<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES
EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT")
Wit Capital Group, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3900397
- ---------------------------------------- ------------------------------------
(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
826 Broadway, Sixth Floor
New York, New York 10003
- ---------------------------------------- ------------------------------------
(Address of Principal Executive Offices) (Zip Code)
If this form relates to the registration of a If this form relates to the
class of securities pursuant to Section registration of a class of
12(b) of the Exchange Act and is effective securities pursuant to Section
pursuant to General Instruction A.(c), 12(g) of the Exchange Act and
please check the following box.[_] is effective pursuant to
General Instruction A.(d),
please check the following box.
[X]
Securities Act registration statement file number to which this form relates:
333-74619
- ---------------
(If applicable)
Securities to be registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
None
- -------------------------------------- ----------------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class)
Associated Rights to Purchase Preferred Stock
- --------------------------------------------------------------------------------
(Title of Class)
<PAGE>
INFORMATION IN REGISTRATION STATEMENT
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
A description of the common stock, par value $0.01 per share (the
"Common Stock"), and the associated rights to purchase preferred stock (the
"Rights" and together with the Common Stock, the "Securities") of Wit Capital
Group, Inc. (the "Registrant") will be contained in a prospectus, constituting
part of the Registrant's Registration Statement on Form S-1 (File No. 333-74619)
(the "Registration Statement") relating to the Securities, to be filed pursuant
to Rule 424(b) under the Securities Act of 1933, as amended (such prospectus as
filed pursuant to Rule 424(b), the "Prospectus"). The description of the
Securities contained in the Prospectus is hereby incorporated by reference into
this Form 8-A. Copies of such description will be filed with the NASDAQ
National Market System.
ITEM 2. EXHIBITS
Exhibit No. Description
----------- -----------
(1) Form of Amended and Restated Certificate of Incorporation of
the Registrant (incorporated herein by reference to Exhibit
3.2 of the Registration Statement).
(2) Form of Amended and Restated By-Laws of the Registrant.
(3) Form of Rights Agreement between Wit Capital Group, Inc.
and American Stock Transfer & Trust Company, as Rights
Agent.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, as amended, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereto duly authorized.
WIT CAPITAL GROUP, INC.
July 1, 1999 By: /s/ Ronald Readmond
------------------------------------
Name: Ronald Readmond
Title: Co-Chief Executive Officer
3
<PAGE>
EXHIBIT 2
BY-LAWS
OF
WIT CAPITAL GROUP, INC.
_______________________
ARTICLE I
---------
Stockholders
------------
SECTION 1. Annual Meeting. The annual meeting of the stockholders of
--------------
the Corporation shall be held on such date, at such time and at such place
within or without the State of Delaware as may be designated by the Board of
Directors, for the purpose of electing directors and for the transaction of such
other business as may be properly brought before the meeting.
SECTION 2. Special Meetings. Except as otherwise provided in the
----------------
Certificate of Incorporation, a special meeting of the stockholders of the
Corporation may be called at any time by the Chief Executive Officer or the
Board of Directors pursuant to a resolution adopted by the affirmative vote of a
majority of the entire Board. Any special meeting of the stockholders shall be
held on such date, at such time and at such place within or without the State of
Delaware as the Board of Directors or the officer calling the meeting may
designate. At a special meeting of the stockholders, no business shall be
transacted and no corporate action shall be taken other than that stated in the
notice of the meeting or brought before the meeting by or at the direction of
the Board of Directors.
<PAGE>
SECTION 3. Notice of Stockholder Business and Nominations.
----------------------------------------------
Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders by or at the direction of the
Board of Directors or by any stockholder of the Corporation who was a
stockholder of record on the record date established for the giving of notice of
such meeting, who is entitled to vote at the meeting and who complies with the
notice procedures set forth in these By-Laws.
In the event the Corporation calls a special meeting of stockholders for
the purpose of electing directors, nominations of persons for election to the
Board of Directors may be made by or at the direction of the Board of Directors
or by any stockholder of the Corporation who was a stockholder of record at the
record date for the giving of notice of such meeting, who was a stockholder of
record on the record date established for the giving of notice of such meeting,
who is entitled to vote at the meeting and who complies with the notice
procedures set forth in these By-Laws.
A notice to be given by a stockholder shall set forth: (a) as to each
person whom the stockholder proposes to nominate for election as a director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934 and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of such business, the reasons
for conducting such business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (c) as to the stockholder giving the notice and the
beneficial owner, if any, on
-2-
<PAGE>
whose behalf the nomination or proposal is made, (i) the name and address of
such stockholder, as they appear on the Corporation's books, and of such
beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner.
For nominations or other business to be properly brought before an annual
meeting of stockholders by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation and such other
business must otherwise be a proper matter for stockholder action. To be
timely, a stockholder's notice shall be given to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
ninetieth (90th) day nor earlier than the close of business on the one hundred
twentieth (120th) day prior to first anniversary of the date of the annual
meeting for the preceding year (or, in the case of the annual meeting of
stockholders to be held in 2000, not fewer than ninety (90) nor more than one
hundred twenty (120) days prior to May 1, 2000). In the event that the date of
an annual meeting is more than thirty (30) days before or more than sixty (60)
days after the date of the annual meeting in the preceding year, notice by a
stockholder to be timely shall be given not earlier than the close of business
on the one hundred twentieth (120th) day prior to such annual meeting and not
later than the close of business on the later of the ninetieth (90th) day prior
to such annual meeting or the tenth (10th) day following the day on which public
announcement or disclosure of the date of such meeting is first made by the
Corporation. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of notice by a
stockholder as described in these By-Laws.
-3-
<PAGE>
Notwithstanding any provision of this Section 3 to the contrary, in the
event that the number of directors to be elected to the Board of Directors of
the Corporation at an annual meeting of stockholders is increased by virtue of
an increase in the size of the Board of Directors and either all of the nominees
for director at such annual meeting of stockholders or the size of the increased
Board of Directors is not publicly announced or disclosed by the Corporation at
least one hundred (100) days prior to the first anniversary of the annual
meeting in the preceding year (or, in the case of the annual meeting of
stockholders to be held in 2000, at least one hundred (100) days prior to May 1,
2000), a notice given by a stockholder, containing the information set forth
above, shall also be considered timely hereunder, but only with respect to
nominees to stand for election at the annual meeting as the result of any new
positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the Corporation not later than the close of
business on the tenth (10th) day following the first day on which all such
nominees or the size of the increased Board of Directors shall have been
publicly announced or disclosed.
For nominations by a stockholder to be properly brought before a special
meeting of stockholders called for the purpose of electing directors, the
stockholder must have given a timely notice in writing, containing the
information set forth above, to the Secretary of the Corporation. To be timely,
a stockholder's notice shall be given to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
ninetieth (90th) day nor earlier than the close of business on the one hundred
twentieth (120th) day prior to such special meeting, or the tenth (10th) day
following the day on which the public announcement or disclosure is first made
of the date of the special meeting. In no event shall the public
-4-
<PAGE>
announcement or disclosure of an adjournment of a special meeting commence a new
time period for the giving of notice by a stockholder as described in these By-
Laws.
Only such persons who are nominated in accordance with the procedures set
forth in these By-Laws shall be eligible to serve as directors and only such
business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with these By-Laws. Except as
otherwise provided by law, the Certificate of Incorporation or these By-Laws,
the Chairman of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth herein
and, if any proposed nomination or business is not in compliance with procedures
set forth herein, to declare that such defective proposal or nomination shall be
disregarded.
Nothing herein shall be deemed to limit or restrict the procedures
required to be followed in connection with stockholder proposals to be brought
before a meeting of stockholders pursuant to Regulation 14A under the Securities
Exchange Act of 1934 and Rule 14a-8 thereunder.
SECTION 4. Notice of Meetings. Except as otherwise provided in these
------------------
By-Laws or by law, a written notice of each meeting shall be given not fewer
than ten (10) days nor more than sixty (60) days before the date of the meeting
to each stockholder of record entitled to vote at such meeting. The notice shall
state the place, date and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is called. If mailed,
such notice shall be deemed to be given when deposited in the United States
mail, postage prepaid, directed to a stockholder at his or her address as it
appears on the records of the Corporation.
-5-
<PAGE>
SECTION 5. Quorum. At any meeting of the stockholders, the holders of a
------
majority in number of the total outstanding shares of stock of the Corporation
entitled to vote at such meeting, present in person or represented by proxy,
shall constitute a quorum of the stockholders for all purposes, unless the
representation of a larger number of shares shall be required by law, by the
Certificate of Incorporation or by these By-Laws, in which case the
representation of the number of shares so required shall constitute a quorum;
provided that at any meeting of the stockholders at which the holders of any
class of stock of the Corporation shall be entitled to vote separately as a
class, the holders of a majority in number of the outstanding shares of such
class, present in person or represented by proxy, shall constitute a quorum for
purposes of such class vote unless the representation of a larger number of
shares of such class shall be required by law, by the Certificate of
Incorporation or by these By-Laws.
SECTION 6. Adjourned Meetings. Whether or not a quorum shall be present
------------------
in person or represented at any meeting of the stockholders, the holders of a
majority in number of the shares of stock of the Corporation present in person
or represented by proxy and entitled to vote at such meeting may adjourn from
time to time; provided, however, that if the holders of any class of stock of
the Corporation are entitled to vote separately as a class upon any matter at
such meeting, any adjournment of the meeting in respect of action by such class
upon such matter shall be determined by the holders of a majority of the shares
of such class present in person or represented by proxy and entitled to vote at
such meeting. When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the stockholders, or the holders of any class of stock entitled to vote
separately as a class, as the case may be, may transact any business which might
have been
-6-
<PAGE>
transacted by them at the original meeting. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting.
SECTION 7. Organization. The Chief Executive Officer or, in the absence
------------
of the Chief Executive Officer, the Chairman of the Board or, in the absence of
the Chairman of the Board, the Chief Operating Officer shall call all meetings
of the stockholders to order, and shall act as a Chairman of such meetings. In
the absence of the Chairman of the Board and the Chief Operating Officer, the
holders of a majority in number of the shares of stock of the Corporation
present in person or represented by proxy and entitled to vote at such meeting
shall elect a Chairman.
The Secretary of the Corporation or, in the absence of the Secretary, the
Assistant Secretary of the Corporation shall act as Secretary of all meetings of
the stockholders, but in the absence of the Secretary and the Assistant
Secretary, the Chairman may appoint any person to act as Secretary of the
meeting. It shall be the duty of the Secretary to prepare and make, at least
ten (10) days before every meeting of stockholders, a complete list of
stockholders entitled to vote at such meeting, arranged in alphabetical order
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open during ordinary
business hours, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting or, if not so
specified, at the place where the meeting is to be held, for the ten (10) days
next preceding the meeting, to the examination of any stockholder for any
purpose germane to the meeting, and shall be produced and kept at the time
-7-
<PAGE>
and place of the meeting during the whole time thereof and subject to the
inspection of any stockholder who may be present.
SECTION 8. Voting and Election of Directors. Except as otherwise
--------------------------------
provided in the Certificate of Incorporation or by law, each stockholder shall
be entitled to one vote for each share of the capital stock of the Corporation
entitled to vote registered in the name of such stockholder upon the books of
the Corporation. Each stockholder entitled to vote at a meeting of stockholders
may authorize another person or persons to act for him or her by proxy executed
in writing by the stockholder or by such person's duly authorized attorney-in-
fact, but no such proxy shall be voted or acted upon after three (3) years from
its date, unless the proxy provides for a longer period.
Except as otherwise provided by law or by the Certificate of
Incorporation and subject to the rights of the holders of any class of capital
stock to elect directors, directors shall be elected by a plurality of the votes
cast at a meeting of stockholders by the stockholders entitled to vote in the
election and, whenever any corporate action, other than the election of
directors is to be taken, it shall be authorized by a majority of the votes cast
at a meeting of stockholders by the stockholders entitled to vote generally for
the election of directors.
Shares of the capital stock of the Corporation belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be counted
for quorum purposes.
SECTION 9. Inspectors of Elections; Opening and Closing the Polls. When
------------------------------------------------------
required by law or directed by the presiding officer or upon the demand of any
stockholder entitled to vote, but not otherwise, the polls shall be opened and
closed, the proxies shall be received and
-8-
<PAGE>
taken in charge, and all questions touching the qualification of voters, the
validity of proxies and the acceptance or rejection of votes shall be decided at
any meeting of the stockholders by one or more inspectors who may be appointed
by the Board of Directors before the meeting, or if not so appointed, shall be
appointed by the presiding officer at the meeting. If any person so appointed
fails to appear or act, the vacancy may be filled by appointment in like manner.
The Chairman of the meeting may fix and announce at the meeting the date and
time of the opening and the closing of the polls for each matter upon which the
stockholders will vote at a meeting.
SECTION 10. No Stockholder Action by Written Consent. Any action
----------------------------------------
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of the stockholders, upon
due notice and in accordance with the other provisions of these By-Laws and may
not be effected by any consent in writing by the stockholders.
SECTION 11. Record Date. In order that the Corporation may determine
-----------
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, as the case may be, the Board of Directors may fix, in advance, a
record date, which shall not be more than sixty (60) days nor fewer than ten
(10) days before the date of such meeting, or more than sixty (60) days prior to
any other action.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held; and the record date for determining
-9-
<PAGE>
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
ARTICLE II
----------
Board of Directors
------------------
SECTION 1. Number and Term of Office. The business and affairs of the
-------------------------
Corporation shall be managed under the direction of the Board of Directors, none
of whom need be stockholders of the Corporation. Except as otherwise provided
by the Certificate of Incorporation, the number of the directors of the
Corporation shall be fixed from time to time exclusively pursuant to a
resolution adopted by a majority of the Board of Directors. The Board of
Directors shall be classified, with respect to the time for which the directors
severally hold office, into three classes as nearly equal in number as possible,
with the term of those directors of the first class to expire at the next annual
meeting of stockholders, the term of those directors of the second class to
expire at the next succeeding annual meeting of stockholders, and the term of
those directors of the third class to expire at the second succeeding annual
meeting of stockholders, with each director to hold office until his successor
is elected and qualified. At each succeeding annual meeting of stockholders,
directors elected to succeed those directors whose terms then expire shall be
elected for a term of office to expire at the third succeeding
-10-
<PAGE>
annual meeting of stockholders after their election, with each director to hold
office until his successor is elected and qualified or until his earlier death,
resignation or removal.
SECTION 2. Removal, Vacancies and Additional Directors. The
-------------------------------------------
stockholders may, at any special meeting the notice of which shall state that it
is called for that purpose, remove for cause any director and fill the vacancy;
provided that whenever any director shall have been elected by the holders of
any class of stock of the Corporation voting separately as a class under the
provisions of the Certificate of Incorporation, such director may be removed,
with or without cause, and the vacancy filled only by the holders of that class
of stock voting separately as a class. Vacancies caused by any such removal and
not filled by the stockholders at the meeting at which such removal shall have
been made, or any vacancy caused by the death or resignation of any director or
for any other reason, and any newly created directorship resulting from any
increase in the authorized number of directors, may be filled by the affirmative
vote of a majority of the directors then in office, although less than a quorum,
and not by the stockholders. Any director so elected to fill any such vacancy
or newly created directorship shall hold office until his successor is elected
and qualified or until his earlier resignation or removal. No decrease in the
number of directors constituting the Board shall shorten the term of any
incumbent director.
Except as may otherwise be provided by law, cause for removal of a
director shall be deemed to exist only if: (i) the director whose removal is
proposed has been convicted, or the director is granted immunity to testify in a
case where another person has been convicted, of a felony by a court of
competent jurisdiction and such conviction is no longer subject to direct appeal
(for this purpose, the entry by a director of a plea of nolo contendere shall be
deemed to be a conviction not subject to appeal); (ii) such director has been
found by the affirmative vote of a majority of the entire Board of Directors at
any regular or special meeting of the Board of
-11-
<PAGE>
Directors called for that purpose or by a court of competent jurisdiction to
have been grossly negligent or guilty of misconduct in the performance of his
duties to the Corporation in a matter of substantial importance to the
Corporation; or (iii) such director has been adjudicated by a court of competent
jurisdiction to be mentally incompetent, which mental incompetency directly
affects his ability to function as a director of the Corporation.
SECTION 3. Place of Meetings. The Board of Directors may hold its
-----------------
meetings in such place or places in the State of Delaware or outside the State
of Delaware as the Board from time to time shall determine.
SECTION 4. Regular Meetings. Regular meetings of the Board of Directors
----------------
shall be held at such times and places as the Board from time to time by
resolution shall determine. No notice shall be required for any regular meeting
of the Board of Directors; but a copy of every resolution fixing or changing the
time or place of regular meetings shall be mailed to every director at least
five (5) days before the first meeting held in pursuance thereof.
SECTION 5. Special Meetings. Special meetings of the Board of Directors
----------------
shall be held whenever called by direction of the Chief Executive Officer, the
Chairman of the Board, the Chief Operating Officer, the President of the
Corporation or by any two of the directors then in office. The person or
persons authorized to call special meetings of the Board of Directors may fix
the place and time of the meetings.
