subdivision, combination, or reclassification, and the number and
kind of shares of Preferred Stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right thereafter exercised
shall be entitled to purchase the aggregate number and kind of shares of
Preferred Stock that, if the Right had been exercised immediately before such
date, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination, or reclassification. If the
Record Date for any such dividend, subdivision, combination, or
reclassification shall occur before the Distribution Date, however, the Company
shall appropriately adjust the Purchase Price (taking into account any
additional Rights that may be issued as a result of such dividend, subdivision,
combination, or reclassification), in lieu of adjusting (as described above)
the number of shares of Preferred Stock (or other capital stock, as the case
may be) issuable upon exercise of the Rights. If an event occurs that would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made before, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 24, if any Person (other than an
Exempt Person), alone or together with its Affiliates and Associates, shall, at
any time after the Rights Dividend Declaration Date become an Acquiring Person
(a "Section 11(a)(ii) Event"), then immediately upon the occurrence thereof,
each holder of a Right (except as provided below and in Section 7(e) and
11(a)(iii)) shall thereafter have the right to receive, upon exercise thereof
at the then current Purchase Price (but in no event less than the par value per
share) multiplied by the number of one-hundredths of a share of Preferred Stock
for which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of shares of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of
one-hundredths of a share of Preferred Stock for which a Right was exercisable
(or, if the Distribution Date shall not have occurred before the date of such
Section 11(a)(ii) Event, the number of one-hundredths of a share of Preferred
Stock for which a Right would have been exercisable if the Distribution Date
had occurred on the Business Day immediately preceding the date of such Section
11(a)(ii) Event) immediately before such Section 11(a)(ii) Event and (y)
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<PAGE> 16
dividing that product by 50% of the current market price per one share of
Common Stock of the Company (determined pursuant to Section 11(d)) on the date
of the occurrence of the event set forth in this subparagraph (ii) (such number
of shares being referred to as the "Adjustment Share Amount"). Successive
adjustments shall be made pursuant to this paragraph each time a Section
11(a)(ii) Event occurs.
(iii) The Company may at its option substitute for a share
of Common Stock issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii) a number of shares of Preferred Stock or fraction
thereof such that the current per share market price of one share of Preferred
Stock multiplied by such number or fraction is equal to the current per share
market price of one share of Common Stock. If there shall not be sufficient
shares of Common Stock issued but not outstanding or authorized but unissued to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Board of Directors shall, to the extent permitted by
applicable law and any material agreements then in effect to which the Company
is a party, (A) determine the excess of (1) the value of the Adjustment Share
Amount issuable upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess, the "Spread"), and (B) with respect to each Right
(subject to Section 7(e)), make adequate provision to substitute for the
Adjustment Share Amount, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price (but in no event to less than the
par value per share), (3) Preferred Stock or other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock that the Board of Directors of the Company has deemed to have
the same value as shares of Common Stock (such shares of preferred stock
referred to in this Agreement as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a recognized investment banking firm selected by the
Board of Directors of the Company. If, however, the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within 30 days
following the later of (x) the first occurrence of a Section 11(a)(ii) Event
and (y) the date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) are referred to in this Agreement as
the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price (except for the payment of an amount equal to the
par value of each share), shares of Common Stock (to the extent available) and
then, if necessary, cash, which shares or cash have an aggregate value equal to
the Spread. If the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional shares of Common Stock could
be authorized for issuance upon exercise in full of the Rights, the 30 day
period set forth above may be extended to the extent necessary, but not more
than 90 days after the Section 11(a)(ii) Trigger Date, so that the Company may
seek stockholder approval for the authorization of such additional shares (such
period, as it may be extended, is referred to in this Agreement as the
"Substitution Period"). If the Company determines that some action need be
taken pursuant to the first or second sentences of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e), that such action shall
apply
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<PAGE> 17
uniformly to all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. If any such suspension occurs, the Company shall issue a public
announcement that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is
no longer in effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the current market price (as determined pursuant to
Section 11(d)) per share of the Common Stock on the Section 11(a)(ii) Trigger
Date and the value of any Common Stock Equivalent shall be deemed to have the
same value as the Common Stock on such date.
(b) If the Company shall fix a record date for the
issuance of rights (other than the Rights), options, or warrants to all holders
of Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within 45 calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges, and preferences as the 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 per share of Preferred
Stock (as determined pursuant to Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately before such record date by
a fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock that the aggregate offering price of the total number of shares of
Preferred Stock or Equivalent Preferred Stock to be offered (or the aggregate
initial conversion price of the convertible securities 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 or Equivalent Preferred
Stock to be offered for subscription or purchase (or into which the convertible
securities to be offered are initially convertible). In case such subscription
price may be paid fully or partially in a consideration in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed, and if such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price that would then
be in effect if such record date had not been fixed.
(c) If the Company shall fix a record date for the
making of a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidence of indebtedness, cash (other
than a regular quarterly cash dividend out of the earnings or
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<PAGE> 18
retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or convertible securities, subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately before such record date by a fraction, the
numerator of which shall be the current market price (as defined in Section
11(d)) per share of Preferred Stock on such record date, less the fair market
value (as determined reasonably and with good faith to the holders of Rights by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent) of the portion of the cash, assets, or evidence of indebtedness to be so
distributed or of such convertible securities, subscription rights, or warrants
distributable in respect of one share of Preferred Stock and the denominator of
which shall be the current market price (determined pursuant to Section 11(d))
per share of the Preferred Stock; however, in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price that would be in effect
if such record date had not been fixed.