Notice of the day, hour and place of holding of each special meeting
shall be given by mailing the same at least two (2) days before the meeting or
by causing the same to be given by facsimile, electronic communication,
telegraph or telephone at least one day before the meeting to each director.
Unless otherwise indicated in the notice thereof, any and all business other
than an amendment of these By-Laws may be transacted at any special meeting, and
an amendment of
-12-
<PAGE>
these By-Laws may be acted upon if the notice of the meeting shall have stated
that the amendment of these By-Laws is one of the purposes of the meeting. At
any meeting at which every director shall be present, even though without any
notice, any business may be transacted, including the amendment of these By-
Laws.
SECTION 6. Quorum. Subject to the provisions of Section 1 of this
------
Article II, a majority of the members of the Board of Directors in office (but,
unless the Board shall consist solely of one director, in no case less than one-
third of the entire Board nor fewer than two directors) shall constitute a
quorum for the transaction of business and the vote of the majority of the
directors present at any meeting of the Board of Directors at which a quorum is
present shall be the act of the Board of Directors. If at any meeting of the
Board there is less than a quorum present, a majority of those present may
adjourn the meeting from time to time.
SECTION 7. Organization. The Chairman of the Board or, in the absence
------------
or at the request of the Chairman of the Board, the Chief Executive Officer
shall preside at all meetings of the Board of Directors. In the absence of the
Chairman of the Board and the Chief Executive Officer, a Chairman shall be
elected from the directors present. The Secretary of the Corporation or, in the
absence of the Secretary of the Corporation, the Assistant Secretary of the
Corporation shall act as Secretary of all meetings of the Board of Directors;
but in the absence of the Secretary and the Assistant Secretary, the Chairman
may appoint any person to act as Secretary of the meeting.
SECTION 8. Committees and Executive Committee.
----------------------------------
(A) Committees.
----------
The Board of Directors may, by a majority of the total number of
directors, designate one or more committees, each committee to consist of one or
more of the directors of the
-13-
<PAGE>
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of a committee, the member or members present at any meeting of the
committee and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Unless otherwise restricted by the Certificate of Incorporation or by these By-
Laws, any such committee, to the extent provided in the resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers that may require it.
A majority of any committee may determine its action and fix the time and
place of its meetings, unless the Board shall otherwise provide. Notice of such
meetings shall be given to each member of the committee in the manner provided
for in this Article II of these By-Laws. The Board shall have power at any time
to fill vacancies in, to change the membership of, or to dissolve any such
committee. Nothing herein shall be deemed to prevent the Board from appointing
one or more committees consisting in whole or in part of persons who are not
directors of the Corporation; provided, however, that no such committee shall
have or may exercise any authority of the Board.
Each Committee shall keep regular minutes of its meetings and, on no less
than a quarterly basis, report such minutes to the Board of Directors.
-14-
<PAGE>
(B) Executive Committee.
-------------------
The Board of Directors may, by resolution passed by a majority of the
Board of Directors, designate an Executive Committee consisting of the Chief
Executive Officer (or Chief Executive Officers if there are more than one) and
such number of other directors, not fewer than one, as the Board may appoint.
Vacancies occurring on the Executive Committee for any reason may be filled by
the Board of Directors at any time. Any member of the Executive Committee shall
be subject to removal, with or without cause, at any time by the Board of
Directors or by a majority in voting interest of the stockholders.
The Executive Committee, subject to any limitation prescribed by the
Board of Directors, shall possess and may exercise, during the intervals between
meetings of the Board of Directors, all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers that
require it; provided, however, that the Executive Committee shall not have such
power or authority in reference to amending the Certificate of Incorporation of
the Corporation, adopting an agreement of merger or consolidation, recommending
to the stockholders the sale, lease or exchange of all or substantially all of
the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, filling
vacancies on the Board of Directors, changing the membership or filling
vacancies on the Executive Committee or amending these By-Laws. The Executive
Committee shall not have the power and authority to declare dividends, to
authorize the issuance of stock of the Corporation or to adopt a certificate of
merger unless such power and authority shall be expressly delegated to it by a
resolution passed by the Board of Directors.
-15-
<PAGE>
A majority of the Executive Committee shall constitute a quorum, and the
vote of a majority of those members of the Executive Committee present at any
meeting thereof at which a quorum is present shall be necessary for the passage
of any resolution or act of the Executive Committee. The Board of Directors may
designate a chairman for the Executive Committee, who shall preside at meetings
thereof, and a vice-chairman, who shall preside at such meetings in the absence
of the chairman.
SECTION 9. Compensation of Directors. Directors, as such, except as may
-------------------------
be otherwise provided by the Board, shall not receive any stated salary for
their services but, by resolution of the Board of Directors, a specific sum
fixed by the Board plus expenses may be allowed for attendance at each regular
or special meeting of the Board or any committee thereof; provided, however,
that nothing herein contained shall be construed to preclude any director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 10. Conference Telephone Meetings. Unless otherwise restricted
-----------------------------
by the Certificate of Incorporation or by these By-Laws, the members of the
Board of Directors or any committee designated by the Board, may participate in
a meeting of the Board or such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
SECTION 11. Consent of Directors or Committee in Lieu of Meeting.
----------------------------------------------------
Unless otherwise restricted by the Certificate of Incorporation or by these By-
Laws, any action required or permitted to be taken at any meeting of the Board
of Directors, or of any committee thereof, may be taken without a meeting if all
members of the Board or committee, as the case may be,
-16-
<PAGE>
consent thereto in writing and the writing or writings are filed with the
minutes of proceedings of the Board or committee, as the case may be.
ARTICLE III
-----------
Officers
--------
SECTION 1. Officers. The Corporation shall have such officers including
--------
a Chairman of the Board, one or more Chief Executive Officers, a Chief Operating
Officer, a President, one or more Vice Presidents, a Secretary and a Treasurer
as shall be elected by the Board of Directors pursuant to this Article III. The
Chairman of the Board, if elected, shall be elected from among the directors.
The officers shall be elected by the Board of Directors at its first meeting
after each annual meeting of the stockholders. The failure to hold such
election shall not of itself terminate the term of office of any officer. All
officers shall hold office at the pleasure of the Board of Directors. Any
officer may resign at any time upon written notice to the Corporation. Officers
may, but need not, be directors. Any number of offices may be held by the same
person.
All officers, agents and employees shall be subject to removal, with
or without cause, at any time by the Board of Directors. The removal of an
officer without cause shall be without prejudice to his contract rights, if any.
The election or appointment of an officer shall not of itself create contract
rights. All agents and employees other than officers elected by the Board of
Directors shall also be subject to removal, with or without cause, at any time
by the officers appointing them.
-17-
<PAGE>
Any vacancy caused by the death, resignation or removal of any officer,
or otherwise, may be filled by the Board of Directors, and any officer so
elected shall hold office at the pleasure of the Board of Directors.
In addition to the powers and duties of the officers of the Corporation
as set forth in these By-Laws, the officers shall have such authority and shall
perform such duties as from time to time may be determined by the Board of
Directors.
SECTION 2. Chief Executive Officer. The Board of Directors shall
-----------------------
designate one of the officers of the Corporation to be the Chief Executive
Officer of the Corporation, or one or more of the officers of the Corporation,
each to be a Chief Executive Officer of the Corporation. Subject to the control
of the Board of Directors, the Chief Executive Officer shall have general charge
and control of all the business and affairs of the Corporation and shall have
all powers and shall perform all duties incident to the position of Chief
Executive Officer. The Chief Executive Officer shall make reports to the Board
of Directors and to the stockholders, and shall see that all orders and
resolutions of the Board of Directors and of any committee thereof are carried
into effect. The Chief Executive Officer shall preside at all meetings of the
stockholders and shall have such other powers and perform such other duties as
may from time to time be assigned by these By-Laws or by the Board of Directors.
Any reference to the Chief Executive Officer in these By-Laws shall be
deemed to mean, if there are Co-Chief Executive Officers, each Co-Chief
Executive Officer, each of whom may individually exercise the full power and
authority of the office of the Chief Executive Officer.
SECTION 3. Chief Operating Officer. The Board of Directors may
-----------------------
designate one of the officers of the Corporation to be the Chief Operating
Officer of the Corporation. Subject to
-18-
<PAGE>
the control of the Board of Directors and the Chief Executive Officer, the Chief
Operating Officer may have general charge and control of all the operations of
the Corporation and may have all powers and may perform all duties incident to
the position of Chief Operating Officer. The Chief Operating Officer may act in
a general executive capacity and assist the Chief Executive Officer in the
administration and operation of the Corporation's business and general
supervision of its policies and affairs. The Chief Operating Officer may have
such other powers and perform such other duties as may from time to time be
assigned by these By-Laws or by the Board of Directors or by the Chief Executive
Officer.
SECTION 4. Chief Financial Officer. The Board of Directors shall
-----------------------
designate one of the officers of the Corporation to be the Chief Financial
Officer of the Corporation. Subject to the control of the Board of Directors,
the Chief Executive Officer and the Chief Operating Officer, the Chief Financial
Officer shall (a) keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of accounts of the properties and
business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings
and shares; (b) deposit all money and other valuables in the name and to the
credit of the Corporation with such depositories as may be designated by the
Board of Directors; (c) disburse the funds of the Corporation as may be directed
by the Board of Directors, the Chief Executive Officer or the Chief Operating
Officer; and (d) render to the Chief Executive Officer, to the Chief Operating
Officer or to the Board of Directors, whenever requested, an account of all of
transactions by the Chief Financial Officer and of the financial condition and
results of operations of the Corporation. The Chief Financial Officer shall
have such other powers and perform such other duties as may from time to time be
assigned by these By-Laws, by the Board of Directors, by the Chief Executive
Officer or by the
-19-
<PAGE>
Chief Operating Officer. The books of account shall at all reasonable times
during business hours be open to inspection by any director.
SECTION 5. Chairman of the Board. The Chairman of the Board shall
---------------------
perform all duties incident to the office of Chairman of the Board. The
Chairman shall preside at all meetings of the Board of Directors and shall have
such other powers and perform such other duties as may from time to time be
assigned by these By-Laws or by the Board of Directors.
SECTION 6. President and Vice Presidents. The President and each Vice
-----------------------------
President shall have such powers which are incidental to their respective
positions and which are required by law and shall have such other powers and
perform such duties as may from time to time be assigned by these By-Laws, by
the Board of Directors, by the Chief Executive Officer or by the Chief Operating
Officer.
SECTION 7. Treasurer. The Treasurer shall have all powers and shall
---------
perform all duties incident to the position of Treasurer which may be required
by law and shall have such other powers and perform such other duties as may
from time to time be assigned by these By-Laws, by the Board of Directors, by
the Chief Executive Officer, by the Chief Operating Officer or by the Chief
Financial Officer.
SECTION 8. Secretary. The Secretary shall keep the minutes of all
---------
meetings of the Board of Directors and the minutes of all meetings of the
stockholders in books provided for that purpose. The Secretary shall attend to
the giving or serving of all notices of the Corporation; shall have custody of
the corporate seal of the Corporation and shall affix the same to such documents
and other papers as the Board of Directors or the Chief Executive Officer shall
authorize and direct; shall have charge of the stock certificate books, transfer
books and stock ledgers and such other books and papers as the Board of
Directors or the Chief Executive Officer
-20-
<PAGE>
shall direct, all of which shall at all reasonable times be open to the
examination of any director, upon application, at the office of the Corporation
during business hours; and whenever required by the Board of Directors or the
Chief Executive Officer shall render statements of such accounts. The Secretary
shall have all powers and shall perform all duties incident to the office of
Secretary and shall also have such other powers and shall perform such other
duties as may from time to time be assigned by these By-Laws or by the Board of
Directors, by the Chief Executive Officer or by the Chief Operating Officer.
SECTION 9. Additional Officers. The Board of Directors may from time to
-------------------
time elect such other officers (who may but need not be directors), including
one or more Vice Chairmen of the Board, a Controller, one or more Assistant
Controllers, one or more Assistant Secretaries and one or more Assistant
Treasurers, as the Board may deem advisable and such officers shall have such
authority and shall perform such duties as may from time to time be assigned by
the Board of Directors, the Chief Executive Officer, the Chief Operating Officer
or, in the case of a Controller, an Assistant Controller or an Assistant
Treasurer, by the Chief Financial Officer, or if appropriate, the Treasurer.
The Board of Directors may from time to time by resolution delegate to
any Assistant Treasurer or Assistant Treasurers any of the powers or duties
herein assigned to the Treasurer, and may similarly delegate to any Assistant
Secretary or Assistant Secretaries any of the powers or duties herein assigned
to the Secretary.
SECTION 10. Voting Upon Stocks. Unless otherwise ordered by the Board
------------------
of Directors, the Chairman of the Board, the Chief Executive Officer, the Chief
Operating Officer, the President, any Vice President, the Chief Financial
Officer, the Treasurer or the Secretary shall have full power and authority on
behalf of the Corporation to attend and to act and to vote, or in
-21-
<PAGE>
the name of the Corporation to execute proxies to vote, at any meeting of
stockholders of any corporation in which the Corporation may hold stock, and at
any such meeting shall possess and may exercise, in person or by proxy, any and
all rights, powers and privileges incident to the ownership of such stock. The
Board of Directors may from time to time, by resolution, confer like powers upon
any other person or persons.
SECTION 11. Compensation of Officers. The officers of the Corporation
------------------------
shall be entitled to receive such compensation for their services as shall from
time to time be determined by the Board of Directors or by persons appointed by
the Board of Directors.
ARTICLE IV
----------
Indemnification of Directors and Officers
-----------------------------------------
SECTION 1. Nature of Indemnity. The Corporation shall indemnify any
-------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was or has agreed to become a director or officer of the Corporation, or
is or was serving or has agreed to serve at the request of the Corporation as a
director or officer of another corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise, or
by reason of any action alleged to have been taken or omitted in such capacity,
and may indemnify any person who was or is a party or is threatened to be made a
party to such an action, suit or proceeding by reason of the fact that he or she
is or was or has agreed to become an employee or agent of the Corporation, or is
or was serving or has agreed to serve at the request of the Corporation as an
employee or agent of another corporation,
-22-
<PAGE>
limited liability company, partnership, joint venture, trust, employee benefit
plan or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person or on his or her behalf in connection with such action, suit or
proceeding and any appeal therefrom, if the person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful;
except that in the case of an action or suit by or in the right of the
Corporation to procure a judgment in its favor (1) such indemnification shall be
limited to expenses (including attorneys' fees) actually and reasonably incurred
by such person in the defense or settlement of such action or suit, and (2) no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
SECTION 2. Successful Defense. To the extent that a director, officer,
------------------
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action,
-23-
<PAGE>
suit or proceeding referred to in Section 1 of this Article IV or in defense of
any claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith.
SECTION 3. Determination that Indemnification is Proper. Any
--------------------------------------------
indemnification of a director or officer of the Corporation under Section 1 of
this Article IV (unless ordered by a court) shall be made by the Corporation
unless a determination is made that indemnification of the director or officer
is not proper in the circumstances because he or she has not met the applicable
standard of conduct set forth in Section 1. Any indemnification of an employee
or agent of the Corporation under Section 1 (unless ordered by a court) may be
made by the Corporation upon a determination that indemnification of the
employee or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Section 1. Any such determination
shall be made (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) if there
are no such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (3) by the stockholders.
SECTION 4. Advance Payment of Expenses. Unless the Board of Directors
---------------------------
otherwise determines in a specific case, expenses incurred by a director or
officer in defending a civil or criminal action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the Corporation as authorized in this
Article IV. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the Board of Directors deems
appropriate. The Board of Directors
-24-
<PAGE>
may authorize the Corporation's legal counsel to represent such director,
officer, employee or agent in any action, suit or proceeding, whether or not the
Corporation is a party to such action, suit or proceeding.
SECTION 5. Survival; Preservation of Other Rights. The foregoing
--------------------------------------
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the General Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing with
respect to any state of facts then or previously existing or any action, suit,
or proceeding previously or thereafter brought or threatened based in whole or
in part upon any such state of facts. Such a contract right may not be modified
retroactively without the consent of such director, officer, employee or agent.
The indemnification provided by this Article IV shall not be deemed
exclusive of any other rights to which a person indemnified may be entitled
under the Certificate of Incorporation, any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. The Corporation may enter into an
agreement with any of its directors, officers, employees or agents providing for
indemnification and advancement of expenses, including attorneys fees, that may
change, enhance, qualify or limit any right to indemnification or advancement of
expenses created by this Article IV.
-25-
<PAGE>
SECTION 6. Severability. If this Article IV or any portion hereof shall
------------
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgment, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article IV that shall not have been invalidated and to the
fullest extent permitted by the Certificate of Incorporation or applicable law.
SECTION 7. Subrogation. In the event of payment of indemnification to a
-----------
person described in Section 1 of this Article IV, the Corporation shall be
subrogated to the extent of such payment to any right of recovery such person
may have and such person, as a condition of receiving indemnification from the
Corporation, shall execute all documents and do all things that the Corporation
may deem necessary or desirable to perfect such right of recovery, including the
execution of such documents necessary to enable the Corporation effectively to
enforce any such recovery.
SECTION 8. No Duplication of Payments. The Corporation shall not be
--------------------------
liable under this Article IV or the Certificate of Incorporation to make any
payment in connection with any claim made against a person described in Section
1 of this Article IV to the extent such person has otherwise received payment
(under any insurance policy, By-Law or otherwise) of the amounts otherwise
payable as indemnity hereunder.
-26-
<PAGE>
ARTICLE V
---------
Stock-Seal-Fiscal Year
----------------------
SECTION 1. Certificates For Shares of Stock. The certificates for
--------------------------------
shares of stock of the Corporation shall be in such form, not inconsistent with
the Certificate of Incorporation, as shall be approved by the Board of
Directors. All certificates shall be signed by the Chairman of the Board, the
Chief Executive Officer, the Chief Operating Officer, the President or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and shall not be valid unless so signed. Any and all the
signatures on a certificate may be facsimile.
In case any officer or officers who shall have signed or whose facsimile
signature has been placed upon any such certificate or certificates shall cease
to be such officer or officers of the Corporation, whether because of death,
resignation or otherwise, before such certificate or certificates shall have
been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates had not ceased to be such officer or officers
of the Corporation.
All certificates for shares of stock shall be consecutively numbered as
the same are issued. The name of the person owning the shares represented
thereby with the number of such shares and the date of issue thereof shall be
entered on the books of the Corporation.
Except as hereinafter provided, all certificates surrendered to the
Corporation for transfer shall be canceled, and no new certificates shall be
issued until former certificates for the same number of shares have been
surrendered and canceled.
-27-
<PAGE>
SECTION 2. Lost, Stolen or Destroyed Certificates. Whenever a person
--------------------------------------
owning a certificate for shares of stock of the Corporation alleges that it has
been lost, stolen or destroyed, he or she shall file in the office of the
Corporation an affidavit setting forth, to the best of his or her knowledge and
belief, the time, place and circumstances of the loss, theft or destruction,
and, if required by the Board of Directors, a bond of indemnity or other
indemnification sufficient in the opinion of the Board of Directors to indemnify
the Corporation and its agents against any claim that may be made against it or
them on account of the alleged loss, theft or destruction of any such
certificate or the issuance of a new certificate in replacement therefor.
Thereupon the Corporation may cause to be issued to such person a new
certificate in replacement for the certificate alleged to have been lost, stolen
or destroyed. Upon the stub of every new certificate so issued shall be noted
the fact of such issue and the number, date and the name of the registered owner
of the lost, stolen or destroyed certificate in lieu of which the new
certificate is issued.
SECTION 3. Transfer of Shares. Shares of stock of the Corporation shall
------------------
be transferred on the books of the Corporation by the holder thereof, in person
or by his attorney duly authorized in writing, upon surrender and cancellation
of certificates for the number of shares of stock to be transferred, except as
provided in Section 2 of this Article V.
SECTION 4. Regulations. The Board of Directors shall have power and
-----------
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates for shares of stock of the
Corporation.
SECTION 5. Dividends. Subject to the provisions of the Certificate of
---------
Incorporation, the Board of Directors shall have power to declare and pay
dividends upon shares of stock of the Corporation, but only out of funds
available for the payment of dividends as provided by law.
-28-
<PAGE>
Subject to the provisions of the Certificate of Incorporation, any
dividends declared upon the stock of the Corporation shall be payable on such
date or dates as the Board of Directors shall determine. If the date fixed for
the payment of any dividend shall in any year fall upon a legal holiday, then
the dividend payable on such date shall be paid on the next day not a legal
holiday.
SECTION 6. Corporate Seal. The Board of Directors shall provide a
--------------
suitable seal, containing the name of the Corporation, which seal shall be kept
in the custody of the Secretary. A duplicate of the seal may be kept and be used
by any officer of the Corporation designated by the Board of Directors.
SECTION 7. Fiscal Year. The fiscal year of the Corporation shall be
-----------
such fiscal year as the Board of Directors from time to time by resolution shall
determine.
ARTICLE VI
----------
Miscellaneous Provisions
------------------------
SECTION 1. Checks, Notes, Etc. All checks, drafts, bills of exchange,
------------------
acceptances, notes or other obligations or orders for the payment of money shall
be signed and, if so required by the Board of Directors, countersigned by such
officers of the Corporation and/or other persons as the Board of Directors from
time to time shall designate.
Checks, drafts, bills of exchange, acceptances, notes, obligations and
orders for the payment of money made payable to the Corporation may be endorsed
for deposit to the credit of the Corporation with a duly authorized depository
by the Chief Financial Officer, the Treasurer and/or such other officers or
persons as the Board of Directors from time to time may designate.
-29-
<PAGE>
SECTION 2. Loans. No loans and no renewals of any loans shall be
-----
contracted on behalf of the Corporation except as authorized by the Board of
Directors. When authorized so to do, any officer or agent of the Corporation
may effect loans and advances for the Corporation from any bank, trust company
or other institution or from any firm, corporation or individual, and for such
loans and advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation. When authorized so to do,
any officer or agent of the Corporation may pledge, hypothecate or transfer, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, any and all stocks, securities and other
personal property at any time held by the Corporation, and to that end may
endorse, assign and deliver the same. Such authority may be general or confined
to specific instances.
SECTION 3. Contracts. Except as otherwise provided in these By-Laws or
---------
by law or as otherwise directed by the Board of Directors, the Chairman of the
Board, the Chief Executive Officer, the Chief Operating Officer, the President,
the Chief Financial Officer or any Vice President shall be authorized to execute
and deliver, in the name and on behalf of the Corporation, all agreements,
bonds, contracts, deeds, mortgages, and other instruments, either for the
Corporation's own account or in a fiduciary or other capacity, and the seal of
the Corporation, if appropriate, shall be affixed thereto by any of such
officers or the Secretary or an Assistant Secretary. The Board of Directors,
the Chief Executive Officer, the Chief Operating Officer, the President, the
Chief Financial Officer or any Vice President designated by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer, the Chief
Operating Officer, the President or the Chief Financial Officer, may authorize
any other officer, employee or agent to execute and deliver, in the name and on
behalf of the Corporation, agreements, bonds, contracts, deeds, mortgages, and
other instruments, either for the Corporation's own account or
-30-
<PAGE>
in a fiduciary or other capacity, and, if appropriate, to affix the seal of the
Corporation thereto. The grant of such authority by the Board or any such
officer may be general or confined to specific instances.
SECTION 4. Waivers of Notice. Whenever any notice whatever is required
-----------------
to be given by law, by the Certificate of Incorporation or by these By-Laws to
any person or persons, a waiver thereof in writing, signed by the person or
persons entitled to the notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
SECTION 5. Offices Outside of Delaware. Except as otherwise required by
---------------------------
the laws of the State of Delaware, the Corporation may have an office or offices
and keep its books, documents and papers outside of the State of Delaware at
such place or places as from time to time may be determined by the Board of
Directors or the Chief Executive Officer.
ARTICLE VII
-----------
Amendments
----------
These By-Laws and any amendment thereof may be altered, amended or
repealed, or new By-Laws may be adopted, by the Board of Directors at any
regular or special meeting by the affirmative vote of a majority of all of the
members of the Board, provided in the case of any special meeting at which all
of the members of the Board are not present, that the notice of such meeting
shall have stated that the amendment of these By-Laws was one of the purposes of
the meeting; but these By-Laws and any amendment thereof, may be altered,
amended or repealed or new By-Laws may be adopted by the holders of two-thirds
of the voting power of all outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors at
-31-
<PAGE>
any annual meeting or at any special meeting, provided, in the case of any
special meeting, that notice of such proposed alteration, amendment, repeal or
adoption is included in the notice of the meeting.
-32-
<PAGE>
================================================================================
WIT CAPITAL GROUP, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF__________, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Certain Definitions............................................................................. 1
Section 2. Appointment of Rights Agent.................................................................... 9
Section 3. Issue of Rights Certificates................................................................... 9
Section 4. Form of Rights Certificates.................................................................... 11
Section 5. Countersignature and Registration.............................................................. 12
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates................................................................................... 12
Section 7. Exercise of Rights; Purchase Price............................................................. 13
Section 8. Cancellation and Destruction of Rights Certificates............................................ 15
Section 9. Reservation and Availability of Capital Stock.................................................. 15
Section 10. Preferred Stock Record Date.................................................................... 17
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights............................................................................... 18
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..................................... 27
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.................................................................................. 27
Section 14. Fractional Rights and Fractional Shares........................................................ 30
Section 15. Rights of Action............................................................................... 31
Section 16. Agreement of Rights Holders.................................................................... 31
Section 17. Rights Certificate Holder Not Deemed a Stockholder............................................. 32
Section 18. Concerning the Rights Agent.................................................................... 33
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 19. Merger or Consolidation or Change of Name of Rights Agent...................................... 33
Section 20. Duties of Rights Agent......................................................................... 34
Section 21. Change of Rights Agent......................................................................... 36
Section 22. Issuance of New Rights Certificates............................................................ 37
Section 23. Redemption and Termination..................................................................... 37
Section 24. Exchange....................................................................................... 38
Section 25. Notice of Certain Events....................................................................... 40
Section 26. Notices........................................................................................ 41
Section 27. Supplements and Amendments..................................................................... 41
Section 28. Successors..................................................................................... 42
Section 29. Determinations and Actions by the Board of Directors, Etc...................................... 42
Section 30. Benefits of This Agreement..................................................................... 42
Section 31. Severability................................................................................... 42
Section 32. Governing Law.................................................................................. 43
Section 33. Counterparts................................................................................... 43
Section 34. Descriptive Headings........................................................................... 43
</TABLE>
Exhibit A-1 - Form of Certificate of Designations of Class 1 Series A Junior
Participating Preferred Stock
Exhibit A-2 - Form of Certificate of Designations of Class 2 Series A Junior
Participating Preferred Stock
Exhibit B-1 - Form of Voting Class Rights Certificate
Exhibit B-2 - Form of Class B Common Rights Certificate
Exhibit C - Summary of Rights to Purchase Preferred Stock
-ii-
<PAGE>
RIGHTS AGREEMENT
This Rights Agreement, dated as of ________, 1999 (the"Agreement"),
between Wit Capital Group, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company (the"Rights Agent"),
WITNESSETH:
WHEREAS, on May 17, 1999 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized (i) the issuance of one voting
class right for each share of Voting Common Stock ("Voting Class Right")
outstanding upon the closing of the Company's Initial Public Offering; (ii) the
issuance of one Voting Class Right for each share of Class C Common Stock of the
Company outstanding at the close of business on May 18, 1999 (the "Record
Date"); and (iii) the issuance of one nonvoting class right for each share of
Class B Common Stock ("Class B Common Right") of the Company outstanding at the
Record Date, and has authorized the issuance of one Voting Class Right (as such
numbers may hereinafter be adjusted pursuant to the provisions of Section 11(p)
hereof) for each share of Voting Common Stock and Class C Common Stock and one
Class B Common Right for each share of Class B Common Stock, respectively,
issued (whether originally issued or delivered from the Company's treasury)
between the Record Date and the earlier of the Distribution Date (as hereinafter
defined) and the Expiration Date (as hereinafter defined), and, in certain
circumstances provided for in Section 22 hereof, after the Distribution Date,
each Voting Class Right initially representing the right to purchase one
Fractional Share (as hereinafter defined) of Class 1 Series A Junior
Participating Preferred Stock of the Company, and each Class B Right initially
representing the right to purchase one Fractional Share of Class 2 Series A
Junior Participating Preferred Stock of the Company, upon the terms and subject
to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
-------------------
the following terms shall have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding, provided, however,
-------- -------
that a Person shall not be or become an Acquiring Person if such Person,
together with its Affiliates and Associates, shall become the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding solely as a result
of a reduction in the number of shares of Common Stock outstanding due to the
repurchase of Common Stock by the Company, unless and until such time as such
Person or any Affiliate or Associate of such Person shall purchase or otherwise
become the Beneficial Owner
<PAGE>
of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or any other Person (or Persons) who is (or
collectively are) the Beneficial Owner of shares of Common Stock constituting 1%
or more of the then outstanding shares of Common Stock shall become an Affiliate
or Associate of such Person, unless, in either such case, such Person, together
with all Affiliates and Associates of such Person, is not then the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding; and
provided, further, that if the Board of Directors, with the concurrence of a
- -------- -------
majority of the members of the Board of Directors who are not, and are not
representatives, nominees, Affiliates or Associates of, such Person or an
Acquiring Person, determines in good faith that a Person that would otherwise be
an "Acquiring Person" has become such inadvertently (including, without
limitation, because (i) such Person was unaware that it beneficially owned a
percentage of Common Stock that would otherwise cause such Person to be an
"Acquiring Person" or (ii) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the consequences of
such Beneficial Ownership under this Agreement) and without any intention of
changing or influencing control of the Company, and if such Person as promptly
as practicable divested or divests itself of Beneficial Ownership of a
sufficient number of shares of Common Stock, so that such Person would no longer
be an "Acquiring Person," then such Person shall not be deemed to be or to have
become an "Acquiring Person" for any purposes of this Agreement.
Notwithstanding anything in this definition of "Acquiring Person" to
the contrary; (i) no Exempt Person shall be deemed to be or become an "Acquiring
Person" or an Affiliate or Associate of an Acquiring Person; (ii) so long as the
Existing Stockholder, together with its Affiliates and Associates thereof, does
not become the Beneficial Owner of 25% or more of the Fully-Diluted Common
Shares, the Existing Stockholder, together with its Affiliates and Associates,
shall not be or become an Acquiring Person; and (iii) so long as a GS Holder,
together with all Affiliates or Associates, does not become the Beneficial Owner
of 25% or more of the Fully-Diluted Common Shares, a GS Holder, together with
its Affiliates and Associates, shall not be or become an Acquiring Person.
At any time that the Rights are redeemable, the Board of Directors
may, generally or with respect to any specified Person or Persons, determine to
increase to a specified percentage greater than that set forth herein or
decrease to a specified percentage lower than that set forth herein or determine
a number of shares to be (but in no event less than or equal to the percentage
or number of shares of Common Stock then beneficially owned by such Person), the
level of Beneficial Ownership of Common Stock at which a Person or such Person
or Persons becomes an Acquiring Person.
Notwithstanding anything in this Agreement to the contrary, no Person
shall be or become an Acquiring Person until after the consummation of the
Company's Initial Public Offering of the Common Stock.
"Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
-2-
<PAGE>
"Affiliate" shall mean a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the Person specified.
"Associate" shall mean, with reference to any Person, (i) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than the Company or a Subsidiary of the Company) of which
such Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10% or
more of any class of equity securities, (ii) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity and (iii) any relative or
spouse of such Person, or any relative of such spouse, who has the same home as
such Person.
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, is the "beneficial owner" of (as
determined pursuant to Rule 13d-3 under the Exchange Act as in effect on
the date of this Agreement) or otherwise has the right to vote or dispose
of, including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not be
-------- -------
deemed the "Beneficial Owner" of, or to "beneficially own," any security
under this subparagraph (i) 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 or consent given in
response to a public (i.e., not including a solicitation exempted by Rule
---
14a-2(b)(2) under the Exchange Act as in effect on the date of this
Agreement) proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions rules under the Exchange Act and
(B) is not then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report);
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to acquire
(whether such right or obligation is exercisable or effective immediately
or only after the passage of time or the occurrence of an event) pursuant
to any agreement, arrangement or understanding (whether or not in writing)
or upon the exercise of conversion rights, exchange rights, other rights,
warrants or options, or otherwise; provided, however, that a Person shall
-------- -------
not be deemed the "Beneficial Owner" of, or to "beneficially own," (A)
securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B) securities issuable
upon exercise of Rights at any time prior to the occurrence of a Triggering
Event or (C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person
or any of such Person's Affiliates or Associates prior to the Distribution
Date or pursuant to
-3-
<PAGE>
Section 3(a) or Section 22 hereof (the "Original Rights") or pursuant to
Section 11(i) or (p) hereof in connection with an adjustment made with
respect to any Original Rights; or
(iii) that are beneficially owned, directly or indirectly, by (A)
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 to a revocable proxy or consent
as described in the proviso to subparagraph (i) of this definition) or
disposing of any voting securities of the Company or (B) any group (as that
term is used in Rule 13d-5(b) under the Exchange Act) of which such Person
is a member;
provided, however, that nothing in this definition 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 (including,
without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Regulation M promulgated under
the Exchange Act or to cover overallotments created in connection with a public
offering) until the expiration of forty days after the date of such acquisition.
For purposes of this Agreement, "voting" a security shall include voting,
granting a proxy, acting by consent, making a request or demand relating to
corporate action (including, without limitation, calling a stockholder meeting)
or otherwise giving an authorization (within the meaning of Section 14(a) of the
Exchange Act as in effect on the date of this Agreement) in respect of such
security.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Class B Common Right" shall have the meaning set forth in the
Recitals.
"Class B Common Stock" shall mean the Class B Common Stock, par value
$.01 per share, of the Company.
"Class C Common Stock" shall mean the Class C Common Stock, par value
$.01 per share, of the Company.