(d) (i) For the purpose of any computation under this
Agreement, other than computations made pursuant to Section 11(a)(iii), the
"current market price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common Stock for
the 30 consecutive Trading Days (as defined below) immediately before such date
and for purposes of computations made pursuant to Section 11(a)(iii), the
"current market price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common Stock for
the ten consecutive Trading Days immediately following such date. If the
"current market price" per share of the Common Stock is determined, however,
during a period following the announcement by the issuer of such Common Stock
of (A) a dividend or distribution on such Common Stock payable in shares of
such Common Stock or securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination, or
reclassification of such Common Stock, and the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination,
or reclassification, shall not have occurred before the commencement of the
requisite 30-Trading Day or 10-Trading Day period, as set forth above, then,
and in each such case, the "current market price" shall be properly adjusted to
take into account ex-dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on NASDAQ or, if the
shares of Common Stock are not listed or admitted to trading on NASDAQ, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if the
shares of
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<PAGE> 19
Common Stock 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 shares of Common
Stock 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 Common Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" means a day on
which the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share
means the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share (or one one-hundredths of a share) of
Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the current market price per share (or one one-hundredth
of a 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 number may be appropriately adjusted for such
events as stock splits, stock dividends, and recapitalizations with respect to
the Common Stock occurring after the date of this Agreement) multiplied by the
current market price per share of the Common Stock and the "current market
price" per one one-hundredth of a share of Preferred Stock shall be equal to
the current market price per share of the Common Stock (as appropriately
adjusted for such events as stock splits, stock dividends, and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement). If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything in this Agreement 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 one percent in the Purchase
Price. Any adjustments that 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 ten-thousandth of a share of Common Stock or other share
or one-millionth of a share of Preferred Stock, as the case
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<PAGE> 20
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 that requires such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a), the holder of any Right thereafter exercised shall
become entitled to receive any share or fraction of a share of capital stock
other than Preferred Stock, thereafter the number or fraction 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 Common
Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), and
(m), and the provisions of Sections 7, 9, 10, 13, and 14 with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company after any
adjustment to the Purchase Price under this Agreement shall represent the right
to purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time under this Agreement upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately before the making of such adjustment shall thereafter
represent the right to purchase, at the adjusted Purchase Price, that number of
one-hundredths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one-hundredths of
a share of Preferred Stock covered by a Right immediately before this
adjustment, by (y) the Purchase Price in effect immediately before 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 shares of Preferred Stock purchasable 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 one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately before such
adjustment. Each Right held of record before such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
before such adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall publicly
announce 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 after the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the
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<PAGE> 21
number of Rights pursuant to this Section 11(i), the Company shall promptly
cause to be distributed to holders of record of Rights Certificates on such
record date Rights Certificates representing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
before 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 shares of Preferred Stock issuable upon the exercise of
the Rights, any Rights Certificates issued may continue to express the Purchase
Price per share and the number of shares that were expressed in the initial
Rights Certificates issued under this Agreement.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of
Preferred Stock or other securities issuable upon exercise of the Rights, the
Company shall take any corporate action that may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Preferred Stock or other securities at
such adjusted Purchase Price. If upon any exercise of the Rights, a holder is
to receive a combination of Common Stock and common stock equivalents, a
portion of the consideration paid upon such exercise, equal to at least the
then par value of a share of Common Stock of the Company, shall be allocated at
the payment for each share of Common Stock of the Company so received.
(l) If this Section 11 requires that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the number of shares
of Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the number of shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect before
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, to the
extent that in their good faith judgment the Board of Directors of the Company
shall determine to be advisable so 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 that by their terms are
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<PAGE> 22
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 stockholders.
(n) The Company agrees that it shall not, after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o)), (ii) merge with or
into any other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o)), if (x) at
the time of or immediately after such consolidation, merger, or sale there are
any rights, warrants, or other instruments or securities outstanding or
agreements in effect that would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) before,
simultaneously with, or immediately after such consolidation, merger, or sale,
the stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company agrees that, after the Distribution Date, it will
not, except as permitted by Section 23, Section 24, or Section 27, 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,
if the Company after the Rights Dividend Declaration Date and before the
Distribution Date (i) declares a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares
of Common Stock, or (iii) combines the outstanding shares of Common Stock into
a smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but before the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately before such event by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately before the occurrence of the event and the
denominator of which shall be the total number of shares of 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 and Section
13, the Company shall (a) promptly prepare a certificate describing such
adjustment and a brief statement
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of the facts giving rise to such adjustment, (b) promptly file with the Rights
Agent, and with the transfer agent for the Common Stock, a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if before the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 26.
The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment contained therein and shall not be obligated or
responsible for calculating any adjustment nor shall it be deemed to have
knowledge of any such adjustment unless and until it shall have received such
certificate.
SECTION 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER.