"close of business" on any given date shall mean 5:00 p.m., New York
time, on such date; provided, however, that if such date is not a Business Day,
-------- -------
it shall mean 5:00 p.m., New York time, on the next succeeding Business Day.
"Closing Price" of a security for any day shall mean the last sales
price, regular way, on such day or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
in either case as reported in the principal transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
-4-
<PAGE>
Exchange, or, if such security is not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which such
security is listed or admitted to trading, or, if such security is not listed or
admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by NASDAQ or such other
self-regulatory organization or registered securities information processor or
alternative trading system (as such terms are used under the Exchange Act) that
then reports information concerning such security, or, if sales price
information is not so reported, the average of the high bid and low asked prices
in the over-the-counter market on such day, as reported by NASDAQ or such other
entity, or, if on such day such security is not quoted by any such entity, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such security selected by the Board of Directors
of the Company. If on such day no market maker is making a market in such
security, the fair value of such security on such day as determined in good
faith by the Board of Directors of the Company shall be used.
"Common Shares" shall mean the shares of Voting Common Stock, Class C
Common Stock and Class B Common Stock of the Company.
"Common Share Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Common Stock" shall mean the Voting Common Stock and the Class C
Common Stock, collectively, except that "common stock" when used with reference
to equity interests issued by any Person other than the Company shall mean 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.
"Company" shall mean the Person named as the "Company" in the Preamble
of this Agreement until a successor Person shall have become such or until a
Principal Party shall assume, and thereafter be liable for, all obligations and
duties of the Company hereunder, pursuant to the applicable provisions of this
Agreement, and thereafter "Company" shall mean such successor Person or
Principal Party.
"Current Market Price" shall have the meaning set forth in Section
11(d) hereof.
"Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof.
"Distribution Date" shall mean the earlier of (i) the close of
business on the tenth day (or, if such Stock Acquisition Date results from the
consummation of a Permitted Offer, such later date as may be determined by the
Company's Board of Directors as set forth below before the Distribution Date
occurs) 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 as set forth
below before the Distribution Date occurs) after the
-5-
<PAGE>
date that a tender offer or exchange offer by any Person (other than any Exempt
Person) is first published or sent or given within the meaning of Rule 14d-2(a)
under the Exchange Act as then in effect, if upon consummation thereof, such
Person would be an Acquiring Person, other than a tender or exchange offer that
is determined before the Distribution Date occurs to be a Permitted Offer. The
Board of Directors of the Company may, to the extent set forth in the preceding
sentence, defer the date set forth in clause (i) or (ii) of the preceding
sentence to a specified later date or to an unspecified later date to be
determined by a subsequent action or event (but in no event to a date later than
the close of business on the tenth day after the first occurrence of a
Triggering Event).
"Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Ratio" shall have the meaning set forth in Section 24
hereof.
"Exempt Person" shall mean the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company,
and any Person organized, appointed or established by the Company for or
pursuant to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or any
Subsidiary of the Company.
"Existing Stockholder" shall mean Capital Z Financial Services Fund
II, L.P. and any Affiliate or Associate thereof.
"Expiration Date" shall mean the earliest of (i) the Final Expiration
Date, (ii) the time at which the Rights are redeemed as provided in Section 23
hereof, (iii) the time at which the Rights expire pursuant to Section 13(d)
hereof and (iv) the time at which all Rights then outstanding and exercisable
are exchanged pursuant to Section 24 hereof.
"Final Expiration Date" shall mean the close of business on September
30, 2009.
"Flip-In Event" shall mean an event described in Section 11(a)(ii)
hereof.
"Flip-In Trigger Date" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Flip-Over Event" shall mean any event described in clause (x), (y) or
(z) of Section 13(a) hereof, that occurs from and after the time when an
Acquiring Person has become such, but excluding any transaction described in
Section 13(d) hereof that causes the Rights to expire.
-6-
<PAGE>
"Fractional Share" with respect to the Preferred Stock shall mean one
one-hundredth of a share of Preferred Stock.
"Fully-Diluted Common Shares" means, at any time of determination, all
then outstanding Common Shares plus (without duplication) all Common Shares
issuable, whether at such time or upon the passage of time or the occurrence of
future events, upon the conversion, exercise or exchange of all then outstanding
securities that are convertible into, exercisable for or exchangeable into,
directly or indirectly, Common Shares.
"GS Holder" shall mean The Goldman Sachs Group, L.P. and any Affiliate
or Associate thereof.
"Initial Public Offering" means the underwritten public offering of
the Company's Voting Common Stock pursuant to a registration statement under the
Securities Act where both (i) the proceeds of the Company (prior to deducting
any underwriters' discounts and commissions) equal or exceed twenty million
dollars ($20,000,000) and (ii) the initial price per share at which such Voting
Common Stock is sold to the public in such offering is at least $4.50 (subject
to equitable adjustment for stock splits, stock combinations, recapitalizations
and similar occurrences).
"NASDAQ" shall mean the trading system operated by the NASDAQ Stock
Market, Inc.
"Original Rights" shall have the meaning set forth in the definition
of "Beneficial Owner."
"Permitted Offer" shall mean a tender offer or an exchange offer for
all outstanding shares of Common Stock at a price and on terms determined by at
least a majority of the members of the Board of Directors, and concurred in by a
majority of those members who are not officers or employees of the Company and
who are not, and are not representatives, Affiliates or Associates of, an
Acquiring Person or the person making the offer, after receiving advice from one
or more investment banking firms, to be (a) at a price and on terms that are
fair to stockholders (taking into account all factors that such members of the
Board deem relevant including, without limitation, prices that could reasonably
be achieved if the Company or its assets were sold on an orderly basis designed
to realize maximum value) and (b) otherwise in the best interests of the Company
and its stockholders.
"Person" shall mean any individual, firm, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other entity.
"Preferred Stock" shall mean in the case of the Voting Class Rights,
the Class 1 Series A Junior Participating Preferred Stock, par value $.001 per
share, of the Company having the rights, powers and preferences set forth in the
form of Certificate of Designations attached
-7-
<PAGE>
hereto as Exhibit A-1 and, in the case of the Class B Common Rights, the Class 2
Series A Junior Participating Preferred Stock, par value $.001 per share, of the
Company having the rights, powers and preferences set forth in the form of
Certificate of Designations attached hereto as Exhibit A-2, and to the extent
that there is not a sufficient number of shares of Class 1 Series A Junior
Participating Preferred Stock or Class 2 Series A Junior Participating Preferred
Stock, as the case may be, authorized to permit the full exercise of the Rights,
any other series of Preferred Stock, par value $.001 per share, of the Company
designated for such purpose containing terms substantially similar to the terms
of the Class 1 Series A Junior Participating Preferred Stock or the Class 2
Series A Junior Participating Preferred Stock, as the case may be.
"Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
"Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
"Record Date" shall have the meaning set forth in the Recitals at the
beginning of this Agreement.
"Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
"Right" shall mean in the case of the Common Stock, a Voting Class
Right, and in the case of the Class B Common Stock, a Class B Common Right.
"Rights Agent" shall mean the Person named as the "Rights Agent" in
the Preamble of this Agreement until a successor Rights Agent shall have become
such pursuant to the applicable provisions hereof, and thereafter "Rights
Agent"shall mean such successor Rights Agent. If at any time there is more than
one Person appointed by the Company as Rights Agent pursuant to the applicable
provisions of this Agreement, "Rights Agent" shall mean and include each such
Person.
"Rights Certificates" shall mean the certificates evidencing the
Rights.
"Rights Dividend Declaration Date" shall have the meaning set forth in
the Recitals at the beginning of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
"Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition and Section 23, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
-8-
<PAGE>
"Subsidiary" shall mean, with reference to any Person, any corporation
or other Person of which an amount of voting securities sufficient to elect at
least a majority of the directors or other persons performing similar functions
is beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
"Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Summary of Rights" shall mean the Summary of Rights to Purchase
Preferred Stock sent pursuant to Section 3(b) hereof.
"Trading Day" with respect to a security shall mean a day on which the
principal national securities exchange on which such security is listed or
admitted to trading is open for the transaction of business, or, if such
security is not listed or admitted to trading on any national securities
exchange but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if
such security is not so quoted, a Business Day.
"Triggering Event" shall mean any Flip-In Event or any Flip-Over
Event.
"Voting Common Stock" shall mean the class of common stock, par value
$.01 per share, of the Company that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended.
"Voting Class Right" shall have the meaning set forth in the Recitals.
Section 2. Appointment of Rights Agent. The Company hereby appoints
---------------------------
the Rights Agent to act as agent for the Company and to take certain actions in
respect of the holders of the Rights in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Rights Certificates.
----------------------------
(1) Until the Distribution Date, (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Shares registered in the names of the holders of Common
Shares and not by separate certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of Common Shares
(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 Common Shares as of the close of business
on the Distribution Date (other than any Person referred to in the first
sentence of Section 7(e)), at the address of such holder shown on the records of
the Company, one or more Rights Certificates, evidencing one Right for each
Common Share so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per Common Share has been made
pursuant to Section 11(p)
-9-
<PAGE>
hereof, 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) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(2) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit C, by first-class, postage
prepaid mail, to each record holder of Common Shares as of the close of business
on the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for Common Shares outstanding as of the
Record Date, until the Distribution Date or the earlier surrender for transfer
thereof or the Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates for
Common Shares together with the Summary of Rights, and the registered holders of
the Common Shares 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 of the certificates for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificates.
(3) Rights shall be issued in respect of all Common Shares that are
issued (whether originally issued or delivered from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date or, in certain circumstances provided in Section 22 hereof,
after the Distribution Date. Certificates issued for Common Shares that shall so
become outstanding or shall be transferred or exchanged after the Record Date
but prior to the earlier of the Distribution Date or the Expiration Date shall
also be deemed to be certificates for Rights, and shall bear the following
legend (which legend may be modified as necessary on the certificates for the
Common Stock or Class B Common Stock, as the case may be, to reflect the
application of this Agreement to the Common Stock or the Class B Common Stock,
as the case may be):
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Wit Capital
Group, Inc. (the "Company") and American Stock Transfer & Trust Company
(the "Rights Agent") dated as of ________, 1999 as it may from time to time
be supplemented or amended (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at
the principal offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be redeemed, may be
exchanged, may expire or may be evidenced by separate certificates and will
no longer be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a written
request therefor. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO
IS, WAS OR
-10-
<PAGE>
BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), AND CERTAIN TRANSFEREES
THEREOF, WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights associated
with the Common Shares represented by such certificates shall be evidenced by
such certificates alone, and registered holders of Common Shares shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Shares represented by such certificates.
Section 4. Form of Rights Certificates.
---------------------------
(1) The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof), when, as and if issued,
shall be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or quotation system
on which the Rights may from time to time be listed or quoted, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever issued, shall be dated as of the Record Date and on their
face shall entitle the holders thereof to purchase such number of Fractional
Shares of Preferred Stock as shall be set forth therein at the price set forth
therein (such exercise price per Fractional Share (or, as set forth in this
Agreement, for other securities), the"Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(2) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by a Person described in the
first sentence of Section 7(e), and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any such Rights, shall contain (to the extent feasible) the
following legend, modified as applicable to apply to such Person:
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 will have become null and void in the circumstances and
with the effect specified in Section 7(e) of such Agreement.
-11-
<PAGE>
The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificate. The
Company shall give notice to the Rights Agent promptly after it becomes aware of
the existence of any Acquiring Person or any Associate or Affiliate thereof.
Section 5. Countersignature and Registration.
---------------------------------
(1) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its Chief
Operating Officer, its President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof, which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such 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 force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(2) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the 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 certificate number 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.
- ----------------------------------------------------------------------
(1) Subject to the provisions of Section 4(b), Section 7(e), Section
13(d), Section 14 and Section 24 hereof, at any time after the close of business
on the Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of Fractional Shares of Preferred Stock (or, following a Triggering Event,
Common Shares, other securities, cash or other assets, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Rights
-12-
<PAGE>
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Rights 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) thereof or of the Affiliates or Associates thereof as
the Company shall reasonably request. Thereupon the Rights Agent shall, subject
to Section 4(b), Section 7(e), Section 13(d), Section 14 and Section 24 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment by the holder 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.
(2) 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, subject to Section 4(b), Section 7(e), Section
13(d), Section 14 and Section 24, 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.
----------------------------------
(1) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly completed and 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 Fractional Shares of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the Expiration Date.
(2) The Purchase Price for each Fractional Share of Preferred Stock
pursuant to the exercise of a Right shall initially be $ __.00, and shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in accordance with paragraph (c) below.
-13-
<PAGE>
(3) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the reverse
side thereof duly executed, accompanied by payment, with respect to each Right
so exercised, of the Purchase Price per Fractional Share of Preferred Stock (or
other shares, securities, cash or other 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) hereof, 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 Fractional 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, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing interests in such number of
Fractional 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 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 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such 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) hereof) may be made in cash
or by certified check, cashier's or official bank check or bank draft payable to
the order of the Company or the Rights Agent. In the event that the Company is
obligated to issue other securities (including Common Shares) of the Company,
pay cash and/or distribute other property pursuant to Section 11(a) or Section
13(a) hereof, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock would be issued.
(4) In case the registered holder of any Rights Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(5) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Triggering Event, any Rights beneficially
owned by or transferred to (i) an Acquiring Person or an Associate or Affiliate
of an Acquiring Person other than any such Person that became such pursuant to a
Permitted Offer and the Board of Directors in good faith determines was not
involved in and did not cause or facilitate, directly or indirectly, such
Triggering Event, (ii) a direct or indirect transferee of such Rights from such
Acquiring Person
-14-
<PAGE>
(or any such Associate or Affiliate) who becomes a transferee after such
Triggering Event or (iii) a direct or indirect transferee of such Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with such Triggering Event and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from such Acquiring
Person (or such Affiliate or Associate) to holders of equity interests in such
Acquiring Person (or such Affiliate or Associate) or to any Person with whom
such Acquiring Person (or such Affiliate or Associate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer that the Board of Directors of the Company determines is part of a
plan, arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action, no holder of such Rights shall have any rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or otherwise, and
such Rights shall not be transferable. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(6) 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 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 canceled form,
or, if surrendered to the Rights Agent, shall be canceled 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
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(1) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued Common Shares and/or
-15-
<PAGE>
other securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities) that,
as provided in this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights.
(2) So long as any shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
issuable and deliverable upon the exercise of the Rights are listed on any
national securities exchange or quoted on any trading system, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange, or quoted on such system, upon official notice of issuance upon such
exercise. Following the occurrence of a Triggering Event, the Company will use
its best efforts to list (or continue the listing of) the Voting Class Rights
and the securities issuable and deliverable upon the exercise of the Voting
Class Rights on one or more national securities exchanges or to cause the Rights
and the securities purchasable upon exercise of the Voting Class Rights to be
reported by NASDAQ or such other transaction reporting system then in use.
(3) The Company shall use its best efforts to (i) prepare and file,
as soon as practicable following the first occurrence of a Flip-In Event or, if
applicable, as soon as practicable following the earliest date after the first
occurrence of a Flip-In Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined pursuant to this
Agreement (including in accordance with Section 11(a)(iii) hereof), a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Voting Class Rights,
(ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Voting Class
Rights are no longer exercisable for such securities and (B) the Expiration
Date. 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 Voting Class Rights. The Company
may temporarily suspend, for a period of time not to exceed 90 days after the
date set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Voting Class Rights in order to prepare and file such
registration statement and permit it to become effective. In addition, if the
Company shall determine that the Securities Act requires an effective
registration statement under the Securities Act following the Distribution Date,
the Company may temporarily suspend the exercisability of the Voting Class
Rights until such time as such a registration statement has been declared
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Voting Class Rights have
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 Voting Class Rights shall not be exercisable in
any jurisdiction if the requisite qualification in such jurisdiction shall not
have been obtained, the exercise thereof shall not be permitted under applicable
law or any required registration statement shall not have been declared
effective.
-16-
<PAGE>
(4) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Fractional Shares of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Shares and/or
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(5) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of Fractional Shares of Preferred Stock (or
Common Shares and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax 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 a number of Fractional
Shares of Preferred Stock (or Common Shares and/or other securities, as the case
may be) in respect of a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of Fractional Shares of Preferred Stock
(or Common Shares and/or other securities, as the case may be) in a name other
than that of the registered holder 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 satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name
---------------------------
any certificate for a number of Fractional Shares of Preferred Stock (or Common
Shares and/or other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such shares (fractional or otherwise) of Preferred Stock (or Common Shares
and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
-------- -------
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Shares and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Shares and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate, as such, shall not be entitled to any rights of
a stockholder of the Company with respect to shares for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
-17-
<PAGE>
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
-------------------------------------------------------
or Number of Rights. The Purchase Price, the number and kind of shares or other
- -------------------
securities subject to purchase upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event the Company shall at any time after the
Rights Dividend Declaration Date (A) declare a dividend on the outstanding
shares of Preferred Stock payable in shares of Class 1 Series A Junior
Participating Preferred Stock or Class 2 Series A Junior Participating
Preferred Stock, as the case may be, (B) subdivide the outstanding shares
of Preferred Stock, (C) combine the outstanding shares of Preferred Stock
into a smaller number of shares of Class 1 Series A Junior Participating
Preferred Stock or Class 2 Series A Junior Participating Preferred Stock,
as the case may be, or (D) otherwise reclassify the outstanding shares of
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of
Preferred Stock or Common Shares, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Voting
Class Right or Class B Common Right, as the case may be, exercised after
such time shall be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares of Preferred Stock
or Common Shares, as the case may be, which, if such Voting Class Right or
Class B Common Right, as the case may be, had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of
the Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs that would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) Subject to Sections 23 and 24 of this Agreement,
in the event any Person shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person, unless the event causing such
Person to become an Acquiring Person is (1) a Flip-Over Event or (2) an
acquisition of shares of Common Shares pursuant to a Permitted Offer
(provided that this clause (2) shall cease to apply if such Acquiring
--------
Person thereafter becomes the Beneficial Owner of any additional shares of
Common Shares other than pursuant to such Permitted Offer or a transaction
set forth in Section 13(a) or 13(d) hereof), then (x) the Purchase Price
shall be adjusted to be the Purchase Price immediately prior to the first
occurrence of a Flip-In Event multiplied by the number of Fractional Shares
of Preferred Stock for which a Right was exercisable immediately prior to
such first occurrence and (y) each holder of a Right (except as provided
below in Section 11(a)(iii) and in Section 7(e) hereof) shall thereafter
have the
-18-
<PAGE>
right to receive, upon exercise thereof at a price equal to the
Purchase Price in accordance with the terms of this Agreement, in lieu
of shares of Preferred Stock, such number of shares of Voting Common
Stock or Class B Common Stock, as the case may be, as shall equal the
result obtained by dividing the Purchase Price by 50% of the Current
Market Price per share of Voting Common Stock on the date of such
first occurrence (such number of shares, the "Adjustment Shares");
provided that the Purchase Price and the number of Adjustment Shares
--------
shall be further adjusted as provided in this Agreement to reflect any
events occurring after the date of such first occurrence.
(iii) In the event that the number of shares of Common Stock or
Class B Common Stock that are authorized by the Company's certificate
of incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Voting Class Rights or Class B
Common Rights, as the case may be, in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall, to the
extent permitted by applicable law and regulation, (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (computed using the Current Market Price used to
determine the number of Adjustment Shares) (the "Current Value") over
(2) the Purchase Price (such excess is herein referred to as the
"Spread"), and (B) with respect to each Right, make adequate provision
to substitute for the Adjustment Shares, upon the exercise of the
Rights and payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Voting Common Stock in the case of
holders of Voting Class Rights and Class B Common Stock in the case of
holders of Class B Common Rights or other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock (including, without limitation, the Preferred Stock)
that the Board of Directors of the Company has determined to have the
same value as shares of Voting Common Stock or Class B Common Stock, as
the case may be (such shares of preferred stock are herein referred to
as "Common Share 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 nationally recognized investment banking firm selected
by the Board of Directors of the Company; provided, however, if 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 Flip-In Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the "Flip-In 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, shares of Voting Common Stock in the case of the
holders of Voting Class Rights and Class B Common Stock in the case of
holders of Class B Common Rights (to the extent available) and then, if
necessary, cash, which shares and/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
-19-
<PAGE>
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 Flip-In Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares
(such period, as it may be extended, the "Substitution Period"). To the
extent that the Company or the Board of Directors determines that some
action need be taken pursuant to the first and/or second sentences of
this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek
any authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock or, if applicable, the Class B Common Stock shall be the
Current Market Price per share of the Voting Common Stock or, if
applicable, the Current Market Price per share of the Class B Common
Stock, in each case on the Flip-In Trigger Date and the value of any
Common Share Equivalent shall be deemed to have the same value as the
Voting Common Stock or, if applicable, the Class B Common Stock on such
date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within 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 on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of 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 and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid by delivery of consideration, part or
all of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith by 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
-20-
<PAGE>
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price that would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend out of the earnings or 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
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Current Market
Price per share of Preferred Stock on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to a share of Preferred Stock and the denominator
of which shall be such Current Market Price per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price that would have been in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of Common Stock or Class B Common
Stock on any date shall be deemed to be the average of the daily
Closing Prices per share of such Voting Common Stock or Class B Common
Stock, as the case may be, for the 30 consecutive Trading Days
immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the "Current Market Price" per
share of Common Stock or Class B Common Stock on any date shall be
deemed to be the average of the daily Closing Prices per share of such
Voting Common Stock or Class B Common Stock, as the case may be, for
the 10 consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price per
-------- -------
share of Common Stock or Class B Common Stock is determined during a
period following the announcement of (A) a dividend or distribution on
such Common Stock or Class B Common Stock, as the case may be, other
than a regular quarterly cash dividend or the dividend of the Voting
Class Rights or Class B Common Rights, as the case may be, or (B) any
subdivision, combination or reclassification of such Common Stock or
Class B 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 prior to the commencement of
the requisite 30 Trading Day or 10 Trading Day period, as set forth
above, then, and in each
-21-
<PAGE>
such case, the Current Market Price shall be properly adjusted to take
into account ex-dividend trading. If the Voting Common Stock is not
publicly held or so listed or traded, "Current Market Price" per share
of the Common Stock shall mean the fair value per share of Voting
Common Stock 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.
If the Class B Common Stock is not listed or admitted to trading on a
national securities exchange or traded in the over-the-counter market,
the Current Market Price per share of the Class B Common Stock on any
date shall be the same as the Current Market Price per share of the
Common Stock on such date.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share (or Fractional Share) of Class 1
Series A Junior Participating Preferred Stock shall be determined in
the same manner as set forth for the Common Stock in this Section 11(d)
and the "Current Market Price" per share (or Fractional Share) of Class
2 Series A Junior Participating Preferred Stock shall be determined in
the same manner as set forth for the Class B Common Stock in this
Section 11(d). If the Current Market Price per share (or Fractional
Share) of Class 1 Series A Junior Participating Preferred Stock cannot
be determined in the manner provided above or if the Class 1 Series A
Junior Participating 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 Class 1 Series A Junior
Participating Preferred Stock or Class 2 Junior Participating Preferred
Stock, as the case may be, 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 or the Class B Common Stock, as the case
may be, occurring after the date of this Agreement) multiplied by the
Current Market Price per share of the Common Stock in the case of the
Class 1 Series A Junior Participating Preferred Stock or the Current
Market Price per share of the Class B Common Stock in the case of the
Class 2 Series A Junior Participating Preferred Stock. If neither the
Common Stock nor the Class 1 Series A Junior Participating Preferred
Stock is publicly held or so listed or traded, Current Market Price per
share of each of the Class 1 Series A Junior Participating Preferred
Stock and Class 2 Series A Junior Participating Preferred Stock shall
mean the fair value per share of Class 1 Series A Junior Participating
Preferred Stock and the fair value per share of Class 2 Series A Junior
Participating Preferred Stock, in each case 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. For all purposes of this Agreement, the
Current Market Price of a Fractional Share of Preferred Stock shall be
equal to the Current Market Price of one share of Preferred Stock
divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of
-22-
<PAGE>
at least 1% in the Purchase Price; provided, however, that 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 Class B Common Stock or other share or
to the nearest ten- thousandth of a Fractional Share of Class 1 Series A Junior
Participating Preferred Stock and Class 2 Series A Junior Participating
Preferred Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which
mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive in respect of such Right any shares of capital
stock other than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Stock
contained in Sections 11(a), (b), (c), (e), (f), (g), (h), (i), (j), (k) and (m)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Fractional Shares of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Fractional Shares of Class 1 Series A Junior Participating Preferred Stock or
Class 2 Series A Junior Participating Preferred Stock, as the case may be
(calculated to the nearest one ten-thousandth of a Fractional Share) obtained by
(i) multiplying (x) the number of Fractional Shares of Class 1 Series A Junior
Participating Preferred Stock or Class 2 Series A Junior Participating Preferred
Stock, as the case may be, covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect, on or after the date of any
adjustment of the Purchase Price, to adjust the number of Voting Class Rights or
Class B Common Rights as the case may be, in lieu of any adjustment in the
number of Fractional Shares of Class 1 Series A Junior Participating Preferred
Stock or Class 2 Series A Junior Participating Preferred Stock, as the case may
be, purchasable upon the exercise of Voting Class Rights or Class B Common
-23-
<PAGE>
Rights, as the case may be. Each of the Rights outstanding after the adjustment
in the number of Rights shall be exercisable for the number of Fractional Shares
of Class 1 Series A Junior Participating Preferred Stock or Class 2 Series A
Junior Participating Preferred Stock, as the case may be, for which a Voting
Class Right or Class B Common Right, as the case may be, was exercisable
immediately prior to such adjustment. Each Voting Class Right or Class B Common
Right held of record prior to such adjustment of the number of Voting Class
Rights or Class B Common Rights shall become that number of Voting Class Rights
or Class B Common Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Voting Class Rights or Class B Common 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 10 days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Voting Class Rights or Class B Common Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Voting Class Rights or Class B Common Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Voting Class Rights or Class B Common
Rights to which such holders shall be entitled after such adjustment. Rights
Certificates so to be 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 Fractional Shares of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per Fractional Share and the
number of Fractional Shares that were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, or the stated
capital of the number of Fractional Shares of Preferred Stock or of the number
of shares of Common Stock or Class B Common Stock, as the case may be, or other
securities issuable upon exercise of a Voting Class Right or Class B Common
Right, as the case may be, 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 such number of Fractional
Shares of Class 1 Series A Junior Participating Preferred Stock or Class 2
Series A Junior Participating Preferred Stock, as
-24-
<PAGE>
the case may be, or such number of shares of Common Stock or Class B Common
Stock, as the case may be, or other securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Voting Class Right or Class B Common
Right, as the case may be, exercised after such record date the number of
Fractional Shares of Class 1 Series A Junior Participating Preferred Stock or
Class 2 Series A Junior Participating Preferred Stock, as the case may be, and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Fractional Shares of Class 1 Series A
Junior Participating Preferred Stock or Class 2 Series A Junior Participating
Preferred Stock, as the case may be, and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
-------- -------
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Class 1 Series A Junior Participating
Preferred Stock or Class 2 Series A Junior Participating Preferred Stock, as the
case may be, (ii) issuance wholly for cash of any shares of Class 1 Series A
Junior Participating Preferred Stock or Class 2 Series A Junior Participating
Preferred Stock, as the case may be, at less than the current market price,
(iii) issuance wholly for cash of shares of Class 1 Series A Junior
Participating Preferred Stock or Class 2 Series A Junior Participating Preferred
Stock, as the case may be, or securities that by their terms are convertible
into or exchangeable for shares of Class 1 Series A Junior Participating
Preferred Stock or Class 2 Series A Junior Participating Preferred Stock, as the
case may be, (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 covenants and agrees that it shall not, at any
time that there is an Acquiring Person, (i) consolidate with any other Person,
(ii) merge with or into any other Person, or (iii) sell, lease or transfer (or
permit one or more Subsidiaries to sell, lease 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, if (x) at the time of or
immediately after such consolidation, merger, sale, lease or transfer there are
any rights, warrants or other instruments or securities of the Company or any
other Person outstanding or agreements, arrangements or understandings in effect
that would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights, (y) prior to, simultaneously with or immediately
after such consolidation,
-25-
<PAGE>
merger, sale, lease or transfer, the stockholders or other equity owners of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates or Associates, or (z) the
identity, form or nature of organization of the Principal Party (including
without limitation the selection of the Person that will be the Principal Party
as a result of the Company's entering into one or more consolidations, mergers,
sales, leases, transfers or transactions with more than one party) would
preclude or limit the exercise of Rights or otherwise diminish substantially or
eliminate the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if the
purpose of such action is to, or if at the time such action is taken it is
reasonably foreseeable that such action will, diminish substantially or
eliminate the benefits intended to be afforded by the Rights, other than Rights
that have become null and void pursuant to Section 7(e) hereof.
(p) Notwithstanding Section 3(c) hereof or any other provision
of this Agreement to the contrary, in the event that the Company shall at any
time after the Rights Dividend Declaration Date and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of Common Stock or Class B
Common Stock, as the case may be, payable in shares of Common Stock or Class B
Common Stock, as the case may be, (ii) subdivide the outstanding shares of
Common Stock or Class B Common Stock, as the case may be, (iii) combine the
outstanding shares of Common Stock or Class B Common Stock, as the case may be,
into a smaller number of shares or (iv) otherwise reclassify the outstanding
shares of Common Stock or Class B Common Stock, as the case may be, (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), the number of Voting
Class Rights associated with each share of Common Stock then outstanding or the
number of Class B Common Rights associated with each share of Class B Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Voting Class Rights thereafter associated with each share of Common Stock or the
number of Class B Common Rights associated with each share of Class B Common
Stock following any such event shall equal the result obtained by multiplying
the number of Voting Class Rights associated with each share of Common Stock, or
the number of Class B Common Rights associated with each share of Class B Common
Stock, as the case may be, immediately prior to such event by a fraction (the
"Adjustment Fraction") the numerator of which shall be the total number of
shares of Common Stock, in the case of an adjustment of Voting Class Rights, or
Class B Common Stock, in the case of an adjustment of Class B Common Rights,
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock, in the case of an
adjustment of Voting Class Rights, or Class B Common Stock, in the case of an
adjustment of Class B Common Rights, outstanding immediately following the
occurrence of such event. In lieu of such adjustment in the number of Voting
Class Rights associated with each share of Common Stock or of such adjustment in
the number of Class B
-26-
<PAGE>
Voting Rights associated with each share of Class B Common Stock, the Company
may elect to adjust the number of Fractional Shares of Class 1 Series A Junior
Preferred Stock or Class 2 Series A Junior Preferred Stock, as the case may be,
purchasable upon the exercise of one Right and the Purchase Price. If the
Company makes such election, the number of Voting Class Rights associated with
each share of Common Stock or the number of Class B Common Rights associated
with each share of Class B Common Stock shall, in either case, remain unchanged,
and the number of Fractional Shares of Preferred Stock purchasable upon exercise
of one Right and the Purchase Price shall be proportionately adjusted so that
(i) the number of Fractional Shares of Preferred Stock purchasable upon exercise
of a Right following such adjustment shall equal the product of the number of
Fractional Shares of Preferred Stock purchasable upon exercise of a Right
immediately prior to such adjustment multiplied by the Adjustment Fraction and
(ii) the Purchase Price following such adjustment shall equal the product of the
Purchase Price immediately prior to such adjustment multiplied by the Adjustment
Fraction.
Section 12. Certificate of Adjusted Purchase Price or Number of
---------------------------------------------------
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13
- ------
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Shares, a copy of such certificate and (c) mail a
brief summary thereof to each registered holder of a Rights Certificate (or, if
prior to the Distribution Date, to each registered holder of a certificate
representing shares of Common Stock) in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
- -------------
(1) In the event that, from and after the time an Acquiring Person has
become such, directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person, and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person 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 Common Shares shall be changed into or exchanged for stock or
other securities of the Company or any other Person or cash or any other
property, or (z) the Company shall sell, lease or otherwise transfer (or one or
more of its Subsidiaries shall sell, lease 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 wholly owned Subsidiary of the Company or any combination thereof in one
or more transactions each of which complies (and all of which together comply)
with Section 11(o) hereof), then, and in each such case (except as may be
contemplated by Section 13(d) hereof), proper provision shall be made so that:
(i) the Purchase Price shall be adjusted to be the Purchase Price immediately
prior
-27-
<PAGE>
to the first occurrence of a Triggering Event multiplied by the number of
Fractional Shares of Preferred Stock for which a Right was exercisable
immediately prior to such first occurrence; (ii) on and after the Distribution
Date, each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the Purchase
Price in accordance with the terms of this Agreement, in lieu of shares of
Preferred Stock or Common Shares of the Company, such number of validly
authorized and issued, fully paid, nonassessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by dividing the Purchase Price
by 50% of the Current Market Price per share of the Common Stock of such
Principal Party on the date of consummation of such Flip-Over Event; provided
that the Purchase Price and the number of shares of Common Stock of such
Principal Party issuable upon exercise of each Right shall be further adjusted
as provided in this Agreement to reflect any events occurring after the date of
such first occurrence of a Triggering Event or after the date of such Flip-Over
Event, as applicable; (iii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Flip-Over Event, all the obligations and
duties of the Company pursuant to this Agreement; (iv) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Flip-Over Event; (v) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (vi) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the occurrence of any Flip-Over Event.