(a) If, following a Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o)), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(o)) shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property, or
(z) the Company shall sell, mortgage, or otherwise transfer (or one or more of
its Subsidiaries shall sell, mortgage, or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions each of
which complies with Section 11(o)), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e), shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable, and freely tradable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of call or first refusal
or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one-hundredths of
a share of Preferred Stock for which a Right is then exercisable (without
taking into account any adjustment previously made pursuant to Section
11(a)(ii)) and dividing that product (that, following the first occurrence of a
Section 13 Event, shall be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i)) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and (iv) such Principal Party
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shall take such steps (including the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions of this Agreement
shall thereafter be applicable, as nearly as practicable, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" means
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or consolidation, and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
If, however, (1) the Common Stock of such Person is not at such time
and has not been continuously over the preceding 12-months registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value; and (3) in case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons, the rules set forth in (1) and (2) above shall apply to each of
the Persons having an interest in such joint venture as if such joint venture
were a "Subsidiary" of both or all of such Persons and, in connection
therewith, "principal party" shall refer to each of such Persons and each such
principal party shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such joint venture bear to
the total of such interests.
(c) If, for any reason, the Rights cannot be exercised for the
Common Stock of such Principal Party, then a holder of Rights will have the
right to exchange each Right for cash from such Principal Party in an amount
equal to the Purchase Price as calculated above. If, for any reason, the
foregoing formulation cannot be applied to determine the cash amount to which
the holder of Rights is entitled, then the Board of Directors of the Company,
based upon the advice from one or more investment banking firms shall determine
such amount reasonably and in good faith.
(d) 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 that 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 previously the
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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), (b), and (c) of this Section 13 and further providing that, as
soon as practicable after the date of any consolidation, merger, or sale of
assets mentioned in paragraph (a) of this Section 13, the Principal Party will
(i) prepare and file a registration statement under the
Act, with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times meeting
the requirements of the Act) until the Expiration Date;
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form 10 under
the Exchange Act; and
(iii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under the
blue sky laws of such jurisdictions as may be necessary or appropriate.
The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, sales, or other transfers. If a Section 13 Event shall
occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights
that have not previously been exercised shall become exercisable in the manner
described in Section 13(a).
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. If a Section
13 Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights that have not theretofore been exercised shall be exercisable
in the manner described in Section 13(a).
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights, except before the Distribution Date as provided in Section 11(p), or to
distribute Rights Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there may be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately before the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on NASDAQ or, if the Rights
are not listed or admitted to trading on NASDAQ, as reported in the principal
consolidated transaction reporting system with respect to
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<PAGE> 26
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions that are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates that evidence fractional shares of Preferred Stock
(other than fractions that are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges, and preferences to which they
are entitled as beneficial owners of the shares of Preferred Stock represented
by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share of Preferred
Stock, 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 current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately before the date of
such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 giving rise to the right to receive common stock
equivalents (other than Preferred Stock) or other securities upon the exercise
of a Right, the Company shall not be required to issue fractions of shares or
units of such common stock equivalents or other securities upon exercise of the
Rights or to distribute certificates that evidence fractional shares of such
common stock equivalents or other securities. In lieu of fractional shares or
units of such common stock equivalents or other securities, 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
current market value of a share or unit of such common stock equivalent or other
securities. For purposes of this Section 14(c), the current market value of such
share or unit shall be determined in the manner set forth in Section 11(d)(i)
with respect to shares of Common Stock except that the current market price
shall be determined by reference only to the Trading Day immediately before the
date of such exercise.
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(d) Except as otherwise expressly provided herein, 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.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, except those rights of action vested in the Rights Agent
pursuant to Sections 20 and 21, are vested in the respective registered holders
of the Rights Certificates (and, before the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, before the Distribution Date, of the Common Stock), without the
consent of the Rights Agent or of the holder of any other Rights Certificate
(or, before the Distribution Date, of the Common Stock), may, on his own behalf
and for his own benefit, enforce, and may institute and maintain any suit,
action, or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights represented 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 under this
Agreement and injunctive relief against actual or threatened violations of the
obligations under this Agreement of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right
by accepting the same agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) before the Distribution Date, the Rights will be transferable
only in connection with the transfer of 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 principal office or offices of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the
Rights Agent may treat the person in whose name a Rights Certificate (or, before
the Distribution Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights represented thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of Section 7(e),
shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of their inability to perform any of
their 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
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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. The Company
must, however, use reasonable efforts promptly to have any such order, decree,
or ruling lifted or otherwise overturned.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
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 fraction of a share
(or number of shares) of Preferred Stock, Common Stock, or any other securities
of the Company that may at any time be issuable on the exercise of the Rights
represented there-by, nor shall anything contained in this Agreement or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Sections 24 and 25), 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 of this Agreement.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for services rendered by it under this Agreement and, on demand of
the Rights Agent, its reasonable expenses and counsel fees and disbursements
incurred in the exercise and performance of its duties under this Agreement. The
Company also agrees to indemnify the Rights Agent, its directors, officers,
employees, and agents for, and to hold each of them harmless against, any loss,
liability, or expense, incurred without gross negligence, bad faith, or willful
misconduct on the part of the Rights Agent or such other indemnified party, for
anything done or omitted by the Rights Agent or such other indemnified party in
connection with the acceptance and administration of this Agreement or the
performance of the Rights Agent's duties hereunder, including the costs and
expenses of defending against any claim of liability in the premises. The
indemnity provided for in this Agreement shall survive the expiration of the
Rights, the resignation or removal of the Rights Agent and the termination of
this Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or with respect to any action taken, suffered, or omitted by it in
connection with its administration of this Agreement or the performance of the
Rights Agent's duties hereunder in reliance upon any Rights Certificate or
certificate for Preferred Stock, Common Stock, or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
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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 business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties to this Agreement if such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21. If 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 if 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) If 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 if 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, all of which shall bind the Company and the holders of Rights
Certificates, by their acceptance thereof:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice or opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this
Agreement, the Rights Agent shall deem it desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be established by the Company before
taking or suffering any action under this Agreement, such fact or matter (unless
other evidence in respect thereto is specifically prescribed in this Agreement)
may be considered conclusively established by a certificate signed by the Chief
Executive Officer, the President, Chief Operating Officer, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary, or any Assistant
Secretary of the
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Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable under this Agreement only for
its own gross 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 any such statements of fact or
recitals (except as to its countersignature on such Rights Certificates). All
such statements and recitals shall be considered to have been made only by the
Company.
(e) The Rights Agent shall not be responsible with respect to the
validity of this Agreement or the execution and delivery of this Agreement
(except the execution of this Agreement by the Rights Agent) or with respect to
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 condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Sections 11, 3, 23, 13, or 24 or 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 represented by
Rights Certificates after receipt of the certificate described in Section 12);
nor shall it be deemed by any act under this Agreement to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock will, when so issued, be
validly authorized and issued, fully paid, and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge,
and deliver or cause to be performed, executed, acknowledged, and delivered all
such further and other acts, instruments, and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Agreement
from the Chief Executive Officer, the President, Chief Operating Officer, 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 or for any delay in acting while awaiting
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent in accordance with
its rights and obligations under this Rights Agreement and the date on 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
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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 officer
of the Company actually receives such application, unless any such officer shall
have consented in writing to an earlier date) unless, before taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions from an officer of the Company
objecting to the action to be taken or omitted as specified in such application.
(h) The Rights Agent and any stockholder, director, officer, or
employee of the Rights Agent may buy, sell, or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing in this Agreement 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 under this Agreement either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect, or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect, or misconduct, if the Rights Agent was not grossly
negligent in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties under this Agreement or in the exercise of
its rights, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any 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 or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
(l) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent.
(m) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits).
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 60 days'
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notice (or such lesser notice as is acceptable to the Company) in writing mailed
to the Company, and to each transfer agent of the 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
60 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to the transfer agent of the 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 60
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a 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 a court, shall be a corporation
organized and doing business under the laws of the United States or of any state
of the United States, in good standing, that is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $100
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties, and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it under this Agreement, and execute and deliver any further
assurance, conveyance, act, or deed necessary for the purpose. Not later than
the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock 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, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates representing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and before the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee 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 appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale, however, (i) no such
Rights Certificate shall be
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issued if, and to the extent that, the Company shall be advised by counsel that
such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option, at
any time before the earlier of (i) the Close of Business on the tenth day
following the Stock Acquisition Date (or such later date as the Board of
Directors of the Company may determine) or (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption
price of $.001 per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend, or similar transaction occurring after
the date of this Agreement (such redemption price is referred to in this
Agreement as the "Redemption Price"). Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the Company's right
of redemption under this Agreement has expired. The Company may, at its option,
pay the Redemption Price either in shares of Common Stock (based on the "current
market price," as defined in Section 11(d), of the shares of Common Stock at the
time of redemption), cash, or any form of consideration deemed appropriate by
the Company's Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action or 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. Promptly after the
action of the Board of 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
their last addresses as they appear upon the registry books of the Rights Agent
or, before the Distribution Date, on the registry books of the Transfer Agent
for the Common Stock. Any notice that is mailed in the manner provided in this
Agreement 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. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which would not include Rights that
have become void pursuant to the provisions of Section 7(e)) for shares of
Common Stock of the Company at an exchange ratio of one share of Common Stock
per Right, appropriately adjusted to reflect any stock split, stock dividend, or
similar transaction occurring after the date of this Agreement (the "Exchange
Ratio"). Notwithstanding the foregoing, the
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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 50% or more of the
shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action or notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the number of
such Rights held by such holder, multiplied by the Exchange Ratio. The Company
promptly shall give public notice of any such exchange; however, 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
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice that is mailed as provided in
this Agreement shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of a
partial exchange, the number of Rights that will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights that have become void pursuant to the provisions of Section 7(e)) held by
each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute shares of Preferred Stock (or Equivalent Preferred
Stock, as such term is defined in Section 11(b) hereof) for shares of Common
Stock exchangeable for Rights, at the initial rate of one one-hundredth of a
share of Preferred Stock (or Equivalent Preferred Stock) for each share of
Common Stock, as appropriately adjusted to reflect adjustments in the voting
rights of the shares of Preferred Stock pursuant to the terms thereof, so that
the fraction of a share of Preferred Stock delivered in lieu of each share of
Common Stock shall have the same voting rights as one share of Common Stock.
(d) If the Company shall not have sufficient shares of Common
Stock authorized but unissued to permit any exchange of Rights as contemplated
in accordance with this Section 24, the Company shall take all action necessary
to authorize additional shares of Common Stock for issuance upon exchange of the
Rights.
(e) The Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates that represent fractions of shares
of Common Stock. In lieu of such fractional shares of Common Stock, the Company
may pay to the registered holders of the Rights Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For purposes of this paragraph (e), the current market
value of a whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to the second sentence of Section 11(d)(i))
for the Trading Day immediately before to the date of exchange pursuant to this
Section 24.