(2) "Principal Party" shall mean
(1) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of
any securities into which Common Shares of the Company are converted in
such merger or consolidation, or, if there is more than one such issuer,
the issuer the Common Stock of which has the greatest aggregate market
value, or (B) if no securities are so issued, (x) the Person that survives
such consolidation or is the other party to the merger and survives such
merger, or, if there is more than one such Person, the Person the Common
Stock of which has the greatest aggregate market value or (y) if the Person
that is the other party to the merger does not survive the merger, the
Person that does survive the merger (including the Company if it survives);
and
(2) 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, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets or
earning power so transferred, or if the Person receiving the greatest
portion of the assets
-28-
<PAGE>
or earning power cannot be determined, the Person the Common Stock of which
has the greatest aggregate market value;
provided, however, that in any such case, if the Common Stock of such Person is
- -------- -------
not at such time and has not been continuously over the preceding twelve-month
period registered under Section 12 of the Exchange Act, and if (1) 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) such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stocks of all 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)
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(3) The Company shall not consummate any Flip-Over Event unless each
Principal Party (or Person that may become a Principal Party as a result of such
Flip-Over Event) 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
prior thereto the Company and each such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of such Flip-Over Event, the
Principal Party at its own expense will
(1) prepare and file a registration statement under the Securities
Act with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the
Expiration Date;
(2) 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;
(3) use its best efforts, if the Common Stock of the Principal Party
is or shall become listed on a national securities exchange, to list (or
continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Stock
of the Principal Party shall not be listed on a national securities
exchange, to cause the Rights and the securities purchasable upon exercise
of
-29-
<PAGE>
the Rights to be reported by NASDAQ or such other transaction reporting
system then in use; and
(4) 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.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Flip-Over Event
shall occur at any time after the occurrence of a Flip-In Event, the Rights that
have not theretofore been exercised shall thereafter become exercisable in the
manner described in Section 13(a).
(5) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons who acquired Common Shares pursuant to a Permitted Offer (or a
wholly owned subsidiary of any such Person or Persons), (ii) the price per share
of Common Shares offered in such transaction is not less than the price per
share of Common Shares paid to all holders of Common Shares whose shares were
purchased pursuant to such Permitted Offer, and (iii) the form of consideration
being offered to the remaining holders of Common Shares pursuant to such
transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated by this
Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(1) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates or scrip evidencing fractional Rights. In lieu of
such fractional Rights, there shall 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 Closing Price
of one Right for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(2) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than, except as provided in Section 7(c) hereof,
fractions that are integral multiples of a Fractional Share of Preferred Stock)
upon exercise of the Rights or to distribute certificates or scrip evidencing
fractional shares of Preferred Stock (other than, except as provided in Section
7(c) hereof, fractions that are integral multiples of a Fractional Share of
Preferred Stock). Interests in fractions of shares of Preferred Stock in
integral multiples of a Fractional Share of Preferred Stock may, at the election
of the Company in its sole discretion, 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
-30-
<PAGE>
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 a Fractional 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 one
one-hundredth of the Closing Price of one share of Class 1 Series A Junior
Participating Preferred Stock or Class 2 Series A Junior Participating Preferred
Stock, as applicable, for the Trading Day immediately prior to the date of such
exercise.
(3) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Shares upon exercise of
the Rights or to distribute certificates or scrip evidencing fractional shares
of Common Shares. In lieu of fractional shares of Common Shares, 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
Closing Price of one share of Common Stock or Class B Common Stock, as
applicable, for the Trading Day immediately prior to the date of such exercise.
(4) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
and, where applicable, the Company; and any registered holder of any Voting
Class Rights or Class B Common Rights, as the case may be, without the consent
of the Rights Agent or of the holders of any other Voting Class Rights or Class
B Common Rights, as the case may be, may, in such holder's own behalf and for
such holder's own benefit and the benefit of other holders of Voting Class
Rights or Class B Common Rights, as the case may be, 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 such holder's Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
After a Triggering Event, holders of Rights shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred by them in
any action to enforce the provisions of this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
---------------------------
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
-31-
<PAGE>
(1) prior to the Distribution Date, the Rights will not be evidenced
by Rights Certificates and will be transferable only in connection with the
transfer of Common Shares;
(2) after the Distribution Date, the Rights Certificates will be
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
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the form of assignment set forth on the reverse side thereof and the
certificate contained therein duly completed and fully executed;
(3) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Share certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(4) 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 its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
-------- -------
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
--------------------------------------------------
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of Fractional
Shares of Preferred Stock or any other securities of the Company that may at any
time be issuable upon the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
-32-
<PAGE>
(1) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other reasonable disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(2) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it, after proper inquiry or examination, to be
genuine and to be signed, executed and, where necessary, guaranteed, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
---------------------------------------------------
Agent.
- -----
(1) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided, however, that such corporation
-------- -------
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(2) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
-33-
<PAGE>
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(1) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(2) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "Current Market Price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the Chief Operating Officer,
the President, the Chief Financial Officer, any Vice President, the Treasurer,
any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(3) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct. In no event shall the Rights Agent
be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of action.
(4) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(5) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its counter signature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of
-34-
<PAGE>
the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after receipt
of actual knowledge of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or Common Shares or other
securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Preferred Stock or Common Stock or other securities
will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(6) 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.
(7) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the Chief Operating Officer,
the President, the Chief Financial 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.
(8) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(9) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
omission, default, neglect or misconduct; provided, however, that reasonable
care was exercised in the selection and continued employment thereof.
(10) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights 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.
(11) 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
-35-
<PAGE>
purchase, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Common Shares and the Preferred Stock, by registered or certified
mail, and to the registered holders, if any, of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent (with or without cause) upon 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares and the Preferred Stock, by registered or
certified mail, and to the registered holders of the Rights Certificates, if
any, 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. Notwithstanding the foregoing provisions of this
Section 21, in no event shall the resignation or removal of a Rights Agent be
effective until a successor Rights Agent shall have been appointed and have
accepted such appointment. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the registered holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of the State of New York (or of
any other state of the United States so long as such corporation is authorized
to conduct a stock transfer or corporate trust business in the State of New
York), in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100,000,000 or (b) an affiliate of a corporation described in clause (a) of
this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
-36-
<PAGE>
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 evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the 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 or Class B Common Stock, as
the case may be, following the Distribution Date and prior to the Expiration
Date, the Company (a) shall, with respect to shares of Common Stock or Class B
Common Stock, as the case may be, so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement granted or awarded on or
prior to the Distribution Date, or upon the exercise, conversion or exchange of
securities issued by the Company on or prior to the Distribution Date, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the appropriate
number of Voting Class Rights or Class B Common Rights, as the case may be, in
connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
--------------------------
(1) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the date of the first
public announcement of the occurrence of a Flip-In Event (or, if such date shall
have occurred prior to the Record Date, the close of business on the tenth day
following the Record Date) and (ii) the Expiration Date, cause the Company to
redeem all but not less than all the then outstanding Rights at a redemption
price of $.01 per Right, as such amount may be appropriately adjusted, if
necessary, to reflect any stock split, stock dividend or similar transaction
occurring after the Rights Dividend Declaration Date (such redemption price
being hereinafter referred to 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 Flip-In Event until such time as the
Company's right of redemption hereunder has expired. The Company may, at its
option, pay the Redemption Price in cash, shares of Voting Common Stock, in the
case of holders of Voting Class Rights, or shares of Class B Common Stock, in
the case of holders of Class B Common Rights (based on the Current Market Price
of the Voting Common Stock or the Class B Common Stock, as the case may be, at
the time of redemption), or any other form of consideration deemed appropriate
by the Board of Directors.
(2) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the redemption of the Rights (the
effectiveness of which action may be conditioned on the occurrence of one or
more events or on the existence of one or more facts or
-37-
<PAGE>
may be effective at some future time), evidence of which shall be filed with the
Rights Agent and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held.
Promptly after the effectiveness of 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 registered holders of the then
outstanding Rights by mailing such notice to all such holders at each holder's
last address as it appears upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the Company for the Common
Shares. Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made.
(3) In the event that prior to the Distribution Date, the Class B
Common Stock is converted, in whole or in part, into Common Stock or Class C
Common Stock, as the case may be, in accordance with the applicable provisions
of the Amended and Restated Certificate of Incorporation of the Company, the
Class B Common Rights attached to the shares of Class B Common Stock so
converted shall be converted to Voting Class Rights pursuant to a conversion
ratio equivalent to the conversion ratio used for converting the Class B Common
Stock to Common Stock. In the event that on or after the Distribution Date, all
outstanding shares of Class B Common Stock are converted into shares of Common
Stock or Class C Common Stock, as the case may be, in accordance with the
applicable provisions of the Amended and Restated Certificate of Incorporation
of the Company, all Class B Common Rights then outstanding shall be converted to
Voting Class Rights pursuant to a conversion ratio equivalent to the conversion
ratio used for converting the Class B Common Stock to Common Stock or Class C
Common Stock, as the case may be.
Section 24. Exchange.
--------
(1) The Board of Directors of the Company may, at its option, at any
time and from time to time after the occurrence of a Flip-In Event, exchange all
or part of the then outstanding and exercisable Voting Class Rights or Class B
Common Rights (which shall not, in either case, include Rights that have become
void pursuant to the provisions of Section 7(e) hereof) (i) for shares of Common
Stock or Common Share Equivalents (which Common Share Equivalents shall not
include any security convertible into, exercisable for or exchangeable for
shares of Class B Common Stock) or any combination thereof, in the case of an
exchange for Voting Class Rights, or (ii) for shares of Class B Common Stock or
Common Share Equivalents (which Common Share Equivalents shall not include
securities convertible into, exercisable for or exchangeable for shares of
Common Stock) or any combination thereof, in the case of an exchange for Class B
Common Rights, at an exchange ratio of one share of Common Stock or Class B
Common Stock, as the case may be, or such number of Common Share Equivalents or
units representing fractions thereof as would be deemed to have the same value
as one share of Common Stock, per Voting Class Right, or one share of Class B
Common Stock, per Class B Common Right, appropriately adjusted, if necessary, to
reflect any stock split, stock dividend or
-38-
<PAGE>
similar transaction occurring after the Rights Dividend Declaration Date (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
(2) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to and in
accordance with subsection (a) of this Section 24 (the effectiveness of which
action may be conditioned on the occurrence of one or more events or on the
existence of one or more facts or may be effective at some future time) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock and/or Common Share
Equivalents or Class B Common Stock, and/or Common Share Equivalents, as the
case may be, equal to the number of such Voting Class Rights or Class B Common
Rights, as the case may be, held by such holder multiplied by the applicable
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
-------- -------
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the registered holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of Common
Stock and/or Common Share Equivalents or Class B Common Stock, and/or Common
Share Equivalents, as the case may be, for Voting Class Rights or Class B Common
Rights, as the case may be, will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected as nearly pro rata as possible based on the number of Rights
(other than Rights that have become void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(3) In the event that the number of shares of Common Shares that
are authorized by the Company's certificate of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights is
not sufficient to permit an exchange of Rights as contemplated in accordance
with this Section 24, the Company may, at its option, take all such action as
may be necessary to authorize additional shares of Common Shares for issuance
upon exchange of the Rights.
(4) The Company shall not be required to issue fractions of
shares of Common Shares. In lieu of such fractional shares of Common Shares, the
Company shall, in the sole discretion of the Board of Directors, either (i) pay
to the registered holders of Rights with regard to which such fractional shares
of Common Shares would otherwise be issuable an amount in cash equal to the same
fraction of the value of a whole share of (x) Voting Common Stock for holders of
Voting Class Rights or (y) Class B Common Stock for holders of Class B Common
Rights or (ii) issue scrip or warrants in registered form (either represented by
a certificate or uncertificated) or in bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. For purposes of
this Section 24, the value of a whole share of Voting Common Stock and
-39-
<PAGE>
the value of a whole share of Class B Common Stock shall be the Closing Price
per share of Voting Common Stock for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24, and the value of any Common Share
Equivalent shall be deemed to have the same value as the Voting Common Stock on
such date.
Section 25. Notice of Certain Events.
------------------------
(1) In case the Company shall propose, at any time after the
Distribution Date, 7(i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a wholly owned Subsidiary of
the Company in a transaction that complies with Section 11(o) hereof), or to
effect any sale, lease or other transfer of all or substantially all the
Company's assets to any other Person or Persons (other than a wholly owned
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of
record of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, lease, transfer, liquidation, dissolution or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock, whichever
shall be the earlier. The failure to give notice required by this Section 25 or
any defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
(2) In case any Flip-In Event or Flip-Over Event shall occur, then
(i) the Company shall as soon as practicable thereafter give to each registered
holder of a Rights Certificate (or if occurring prior to the Distribution Date,
the registered holders of Common Shares), in accordance with Section 26 hereof,
a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13(a) hereof, and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Stock and Class B
Common Stock and/or, if appropriate, other securities.
-40-
<PAGE>
Section 26. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any 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:
Wit Capital Group, Inc.
826 Broadway, Sixth Floor
New York, NY 10003
Attention: Secretary
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:
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of 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. Except as provided in the
--------------------------
last sentence of this Section 27, at any time when the Rights are then
redeemable, the Company may in its sole and absolute discretion and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement in any respect without the approval of any holders of Rights or
holders of Common Shares. At any time when the Rights are not redeemable, except
as provided in the last sentence of this Section 27, the Company may and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein that may
be defective or inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or
desirable; provided that no such amendment or supplement shall materially
--------
adversely affect the interests of the holders of Rights (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person); and further
-------
provided that this Agreement may not be supplemented or amended pursuant to this
- --------
sentence to lengthen (A) a time period relating to when the Rights may be
redeemed or (B) any other time period unless the lengthening of such other time
period is for the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders
-41-
<PAGE>
of Rights (other than any Acquiring Person and its Affiliates and Associates).
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment; provided, however, that the Rights Agent may, but shall not be
-------- -------
obligated to, enter into any such supplement or amendment that affects the
Rights Agent's own rights, duties or immunities under this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made that decreases the Redemption Price.
Section 28. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors,
----------------------------------------------------
Etc. For all purposes of this Agreement, any calculation of the number of Common
- ---
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company (or, as set forth herein,
certain specified members thereof) shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). 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 of Directors of the Company in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, 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, prior to 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, prior to the Distribution
Date, registered holders of the Common Shares).
Section 31. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this
-42-
<PAGE>
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that notwithstanding anything in
-------- -------
this Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, then the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of such
determination by the Board of Directors of the Company or, if earlier,
immediately prior to any such merger. Without limiting the foregoing, if any
provision requiring that a determination be made by less than the entire Board
of Directors of the Company, or by the Board of Directors of the Company with
the concurrence of a majority of certain members of the 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 of
Directors of the Company.
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 Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
--------------------
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
-43-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
WIT CAPITAL GROUP, INC.
By:______________________________________
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:______________________________________
Name:
Title:
-44-
<PAGE>
EXHIBIT A-1
FORM OF
CERTIFICATE OF DESIGNATIONS
of
CLASS 1 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
WIT CAPITAL GROUP, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
WIT CAPITAL GROUP, INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Certificate of Incorporation of the said
Corporation, the said Board of Directors on ____________, 1999 adopted the
following resolution creating a series of [___________] shares of Preferred
Stock designated as "Class 1 Series A Junior Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of the
Certificate of Incorporation, a series of Preferred Stock, par value $.001
per share, of the Corporation be and hereby is created, and that the
designation and number of shares thereof and the voting and other powers,
preferences and relative, participating, optional or other rights of the
shares of such series and the qualifications, limitations and restrictions
thereof are as follows:
CLASS 1 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. Designation and Amount. There shall be a series of Preferred
----------------------
Stock that shall be designated as "Class 1 Series A Junior Participating
Preferred Stock," and the number of shares constituting such series shall be
[___________]. Such number of shares may be increased or decreased by resolution
of the Board of Directors; provided, however, that no decrease shall reduce the
-------- -------
number of shares of Class 1 Series A Junior Participating Preferred Stock to
less than the number of shares then issued and 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.
A-1
<PAGE>
2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Class 1 Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Class 1 Series A Junior Participating
Preferred Stock, in preference to the holders of shares of any class or series
of stock of the Corporation ranking junior to the Class 1 Series A Junior
Participating Preferred Stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of 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 Class
1 Series A Junior Participating Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $10 or (b) the Adjustment
Number (as defined below) times the aggregate per share amount of all cash
dividends, and the Adjustment Number times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock, par value $.01 per share, of the Corporation (the "Common Stock"),
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Class 1 Series A Junior Participating
Preferred Stock. The "Adjustment Number" shall initially be 100. In the event
the Corporation shall at any time after ____________, 1999 (the"Rights
Declaration Date") (i) declare any dividend on Common Stock, Class C Common
Stock, par value $.01 per share, of the Corporation (the "Class C Common Stock")
or Class B Common Stock, par value $.01 per share, of the Corporation (the
"Class B Common Stock"), payable in shares of Common Stock or Class B Common
Stock, as the case may be, (ii) subdivide the outstanding Common Stock, Class C
Common Stock or Class B Common Stock or (iii) combine the outstanding Common
Stock, Class C Common Stock or Class B 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 sum of the number of shares of Common
Stock outstanding immediately after such event plus the number of shares of
Class C Common Stock outstanding immediately after such event plus the number of
shares of Class B Common Stock outstanding immediately after such event and the
denominator of which is the sum of the number of shares of Common Stock that
were outstanding immediately prior to such event plus the number of shares of
Class C Common Stock that were outstanding immediately prior to such event plus
the number of shares of Class B Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Class 1 Series A Junior Participating 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, Class C Common
Stock or Class B Common Stock, as the case may
A-2
<PAGE>
be); provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $10 per share on the Class 1 Series A Junior Participating Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Class 1 Series A Junior Participating Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Class 1 Series A Junior Participating Preferred Stock, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Class 1 Series A Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Class 1 Series A Junior Participating 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 Class 1 Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than thirty (30) days prior
to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Class 1 Series A Junior
-------------
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Class 1 Series A Junior Participating Preferred
Stock shall entitle the holder thereof to a number of votes equal to the
Adjustment Number on all matters submitted to a vote of the stockholders of the
Corporation entitled to vote thereon.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or by law, the holders of shares of Class 1 Series A Junior
Participating Preferred Stock, the holders of shares of any other class or
series entitled to vote with the Common 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 Class 1 Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") that 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
Class 1 Series A Junior Participating Preferred Stock then outstanding shall
have been declared and paid
A-3
<PAGE>
or set apart for payment. During each default period, (1) the number of
directors shall be increased by two (2), effective as of the time of election of
such directors as herein provided, and (2) the holders of Preferred Stock
(including holders of the Class 1 Series A Junior Participating Preferred Stock)
upon which these or like voting rights have been conferred and are exercisable
(the "Voting Preferred Stock") with dividends in arrears in an amount equal to
six (6) quarterly dividends thereon, voting as a class, irrespective of series,
shall have the right to elect such two (2) directors.