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SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) If the Company proposes, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Common Stock or to make any other distribution to the holders of Common Stock
(other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of Common Stock rights
or warrants to subscribe for or to purchase any additional shares of Common
Stock or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Common Stock (other than
a reclassification involving only the subdivision of outstanding shares of
Common Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o)), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer), in
one transaction or a series of related transactions of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o)), or (v) to effect the liquidation, dissolution, or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26, a
notice of such proposed action that specifies the record date for such stock
dividend, distribution of rights, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
shares of Common Stock, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least 20 days before the record date for determining holders of the shares of
Common Stock for purposes of such action, and in the case of any such other
action, at least 20 days before the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Common
Stock, whichever is earlier.
(b) In case any of the events described in Section 11(a)(ii) shall
occur, (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 26, a notice of the occurrence of such event that specifies the event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
and (ii) all references in the preceding paragraph to Common Stock shall be
deemed thereafter to refer, if appropriate, to other securities.
SECTION 26. NOTICES. Any notice, demand, or delivery authorized
by this Agreement to be given or made by the Rights Agent or by the holder of
any Rights Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage-prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
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<PAGE> 36
Pinnacle Holdings Inc
301 North Cattlemen Road, Suite 300
Sarasota, Florida 34232
Attention: Chief Executive Officer
Copies to:
Holland & Knight LLP
400 N. Ashley Drive, Suite 2300
Tampa, FL 33602
Attention: Chester E. Bacheller, Esq.
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage-prepaid, addressed (until another address is
filed in writing with the Company) as follows:
First Union National Bank
1525 West W.T. Harris Boulevard, 3C3
Charlotte, North Carolina 28288-1153
Attention: Shareholder Services Group
Notices or demands that this Agreement authorizes the Company or the
Rights Agent to give to the holder of any Rights Certificate (or, if before the
Distribution Date, to the holder of certificates representing shares of 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 27. SUPPLEMENTS AND AMENDMENTS. Before the Distribution
Date and subject to the penultimate sentence of this Section 27, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. Beginning on the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates
in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained in this Agreement that may be defective or inconsistent with any other
provisions in this Agreement, (iii) to shorten or lengthen any time period under
this Agreement, or (iv) to change or supplement the provisions under this
Agreement in any manner that the Company may deem necessary or desirable and
that 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); however, this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) a period relating to
when the Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other period unless such lengthening is for the purpose
of protecting, enhancing, or clarifying the rights of, or the benefits to, the
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<PAGE> 37
holders of Rights. Upon the delivery of a certificate from an appropriate
officer of the Company that states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made that changes
the rights or duties of the Rights Agent under this Agreement without the
consent of the Rights Agent. Before the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock.
SECTION 28. SUCCESSORS. All the 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 under this Agreement.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
the right and power to (i) interpret the provisions of this Agreement, and (ii)
make all determinations considered advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations, and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) that are done or made by the Board in good faith,
shall (x) be final, conclusive, and binding on the Company, the Rights Agent,
the holders of the Rights, and all other parties, and (y) not subject the Board
of Directors to any liability to the holders of the Rights.
SECTION 30. 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, before the
Distribution Date, registered holders of the 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, before the Distribution
Date, registered holders of the Common Stock).
SECTION 31. SEVERABILITY. If any provision of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void, or unenforceable, the remainder of the provisions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired, or
invalidated. Notwithstanding anything in this Agreement to the contrary, if any
such provision is held by such court or authority to be invalid, void, or
unenforceable and the Board of Directors determines in its good faith
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<PAGE> 38
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 shall be reinstated and shall not expire until the Close of
Business on the tenth day following the date of such determination by the Board
of Directors. Without limiting the foregoing, if any provision requiring that a
determination be made by less than the entire Board of Directors is held by a
court of competent jurisdiction or other authority to be invalid, void, or
unenforceable, such determination shall then be made by the entire Board in
accordance with applicable law and the Company's Certificate of Incorporation
and Bylaws.
SECTION 32. GOVERNING LAW. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Florida and for all purposes shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within the State of Delaware.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and attested, all as of the day and year first above written.
Attest: /s/ Jeffrey Card PINNACLE HOLDINGS INC.
-----------------------------
Chief Financial Officer
By: /s/ Steven R. Day
--------------------------
Name: Steven R. Day
------------------------
Title: Chief Operating Officer
-----------------------
FIRST UNION NATIONAL BANK,
a national banking institution
By: /s/ DeVonna L. Musley
--------------------------
Name: DeVonna L. Musley
------------------------
Title: Corporate Trust Officer
-----------------------
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Exhibit A
FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES C PREFERRED STOCK
of
PINNACLE HOLDINGS INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, the undersigned officer of Pinnacle Holdings Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "Corporation"), in accordance with the provisions of
Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, the Board of Directors on
December 22, 2000, adopted the following resolution creating a series of
2,000,000 shares of Preferred Stock designated as Series C Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications,
limitations, or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series C Preferred Stock" par value of $.001 per share, and the
number of shares constituting such series shall be 2,000,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series C
Preferred Stock to a number less than that of the shares then outstanding plus
the number of shares issuable upon exercise of outstanding rights, options, or
warrants or upon conversion of outstanding securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series C Preferred Stock
shall be entitled to receive, when, as, and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the last day of March, June, September, and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series C Preferred Stock, in an
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<PAGE> 41
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and non-cash (payable in
kind) dividends or other distributions other than a dividend payable in shares
of common stock (as defined below) or a subdivision of the outstanding shares of
common stock (by reclassification or otherwise), declared on the common stock,
par value $0.001 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series C Preferred Stock. If the Corporation shall at any
time after December 22, 2000 (the "Rights Dividend Declaration Date") (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series C Preferred Stock were entitled immediately
before such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately before such event.