(ii) During any default period, such voting right of the holders of
Class 1 Series A Junior Participating 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 such voting right shall not be exercised unless the
holders of at least one-third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum of
the holders of Common Stock and Class C Common Stock shall not affect the
exercise by the holders of Voting Preferred Stock of such voting right.
(iii) Unless the holders of Voting 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 (10%) of the total number of
shares of Voting Preferred Stock outstanding, irrespective of series, may
request, the calling of a special meeting of the holders of Voting Preferred
Stock, which meeting shall thereupon be called by the Chairman of the Board or
the President of the Corporation. Notice of such meeting and of any annual
meeting at which holders of Voting Preferred Stock are entitled to vote pursuant
to this paragraph (C)(iii) shall be given to each holder of record of Voting
Preferred Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than twenty (20) days and not later than sixty (60) days
after such order or request or, in default of the calling of such meeting within
sixty (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 (10%) of the total number of shares of Voting Preferred
Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no
such special meeting shall be called during the period within sixty (60) days
immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect directors voting as a class, (x)
the directors so elected by the holders of Voting 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 be filled by vote of a majority of the remaining directors
theretofore elected by the holders of the class or classes 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-4
<PAGE>
a particular class or classes 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 Voting Preferred Stock as a class to elect directors
shall cease, (y) the term of any directors elected by the holders of Voting
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 irrespective of any increase made pursuant to the provisions of paragraph
(C) of this Section 3 (such number being subject, however, to change thereafter
in any manner provided by law or in the Certificate of Incorporation or By-
Laws). 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 Class 1 Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Class 1 Series A Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares of
Class 1 Series A Junior Participating 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 Class 1 Series A Junior
Participating 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 Class 1
Series A Junior Participating Preferred Stock, except dividends paid
ratably on the Class 1 Series A Junior Participating 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; or
(iii) redeem or purchase or otherwise acquire for
consideration any shares of Class 1 Series A Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Class 1 Series A
Junior Participating 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 Class 1 Series A Junior Participating
Preferred
A-5
<PAGE>
Stock, or to all such holders and the holders of any such shares ranking on
a parity therewith, 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 and classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any shares of Class 1 Series A Junior
-----------------
Participating 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 any conditions and restrictions on issuance
set forth herein.
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 Class 1 Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Class 1 Series A Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Class 1 Series A Liquidation Preference").
Following the payment of the full amount of the Class 1 Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Class 1 Series A Junior Participating 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
Class 1 Series A Liquidation Preference by (ii) the Adjustment Number. Following
the payment of the full amount of the Class 1 Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Class 1 Series
A Junior Participating Preferred Stock and Common Stock, respectively, holders
of Class 1 Series A Junior Participating Preferred Stock and holders of shares
of Common Stock shall, subject to the prior rights of all other series of
Preferred Stock, if any, ranking prior thereto, receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to one (1) with respect to such Class 1 Series A Junior
Participating 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 Class 1 Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, that rank on a parity with the Class 1 Series A Junior
Participating Preferred Stock, then such remaining assets shall be distributed
A-6
<PAGE>
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.
(C) Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
6, but the sale, lease or conveyance of all or substantially all the
Corporation's assets shall be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this Section 6.
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 and/or shares of Class C Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other property, then
in any such case each share of Class 1 Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged or changed in an amount per
share equal to the Adjustment Number times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock and/or Class C Common
Stock is changed or exchanged.
8. Redemption. (A) The Corporation, at its option, may redeem
----------
shares of the Class 1 Series A Junior Participating Preferred Stock in whole at
any time and in part from time to time, at a redemption price equal to the
Adjustment Number times the current per share market price (as such term is
hereinafter defined) of the Common Stock on the date of the mailing of the
notice of redemption, together with unpaid accumulated dividends to the date of
such redemption. The "current per share market price" on any date shall be
deemed to be the average of the closing price per share of such Common Stock for
the ten (10) consecutive Trading Days (as such term is hereinafter
defined)immediately prior to such date; provided, however, that in the event
that the current per share market price of the Common Stock is determined during
a period following the announcement of (A) a dividend or distribution on the
Common Stock other than a regular quarterly cash dividend 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 prior to
the commencement of such ten Trading Day period, then, and in each such case,
the current per share market price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sales 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 transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange, or, if
the Common Stock is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange but
A-7
<PAGE>
sales price information is reported for such security, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other self-regulatory organization or registered securities
information processor (as such terms are used under the Securities Exchange Act
of 1934, as amended) that then reports information concerning the Common Stock,
or, if sales price information is not so reported, the average of the high bid
and low asked prices in the over-the-counter market on such day, as reported by
NASDAQ or such other entity, or, if on any such date the Common Stock is not
quoted by any such entity, 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 Corporation. If on any such date no
such market maker is making a market in the Common Stock, the fair value of the
Common Stock on such date as determined in good faith by the Board of Directors
of the Corporation shall be used. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Common Stock is
listed or admitted to trading is open for the transaction of business, or, if
the Common Stock is not listed or admitted to trading on any national securities
exchange but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if
the Common Stock is not so quoted, a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the State of New York are not authorized
or obligated by law or executive order to close.
(B) In the event that fewer than all the outstanding shares of the
Class 1 Series A Junior Participating Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of Directors
and the shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors or by any other method that may be
determined by the Board of Directors in its sole discretion to be equitable.
(C) Notice of any such redemption shall be given by mailing to the
holders of the shares of Class 1 Series A Junior Participating Preferred Stock
to be redeemed a notice of such redemption, first class postage prepaid, not
later than the fifteenth (15th) day and not earlier than the (60th) sixtieth day
before the date fixed for redemption, at their last address as the same shall
appear upon the books of the Corporation. Each such notice shall state: (i) the
redemption date; (ii) the number of shares to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the number of such shares to
be redeemed from such holder; (iii) the redemption price; (iv) the place or
places where certificates for such shares are to be surrendered for payment of
the redemption price; and (v) that dividends on the shares to be redeemed will
cease to accrue on the close of business on such redemption date. Any notice
that is mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the stockholder received such notice, and
failure duly to give such notice by mail, or any defect in such notice, to any
holder of Class 1 Series A Junior Participating Preferred Stock shall not affect
the validity of the proceedings for the redemption of any other shares of Class
1 Series A Junior Participating Preferred Stock that are to be redeemed. On or
after the date fixed for redemption as stated in such notice, each holder of the
shares called for redemption shall surrender the certificate evidencing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the redemption price. If fewer than
A-8
<PAGE>
all the shares represented by any such surrendered certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares.
(D) The shares of Class 1 Series A Junior Participating Preferred
Stock shall not be subject to the operation of any purchase, retirement or
sinking fund.
9. Ranking. The Class 1 Series A Junior Participating Preferred
-------
Stock shall rank pari passu with the Class 2 Series A Junior Participating
Preferred Stock as to any reclassification, recapitalization, stock split or
similar transaction, and as to any payment of dividends and distribution of
assets, and in any merger, consolidation or share exchange, except as otherwise
required by law. The Class 1 Series A Junior Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock, excluding
the Class 2 Series A Junior Participating Preferred Stock, as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise, and shall rank senior to the Common Stock, the Class C
Common Stock and the Class B Common Stock as to such matters.
10. Amendment. At any time that any shares of Class 1 Series A
---------
Junior Participating Preferred Stock are outstanding, the Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Class 1 Series A Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds or more of
the outstanding shares of Class 1 Series A Junior Participating Preferred Stock,
voting separately as a class.
11. Fractional Shares. Class 1 Series A Junior Participating
-----------------
Preferred Stock may be issued in fractions of a share that 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 Class 1 Series A Junior Participating
Preferred Stock.
IN WITNESS WHEREOF, the undersigned has executed this Certificate and
does affirm the foregoing as true this ___ day of ____________, 1999.
--------------------------------------
Name:
Title:
Attest:_________________________
Name:
Title:
A-9
<PAGE>
EXHIBIT A-2
FORM OF
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
OF
CLASS 2 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
WIT CAPITAL GROUP, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
WIT CAPITAL GROUP, INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Certificate of Incorporation of the said
Corporation, the said Board of Directors on ____________, 1999 adopted the
following resolution creating a series of [_____________] shares of Preferred
Stock designated as "Class 2 Series A Junior Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of the
Certificate of Incorporation, a series of Preferred Stock, par value $.001
per share, of the Corporation be and hereby is created, and that the
designation and number of shares thereof and the voting and other powers,
preferences and relative, participating, optional or other rights of the
shares of such series and the qualifications, limitations and restrictions
thereof are as follows:
CLASS 2 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. Designation and Amount. There shall be a series of Preferred
----------------------
Stock that shall be designated as "Class 2 Series A Junior Participating
Preferred Stock," and the number of shares constituting such series shall be
[___________]. Such number of shares may be increased or decreased by resolution
of the Board of Directors; provided, however, that no decrease shall reduce the
number of shares of Class 2 Series A Junior Participating Preferred Stock to
less than the number of shares then issued and outstanding plus the number of
shares issuable upon
A-10
<PAGE>
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Class 2 Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Class 2 Series A Junior Participating
Preferred Stock, in preference to the holders of shares of any class or series
of stock of the Corporation ranking junior to the Class 2 Series A Junior
Participating Preferred Stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of 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 Class
2 Series A Junior Participating Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $10 or (b) the Adjustment
Number (as defined below) times the aggregate per share amount of all cash
dividends, and the Adjustment Number times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Class B Common Stock or a subdivision of the
outstanding shares of Class B Common Stock (by reclassification or otherwise),
declared on the Class B Common Stock, par value $.01 per share, of the
Corporation (the "Class B 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 Class 2 Series A Junior Participating Preferred Stock. The "Adjustment
Number" shall initially be 100. In the event the Corporation shall at any time
after ____________, 1999 (the"Rights Declaration Date") (i) declare any dividend
on Common Stock, par value $.01 per share, of the Corporation (the "Common
Stock"), the Class C Common Stock, par value $.01 per share, of the Corporation
(the "Class C Common Stock") or Class B Common Stock, payable in shares of
Common Stock or Class B Common Stock, as the case may be, (ii) subdivide the
outstanding Common Stock, the Class C Common Stock or Class B Common Stock or
(iii) combine the outstanding Common Stock, the Class C Common Stock or Class B
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
sum of the number of shares of Common Stock outstanding immediately after such
event plus the number of shares of Class B Common Stock outstanding immediately
after such event plus the number of shares of Class C Common Stock outstanding
immediately after such event and the denominator of which is the sum of the
number of shares of Common Stock that were outstanding immediately prior to such
event plus the number of shares of Class C Common Stock that were outstanding
immediately prior to such event plus the number of shares of Class B Common
Stock that were outstanding immediately prior to such event.
A-11
<PAGE>
(B) The Corporation shall declare a dividend or distribution on the
Class 2 Series A Junior Participating Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the Class
B Common Stock (other than a dividend payable in shares of Class B Common
Stock); provided that, in the event no dividend or distribution shall have been
declared on the Class B Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $10 per share on the Class 2 Series A Junior Participating Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Class 2 Series A Junior Participating Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Class 2 Series A Junior Participating Preferred Stock, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Class 2 Series A Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Class 2 Series A Junior Participating 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 Class 2 Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than thirty (30) days prior
to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Class 2 Series A Junior
-------------
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Class 2 Series A Junior Participating Preferred
Stock shall entitle the holder thereof to a number of votes equal to the
Adjustment Number on all matters submitted to a vote of the holders of the Class
B Common Stock.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or by law, shares of Class 2 Series A Junior Participating
Preferred Stock shall have identical voting rights as shares of Class B Common
Stock.
(C) Except as set forth herein, holders of Class 2 Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Class B Common Stock as set forth herein) for taking any
corporate action.
A-12
<PAGE>
4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Class 2 Series A Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares of
Class 2 Series A Junior Participating 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 Class 2 Series A Junior
Participating 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 Class 2
Series A Junior Participating Preferred Stock, except dividends paid
ratably on the Class 2 Series A Junior Participating 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; or
(iii) redeem or purchase or otherwise acquire for
consideration any shares of Class 2 Series A Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Class 2 Series A
Junior Participating 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 Class 2 Series A Junior Participating
Preferred Stock, or to all such holders and the holders of any such shares
ranking on a parity therewith, 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 and classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any shares of Class 2 Series A Junior
-----------------
Participating 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 any conditions and restrictions on issuance
set forth herein.
A-13
<PAGE>
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
Class 1 Series A Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Class 1 Series A Junior Participating Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Class 1 Series A Liquidation Preference"). Following the
payment of the full amount of the Class 1 Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Class 1
Series A Junior Participating 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 Class 1 Series A
Liquidation Preference by (ii) the Adjustment Number. Following the payment of
the full amount of the Class 1 Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Class 1 Series A Junior
Participating Preferred Stock and Common Stock, respectively, holders of Class 1
Series A Junior Participating Preferred Stock and holders of shares of Common
Stock shall, subject to the prior rights of all other series of Preferred Stock,
if any, ranking prior thereto, receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment Number to
one (1) with respect to such Class 1 Series A Junior Participating 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 Class 1 Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, that rank on a parity with the Class 1 Series A Junior
Participating 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.
(C) Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
6, but the sale, lease or conveyance of all or substantially all the
Corporation's assets shall be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this Section 6.
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 and/or shares of Class C Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other property, then
in any such case each share of Class 1 Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged or changed in an amount per
share equal to the Adjustment
A-14
<PAGE>
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock and/or Class C Common Stock is changed or exchanged.
8. Redemption. (A) The Corporation, at its option, may redeem shares
----------
of the Class 1 Series A Junior Participating Preferred Stock in whole at any
time and in part from time to time, at a redemption price equal to the
Adjustment Number times the current per share market price (as such term is
hereinafter defined) of the Common Stock on the date of the mailing of the
notice of redemption, together with unpaid accumulated dividends to the date of
such redemption. The "current per share market price" on any date shall be
deemed to be the average of the closing price per share of such Common Stock for
the ten (10) consecutive Trading Days (as such term is hereinafter
defined)immediately prior to such date; provided, however, that in the event
-------- -------
that the current per share market price of the Common Stock is determined during
a period following the announcement of (A) a dividend or distribution on the
Common Stock other than a regular quarterly cash dividend 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 prior to
the commencement of such ten Trading Day period, then, and in each such case,
the current per share market price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sales 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 transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange, or, if
the Common Stock is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other self-regulatory organization or registered securities information
processor (as such terms are used under the Securities Exchange Act of 1934, as
amended) that then reports information concerning the Common Stock, or, if sales
price information is not so reported, the average of the high bid and low asked
prices in the over-the-counter market on such day, as reported by NASDAQ or such
other entity, or, if on any such date the Common Stock is not quoted by any such
entity, 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 Corporation. If on any such date no such market maker
is making a market in the Common Stock, the fair value of the Common Stock on
such date as determined in good faith by the Board of Directors of the
Corporation shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if the Common
Stock is not so quoted, a Monday, Tuesday,
A-15
<PAGE>
Wednesday, Thursday or Friday on which banking institutions in the State of New
York are not authorized or obligated by law or executive order to close.
(B) In the event that fewer than all the outstanding shares of the
Class 1 Series A Junior Participating Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of Directors
and the shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors or by any other method that may be
determined by the Board of Directors in its sole discretion to be equitable.
(C) Notice of any such redemption shall be given by mailing to the
holders of the shares of Class 1 Series A Junior Participating Preferred Stock
to be redeemed a notice of such redemption, first class postage prepaid, not
later than the fifteenth (15th) day and not earlier than the (60th) sixtieth day
before the date fixed for redemption, at their last address as the same shall
appear upon the books of the Corporation. Each such notice shall state: (i) the
redemption date; (ii) the number of shares to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the number of such shares to
be redeemed from such holder; (iii) the redemption price; (iv) the place or
places where certificates for such shares are to be surrendered for payment of
the redemption price; and (v) that dividends on the shares to be redeemed will
cease to accrue on the close of business on such redemption date. Any notice
that is mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the stockholder received such notice, and
failure duly to give such notice by mail, or any defect in such notice, to any
holder of Class 1 Series A Junior Participating Preferred Stock shall not affect
the validity of the proceedings for the redemption of any other shares of Class
1 Series A Junior Participating Preferred Stock that are to be redeemed. On or
after the date fixed for redemption as stated in such notice, each holder of the
shares called for redemption shall surrender the certificate evidencing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the redemption price. If fewer than
all the shares represented by any such surrendered certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares.