(B) The Corporation shall declare a dividend or
distribution on the outstanding shares of Series C Preferred Stock as provided
in paragraph (A) above immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of Common Stock);
provided that, if 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 $.25 per
share on the outstanding shares of Series C Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series C Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series C
Preferred Stock, unless the date of issue of such shares is before the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series C Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
C Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series C Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
before the date fixed for the payment thereof.
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<PAGE> 42
Section 3. Voting Rights. The holders of shares of Series C Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series C Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. If the Corporation shall at any time after the Rights Dividend
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the number of votes per share to which holders of shares of Series C Preferred
Stock were entitled immediately before such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately before such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series C Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series C
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period"), which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series C
Preferred Stock then outstanding shall have been declared and paid or set apart
for payment. During each default period, all holders of Preferred Stock
(including holders of the Series C Preferred Stock) with dividends in arrears in
an amount equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two Directors.
(ii) During any default period, such voting right
of the holders of Series C Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two
Directors or, if such right is exercised at an annual meeting, to elect two
Directors. If the number that may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of
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Directors as shall be necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during the continuance of
such period, the number of Directors shall not be increased or decreased except
by vote of the holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with the Series
C Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent of the total
number of shares of Preferred Stock outstanding, irrespective of series, may
request, the calling of a special meeting of the holders of Preferred Stock,
which meeting shall thereupon be called by the Chief Executive Officer,
President, Chief Operating Officer, a Vice-President, or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this Paragraph (C)(iii)
shall be given to each holder of record of Preferred Stock by mailing a copy of
such notice to such holder at such holder's last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such order or request, or
in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent of the total
number of shares of Preferred Stock outstanding. Notwithstanding the provisions
of this paragraph (C)(iii), no such special meeting shall be called during the
period within 60 days immediately preceding the date fixed for the next annual
meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if applicable, shall
continue to be entitled to elect the whole number of Directors until the holders
of Preferred Stock shall have exercised their right to elect two Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until the expiration of
the default period, and (y) any vacancy in the Board of Directors may (except as
provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority
of the remaining Directors theretofore elected by the holders of the class of
stock which elected the Director whose office shall have become vacant.
References in this paragraph (C) to Directors elected by the holders of a
particular class of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the holders of
Preferred Stock as a class shall terminate, and (z) the number of Directors
shall be such number as may be provided for in the Certificate of Incorporation
or By-laws of the Corporation irrespective of any increase made pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the
Certificate of
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Incorporation or By-laws of the Corporation). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series C Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series C Preferred Stock as provided in Section 2
hereof are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series C Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution, or winding up) to the Series C Preferred Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution, or winding up) with the Series C
Preferred Stock, except dividends paid ratably on the Series C Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution, or winding up) with the Series C Preferred Stock,
provided that the Corporation may at any time redeem, purchase, or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation, or winding up) to the Series C Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series C Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution, or
winding up) with the Series C Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
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(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 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series C Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution, or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution, or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution, or winding up) to the Series C Preferred Stock unless, prior
thereto, the holders of shares of Series C Preferred Stock shall have received
per share an amount equal to the greater of 100 times $60.00 or 100 times the
payment made per share of Common Stock, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series C Liquidation Preference"). Following the payment
of the full amount of the Series C Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series C Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series C Liquidation Preference by (ii) 100 (as appropriately
adjusted as set forth in subparagraph (C) below to reflect such events as stock
splits, stock dividends, and recapitalizations with respect to the Common Stock)
(such number in clause (ii), the "Adjustment Number"). Following the payment of
the full amount of the Series C Liquidation Preference and the Common Adjustment
in respect of all outstanding shares of Series C Preferred Stock and Common
Stock, respectively, holders of Series C Preferred Stock and holders of shares
of Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to 1
with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series C Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series C Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. In the event, however, that there
are not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
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(C) In the event the Corporation shall at any time after the
Rights Dividend Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination, or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series C Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or exchanged. If
the Corporation shall at any time after the Rights Dividend Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series C Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately before such
event.
Section 8. Redemption. The shares of Series C Preferred Stock shall not
be redeemable.
Section 9. Amendment. The Certificate of Incorporation of the Corporation
shall not be further amended in any manner that would materially alter or change
the powers, preferences, or special rights of the Series C Preferred Stock so as
to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series C Preferred Stock, voting
separately as a class.
Section 10. Fractional Shares. Series C Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series C Preferred Stock.
Section 11. Ranking. The Series C Preferred Stock shall rank junior to all
other series of the Corporation's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such series shall
provide otherwise.
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IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 22nd day
of December, 2000.
PINNACLE HOLDINGS INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
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Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R-______________________ _________ Rights
NOT EXERCISABLE AFTER JANUARY 12, 2011 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
PINNACLE HOLDINGS INC.
This certifies that _______________________________________________, or
registered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions, and conditions of the Rights Agreement, dated as of December 22,
2000 (the "Rights Agreement"), between PINNACLE HOLDINGS INC., a Delaware
corporation (the "Company"), and First Union National Bank, a national banking
association (the "Rights Agent"), to purchase from the Company at any time
before 5:00 p.m., eastern time, on January 12, 2001 at the office of the Rights
Agent designated for such purpose, or its successors as Rights Agent, one
one-hundredth of a fully paid, non-assessable share of Series C Preferred Stock
(the "Preferred Stock"), of the Company, at a purchase price of $60.00 per one
one-hundredth of a share (the "Purchase Price"), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares that may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of _______________, 2000, based on the
Preferred Stock as constituted at such date. Capitalized terms not defined in
this Rights Certificate shall have the meaning set forth in the Rights
Agreement.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock that may be purchased upon the exercise of the
Rights
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<PAGE> 49
represented by this Rights Certificate are subject to modification and
adjustment upon the occurrence of certain events.
---------------------------
* The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person, as applicable, and shall
replace the preceding sentence.
This Rights Certificate is subject to all provisions of the Rights
Agreement, which provisions are hereby incorporated by reference and made a part
of this Rights Certificate and to which Rights Agreement reference is hereby
made for a full description of the rights, limitations of rights, obligations,
duties, and immunities under this Rights Certificate 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
circumstances described in the Rights Agreement. Copies of the Rights Agreement
are on file at the above-mentioned office of the Rights Agent and are also
available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate is exercised in part, the holder shall
be entitled to receive upon surrender of this Rights Certificate another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right payable in cash, common stock, or other consideration
at any time before the earlier of the Close of Business on (i) the tenth day
following the Stock Acquisition Date (as such period may be extended pursuant to
the Rights Agreement), and (ii) the Final Expiration Date.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced by this Rights Certificate (other than
fractions that are integral multiples of one one-hundredth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof, the Company will make a cash payment
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 shares of
Preferred Stock or of any other securities of the Company that may at any time
be issuable on the exercise of this Rights Certificate, nor shall anything
contained in the Rights Agreement or in this Rights Certificate be construed to
confer upon the holder hereof, as such, any of the rights of a
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<PAGE> 50
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights represented by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
IN WITNESS WHEREOF the facsimile signature of the proper officers of
the Company.
Dated as of ______________, ____
[SEAL]
ATTEST: PINNACLE HOLDINGS INC.
_________________________ By:_________________________________
Secretary
Title:______________________________
Countersigned:
_________________________,
as Rights Agent
By:_______________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
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<PAGE> 51
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 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);
(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:
NOTICE
______
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<PAGE> 52
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.
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<PAGE> 53
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: PINNACLE HOLDINGS INC.
The undersigned hereby irrevocably elects to exercise ___________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock (or Common Stock or such other securities of the Company or any
other Person) issuable upon the exercise of the Rights and requests that
certificates for such shares be issued in the name of and delivered to:
Please insert social security or other identifying number ______________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights represented by
this Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Form of Reverse Side of Rights Certificate - continued
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<PAGE> 54
Please insert social security or other identifying number ______________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ____________________ , ____
___________________________
Signature
Signature Guaranteed:
Certificate
___________
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights represented by this Rights Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: _________________, ____ ___________________________
Signature
Signature Guaranteed:
NOTICE
______
The signature to the foregoing Election to Purchase 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.
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<PAGE> 55
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On December 22, 2000, the Board of Directors of Pinnacle Holdings, Inc.
(the "Company") declared a dividend distribution of one preferred stock purchase
right (a "Right") for every outstanding share of common stock, par value $.001
per share (the "Common Stock"), of the Company to stockholders of record at the
close of business on January 12, 2001. The description and terms of the Rights
are set forth in a Rights Agreement (the "Rights Agreement") between the Company
and First Union National Bank, a national banking institution, as Rights Agent.
1. Common Stock Certificates Representing Rights
Until the Distribution Date (as defined in Section 2 below), (a) the
Rights shall not be exercisable, (b) the Rights shall be attached to and trade
only together with the Common Stock, and (c) the stock certificates representing
the Common Stock shall also represent the Rights attached to such Common Stock.
Common Stock certificates issued after the Record Date and before the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.
After the Distribution Date, the Rights shall separate from the Common
Stock, Rights certificates shall be issued, and the Rights shall become
exercisable to purchase preferred stock as described in Section 5 below.
2. Distribution Date
The "Distribution Date" is the earliest of (i) the tenth day following
the date of the first public announcement that any person (other than the
Company or certain related entities, and with certain additional exceptions) has
become the beneficial owner of 15% or more of the then outstanding Common Stock
other than as the result of a Qualifying Offer (as defined in (b) below) (such
person is an "Acquiring Person" and the date of such public announcement is the
"Stock Acquisition Date") or (ii) the close of business on the tenth business
day (or such later day as shall be designated by the Board of Directors)
following the date of the commencement of, or the announcement of an intention
to make, a tender offer or exchange offer, the consummation of which would cause
any person (other than the Company and certain related entities and with certain
additional exceptions) to become an Acquiring Person. In calculating the
percentage of shares of outstanding Common Stock that are beneficially owned by
any person, such person shall be deemed to beneficially own any shares of Common
Stock issuable upon the exercise, exchange, or conversion of any options,
warrants, or other securities beneficially owned by certain affiliates and
associates of such person. Notwithstanding the foregoing, if any person shall
become the beneficial owner of at least 15% of the outstanding Common Stock by
reason of purchases of Common Stock by the Company, then such person shall not
be deemed an "Acquiring Person" until such person thereafter acquires beneficial
ownership of, in the aggregate, a number of additional shares of Common Stock
equal to 1% or more of the then outstanding Common Stock.
3. Issuance of Rights Certificates
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of shares of Common Stock as of the close of business on the Distribution Date,
and such separate Rights certificates alone shall represent such Rights from and
after the Distribution Date.
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<PAGE> 56
4. Expiration of Rights
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on January 12, 2011 unless earlier redeemed by
the Company as described below.
5. Exercise of Rights
Unless the Rights have expired or been redeemed or exchanged, they may
be exercised, at the option of the holders, pursuant to paragraphs (a), (b), or
(c) below. No Right may be exercised more than once or pursuant to more than one
of such paragraphs. From and after the first event of the type described in
paragraphs (b) or (c) below, each Right that is beneficially owned by an
Acquiring Person or an affiliate or associate thereof shall be void.
(a) Right to Purchase Preferred Shares. From and after the close
of business on the Distribution Date, each Right (other than a Right that has
become void) shall be exercisable to purchase one one-hundredth of a share of
Series C Preferred Stock, par value $.001 per share, of the Company (the
"Preferred Shares"), at an exercise price of $60.00 (the "Purchase Price"). The
Preferred Shares are nonredeemable and, unless otherwise provided in connection
with the creation of a subsequent series of preferred stock, are subordinate to
any other series of the Company's preferred stock whether issued before or after
the issuance of the Preferred Shares. The Preferred Shares may not be issued
except upon exercise of Rights. The holder of a Preferred Share is entitled to
receive when, as, and if declared, the greater of (i) cash and non-cash
dividends in an amount equal to 100 times the dividends declared on each share
of Common Stock or (ii) a preferential annual dividend of $100.00 per Preferred
Share ($1.00 per one one-hundredth of a Preferred Share). In the event of
liquidation, the holder of Preferred Shares shall be entitled to receive a
liquidation payment in an amount equal to the greater of (1) $6,000.00 per
Preferred Share $60.00 per one one-hundredth of a Preferred Share), plus all
accrued and unpaid dividends and distributions on the Preferred Shares or (2) an
amount equal to 100 times the aggregate amount to be distributed per share of
Common Stock. Each Preferred Share has 100 votes, voting together with the
shares of Common Stock. In the event of any merger, consolidation, or other
transaction in which shares of Common Stock are exchanged, the holder of a
Preferred Share shall be entitled to receive 100 times the amount received per
share of Common Stock. The rights of the Preferred Shares as to dividends,
voting, and liquidation preferences are protected by antidilution provisions. It
is anticipated that the value of one one-hundredth of a Preferred Share should
approximate the value of one share of Common Stock.
(b) Right to Purchase Shares of Common Stock of the Company. If
any person, alone or together with its affiliates or associates, shall become an
Acquiring Person (subject to certain exceptions), each Right (other than a Right
that has become void) shall be exercisable to purchase, at the Purchase Price
(initially $60.00), shares of Common Stock with a market value equal to two
times the Purchase Price. The Company may at its option or, if the Company does
not have sufficient shares of Common Stock available for all Rights to be
exercised, the Company shall substitute for all or any portion of the shares of
Common Stock that would otherwise be issuable upon the exercise of the Rights,
cash, assets, or other securities having the same aggregate value as such shares
of Common Stock.
(c) Right to Purchase Common Stock of a Successor Corporation. If,
after a person has become an Acquiring Person, (i) the Company is acquired in a
merger or other business combination in which the Company is not the surviving
corporation, (ii) the Company is the surviving corporation in a merger or other
business combination in which all or part of the outstanding shares of Common
Stock are changed into or exchanged for stock or assets of another person, or
(iii) 50% or more of the Company's consolidated assets or earning power are
sold, then each Right (other than a Right that has become void) shall thereafter
be exercisable to purchase, at the Purchase Price (initially $60.00), shares of
Common Stock or cash of the surviving corporation or purchaser, respectively,
with an aggregate market value equal to two times the Purchase Price.
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<PAGE> 57
6. Adjustments to Prevent Dilution
The Purchase Price payable, and the number of Preferred Shares or
shares of Common Stock issuable upon exercise of the Rights are subject to
adjustment from time to time as set forth in the Rights Agreement to prevent
dilution. With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one percent of the
Purchase Price.
7. Cash Paid Instead of Issuing Fractional Securities
No fractional securities shall be issued upon exercise of a Right
(other than fractions of Preferred Shares that are integral multiples of one
one-hundredth of a Preferred Share, which fractions may, at the election of the
Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment
in cash shall be made based on the market price of such securities on the last
trading date before the date of exercise.
8. Exchange
At any time after any Person becomes an Acquiring Person and before the
acquisition by such Person of 50% or more of the outstanding shares of Common
Stock, the Board of Directors of the Company may exchange the Rights (other than
Rights owned by such person or group that will have become void), in whole or in
part, at an exchange ratio of one share of Common Stock per Right (subject to
adjustment).
9. No Stockholder Rights Before Exercise
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 if the Rights become exercisable for
Common Stock (or other consideration) of the Company or for common stock of an
acquiring company as set forth above.
10. Amendment of Rights Agreement
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company before the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board to cure any ambiguity, to make changes that 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;
however, no amendment to adjust the time period governing redemption shall be
made at such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-K dated
December 22, 2000. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
55