(D) The shares of Class 1 Series A Junior Participating Preferred
Stock shall not be subject to the operation of any purchase, retirement or
sinking fund.
9. Ranking. The Class 1 Series A Junior Participating Preferred
-------
Stock shall rank pari passu with the Class 2 Series A Junior Participating
Preferred Stock as to any reclassification, recapitalization, stock split or
similar transaction, and as to any payment of dividends and distribution of
assets, and in any merger, consolidation or share exchange, except as otherwise
required by law. The Class 1 Series A Junior Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock, excluding
the Class 2 Series A Junior Participating Preferred Stock, as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise, and shall rank senior to the Common Stock, the Class C
Common Stock and the Class B Common Stock as to such matters.
A-16
<PAGE>
10. Amendment. At any time that any shares of Class 1 Series A
---------
Junior Participating Preferred Stock are outstanding, the Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Class 1 Series A Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds or more of
the outstanding shares of Class 1 Series A Junior Participating Preferred Stock,
voting separately as a class.
11. Fractional Shares. Class 1 Series A Junior Participating
-----------------
Preferred Stock may be issued in fractions of a share that 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 Class 1 Series A Junior Participating
Preferred Stock.
12. Conversion. Upon any Transfer of shares of Class 2 Series A
----------
Junior Participating Preferred Stock to any Person other than a GS Holder, such
transferred shares of Class 2 Series A Junior Participating Preferred Stock
shall be automatically and irrevocably converted into an equal number of shares
of Class 1 Series A Junior Participating Preferred Stock, and thereafter, all
rights of the holder of such transferred shares of Class 2 Series A Junior
Participating Preferred Stock as a holder of Class 2 Series A Junior
Participating Preferred Stock shall cease and the Person or Persons in whose
name or names the certificate or certificates of Class 1 Series A Junior
Participating Preferred Stock are to be issued shall be treated for all purposes
as having become the holder or holders of such shares of Class 1 Series A Junior
Participating Preferred Stock. "GS Holder" means The Goldman Sachs Group, L.P.
and any Affiliate of such Person to which The Goldman Sachs Group, L.P.,
directly or indirectly, transfers beneficial ownership in the capital stock of
the Corporation and any successive transferees thereafter that are Affiliates of
The Goldman Sachs Groups, L.P. "Transfer" means any sale or other disposition,
whether voluntary or involuntary, of beneficial ownership of any capital stock
of the Corporation. "Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof. "Affiliate" means, with respect to any Person, any Person
who, directly or indirectly, controls, is controlled by or is under common
control with that Person. For purposes of this definition, "control" when used
with respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
A-17
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate and
does affirm the foregoing as true this ___ day of ____________, 1999.
________________________________________
Name:
Title:
Attest:_________________________
Name:
Title:
A-18
<PAGE>
EXHIBIT B-1
Form of Voting Class Rights Certificates
Certificate No. VCR- _____________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 30, 2009 OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
VOTING CLASS RIGHTS CERTIFICATE
WIT CAPITAL GROUP, 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 ________, 1999 as it may from time to time be
supplemented or amended (the "Rights Agreement"), between Wit Capital Group,
Inc., a Delaware corporation (the "Company"), and American Stock Transfer &Trust
Company (the "Rights Agent"), to purchase from the Company at any time prior to
5:00 p.m. (New York time) on _________, 1999 at the principal office or offices
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-hundredth of a fully paid, nonassessable share (a "Fractional
Share") of Class 1 Series A Junior Participating Preferred Stock (the "Class 1
Series A Junior Participating Preferred Stock") of the Company, at a purchase
price of $__.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 set forth on the reverse hereof duly
executed. The Purchase Price may be paid in cash or by certified check,
cashier's or official bank check or bank draft payable to the order of the
Company or the Rights Agent. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per Fractional Share set forth
above, are the number and Purchase Price as of ________, 1999, based on the
Class 1 Series A Junior Participating Preferred Stock as constituted at such
date. The Company reserves the right to require prior to the occurrence of a
Triggering Event (as such term is defined in the Rights Agreement) that a number
of Rights be exercised so that only whole shares of Class 1 Series A Junior
Participating Preferred Stock will be issued.
B-1
<PAGE>
From and after the first occurrence of a Triggering Event (as such
term is defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by or transferred to (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person (as such terms are defined
in the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, such Rights shall, with certain exceptions, become null and
void in the circumstances set forth in the Rights Agreement, and no holder
hereof shall have any rights whatsoever with respect to such Rights from and
after the occurrence of such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Class 1 Series A Junior Participating Preferred Stock or
other securities or assets that may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices 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 Fractional Shares of Class 1 Series A Junior
Participating Preferred Stock as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at its option
at a redemption price of $.01 per Right, payable, at the election of the
Company, in cash or shares of Common Stock, par value $.01 per share, of the
Company ("Common Stock") or such other consideration as the Board of Directors
may determine, at any time prior to the earlier of the close of business on (a)
the date of the first public announcement of the occurrence of a Flip- In Event
(as such time period may be extended or shortened pursuant to the Rights
Agreement) and (b) the Expiration Date (as such
B-2
<PAGE>
term is defined in the Rights Agreement) or (ii) may be exchanged in whole or in
part for shares of the Common Stock and/or other equity securities of the
Company deemed to have the same value as shares of Common Stock, at any time
prior to a person's becoming the beneficial owner of 50% or more of the
aggregate of the shares of Common Stock and the shares of Class C Common Stock
outstanding or the occurrence of a Flip-Over Event.
No fractional shares of Class 1 Series A Junior Participating
Preferred Stock are required to be issued upon the exercise of any Right or
Rights evidenced hereby (other than, except asset forth above, fractions that
are integral multiples of a Fractional Share of Class 1 Series A Junior
Participating Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment may be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Class 1 Series A Junior Participating Preferred Stock or of any other securities
of the Company that may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this 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.
B-3
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ___________, ____
ATTEST: WIT CAPITAL GROUP, INC.
By _______________________________
Secretary Title:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By _______________________
Authorized Signature
B-4
<PAGE>
Form of Reverse Side of Voting Class Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer any Rights evidenced by the Rights Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby sells, assigns
and transfers unto _____________________________________________________________
(Please print name and address of transferee)
______ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
____________________________ Attorney, to transfer the said Rights on the books
of the within-named Company, with full power of substitution.
Dated: _____________, ____
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
B-5
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate are 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 an 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 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 or who is a direct or indirect
transferee of an Acquiring Person or of an Affiliate or Associate of an
Acquiring Person.
Dated: ___________, ____ _________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures 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.
B-6
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: WIT CAPITAL GROUP, INC.
The undersigned hereby irrevocably elects to exercise Rights
represented by this Rights Certificate to purchase the shares of Class 1 Series
A Junior Participating Preferred Stock issuable upon the exercise of the Rights
(or such other securities of the Company or of any other person that may be
issuable upon the exercise of the Rights) and requests that certificates for
such shares (or other securities) 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 evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: _____________, ____
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
B-7
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an 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 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 or who is a direct or indirect transferee of an
Acquiring Person or of an Affiliate or Associate of an Acquiring Person.
Dated: _____________, ____ ____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures 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.
B-8
<PAGE>
EXHIBIT B-2
Form of Class B Common Rights Certificates
Certificate No. CBCR- _________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 30, 2009 OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
CLASS B COMMON RIGHTS CERTIFICATE
WIT CAPITAL GROUP, 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 ________, 1999 as it may from time to time be
supplemented or amended (the "Rights Agreement"), between Wit Capital Group,
Inc., a Delaware corporation (the "Company"), and American Stock Transfer &Trust
Company (the "Rights Agent"), to purchase from the Company at any time prior to
5:00 p.m. (New York time) on _________, 1999 at the principal office or offices
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-hundredth of a fully paid, nonassessable share (a "Fractional
Share") of Class 2 Series A Junior Participating Preferred Stock (the "Class 2
Series A Junior Participating Preferred Stock") of the Company, at a purchase
price of $__.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 set forth on the reverse hereof duly
executed. The Purchase Price may be paid in cash or by certified check,
cashier's or official bank check or bank draft payable to the order of the
Company or the Rights Agent. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per Fractional Share set forth
above, are the number and Purchase Price as of ________, 1999, based on the
Class 2 Series A Junior Participating Preferred Stock as constituted at such
date. The Company reserves the right to require prior to the occurrence of a
Triggering Event (as such term is defined in the Rights Agreement) that a number
of Rights be exercised so that only whole shares of Class 2 Series A Junior
Participating Preferred Stock will be issued.
B-9
<PAGE>
From and after the first occurrence of a Triggering Event (as
such term is defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by or transferred to (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances specified
in the Rights Agreement, a transferee of a person who, concurrently with or
after such transfer, became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person, such Rights shall, with certain exceptions, become null and
void in the circumstances set forth in the Rights Agreement, and no holder
hereof shall have any rights whatsoever with respect to such Rights from and
after the occurrence of such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Class 2 Series A Junior Participating Preferred
Stock or other securities or assets that may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices 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 Fractional Shares of
Class 2 Series A Junior Participating Preferred Stock as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at its option
at a redemption price of $.01 per Right, payable, at the election of the
Company, in cash or shares of Class B Common Stock, par value $.01 per share, of
the Company ("Class B Common Stock") or such other consideration as the Board of
Directors may determine, at any time prior to the earlier of the close of
business on (a) the date of the first public announcement of the occurrence of a
Flip- In Event (as such time period may be extended or shortened pursuant to the
Rights Agreement) and (b) the Expiration
B-10
<PAGE>
Date (as such term is defined in the Rights Agreement) or (ii) may be exchanged
in whole or in part for shares of the Class B Common Stock and/or other equity
securities of the Company deemed to have the same value as shares of Class B
Common Stock, at any time prior to a person's becoming the beneficial owner of
50% or more of the aggregate of the shares of Common Stock and the shares of
Class C Common Stock outstanding or the occurrence of a Flip-Over Event.
In the event that prior to the Distribution Date (as such term
is defined in the Rights Agreement), the Class B Common Stock is converted, in
whole or in part, into Common Stock or Class C Common Stock, as the case may be,
in accordance with the applicable provisions of the Amended and Restated
Certificate of Incorporation of the Company, the Class B Common Rights attached
to the shares of Class B Common Stock so converted shall be converted to Voting
Class Rights pursuant to a conversion ratio equivalent to the conversion ratio
used for converting the Class B Common Stock to Common Stock. In the event that
on or after the Distribution Date, all outstanding shares of Class B Common
Stock are converted into shares of Common Stock or Class C Common Stock, as the
case may be, in accordance with the applicable provisions of the Amended and
Restated Certificate of Incorporation of the Company, all Class B Common Rights
then outstanding shall be converted to Voting Class Rights pursuant to a
conversion ratio equivalent to the conversion ratio used for converting the
Class B Common Stock to Common Stock or Class C Common Stock, as the case may
be.
No fractional shares of Class 2 Series A Junior Participating
Preferred Stock are required to be issued upon the exercise of any Right or
Rights evidenced hereby (other than, except asset forth above, fractions that
are integral multiples of a Fractional Share of Class 2 Series A Junior
Participating Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment may be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
shares of Class 2 Series A Junior Participating Preferred Stock or of any other
securities of the Company that may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this 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.
B-11
<PAGE>
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ___________, ____
ATTEST: WIT CAPITAL GROUP, INC.
By______________________
Secretary Title:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By
----------------------------------
Authorized Signature
B-12
<PAGE>
Form of Reverse Side of Class B Common Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer any Rights evidenced by
the Rights Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby sells, assigns
and transfers unto ____________________________________________________________
(Please print name and address of transferee)
______ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
____________________________ Attorney, to transfer the said Rights on the books
of the within-named Company, with full power of substitution.
Dated: _____________, ____
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
B-13
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate are 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 an 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 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 or who is a direct or indirect
transferee of an Acquiring Person or of an Affiliate or Associate of an
Acquiring Person.
Dated: ___________, ____ ____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures 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.
B-14
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: WIT CAPITAL GROUP, INC.
The undersigned hereby irrevocably elects to exercise Rights
represented by this Rights Certificate to purchase the shares of Class 2 Series
A Junior Participating Preferred Stock issuable upon the exercise of the Rights
(or such other securities of the Company or of any other person that may be
issuable upon the exercise of the Rights) and requests that certificates for
such shares (or other securities) 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 evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: _____________, 199_
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
B-15
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an 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 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 or who is a direct or indirect transferee of an
Acquiring Person or of an Affiliate or Associate of an Acquiring Person.
Dated: _____________, ____ ______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures 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.
B-16
<PAGE>
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT), AND CERTAIN TRANSFEREES THEREOF, WILL BECOME NULL AND
VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On May 17, 1999, the Board of Directors of Wit Capital Group,
Inc. (the "Company") authorized the issuance of one voting class right ("Voting
Class Right") for each outstanding share of the Company's Common Stock, par
value $.01 per share ("Common Stock"), authorized the issuance of one Voting
Class Right for each outstanding share of the Company's Class C Common Stock,
par value $.01 per share ("Class C Common Stock"), and also authorized the
issuance of one nonvoting class right ("Class B Right") for each outstanding
share of the Company's Class B Common Stock, par value $.01 per share ("Class B
Common Stock") to the stockholders of record at the close of business on May 18,
1999. The Voting Class Rights and the Class B Common Rights are referred to
collectively herein as the "Rights". Each Voting Class Right entitles the
registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Fractional Share") of Class 1 Series A Junior
Participating Preferred Stock, par value $.001 per share, and each Class B
Common Right entitles the registered holder to purchase from the Company a unit
consisting of a Fractional Share of Class 2 Series A Junior Participating
Preferred Stock, par value $.001 per share (the Class 1 Series A Junior
Participating Preferred Stock and the Class 2 Series A Junior Participating
Preferred Stock collectively referred to as the "Preferred Stock"), at a
purchase price of $__.00 per Fractional Share, subject to adjustment
(the"Purchase Price"). The description and terms of the Rights are set forth in
a Rights Agreement dated as of _________, 1999 as it may from time to time be
supplemented or amended (the "Rights Agreement") between the Company and
American Stock Transfer & Trust Company, as Rights Agent.
Initially, the Voting Class Rights will be attached to all
certificates representing outstanding shares of Common Stock and Class C Common
Stock, and the Class B Common Rights will be attached to all certificates
representing outstanding shares of Class B Common Stock, and no separate
certificates for the Rights ("Rights Certificates") will be distributed. The
Voting Rights will separate from the Common Stock and Class C Common Stock and
the Class B Common Rights will separate from the Class B Common Stock and a
"Distribution Date" will occur, with certain exceptions, upon the earlier of (i)
ten days following a public announcement that a person or group of affiliated or
associated persons (an"Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the aggregate of outstanding
shares of Common Stock and Class C Common Stock (the date of the announcement
C-1
<PAGE>
being the "Stock Acquisition Date"), or (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a person's
becoming an Acquiring Person.
Notwithstanding the foregoing, so long as Capital Z Financial
Services Fund II, L.P. ("Capital Z"), together with all its affiliates and
associates, does not become the beneficial owner of 25% or more of the aggregate
of the fully-diluted Common Stock and the fully-diluted Class C Common Stock,
Capital Z, together with its affiliates and associates, shall not be or become
an Acquiring Person. Furthermore, so long as The Goldman Sachs Group, L.P.
("Goldman Sachs"), together with all its affiliates and associates, does not
become the beneficial owner of 25% or more of the aggregate of the fully-diluted
Common Stock and the fully-diluted Class C Common Stock, Goldman Sachs, together
with its affiliates and associates, shall not be or become an Acquiring Person.
In certain circumstances, the Distribution Date may be deferred by the Board of
Directors. Certain inadvertent acquisitions will not result in a person's
becoming an Acquiring Person if the person promptly divests itself of sufficient
Common Stock and/or Class C Common Stock.
Until the Distribution Date, (a) the Voting Class Rights will
be evidenced by the Common Stock certificates and the Class C Common Stock
certificates and the Class B Common Rights will be evidenced by the Class B
Common Stock certificates and both will be transferred with and only with such
Common Stock certificates and such Class C Common Stock certificates or Class B
Common Stock certificates, as the case may be, (b) Common Stock certificates,
Class C Common Stock certificates and Class B Common Stock certificates will
contain a notation incorporating the Rights Agreement by reference and (c) the
surrender for transfer of any certificate for Common Stock will also constitute
the transfer of the Rights associated with either the Common Stock or the Class
B Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on September 30, 2009, unless earlier
redeemed or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Common Stock, Class C Common
Stock and Class B Common Stock as of the close of business on the Distribution
Date and, from and after the Distribution Date, the separate Rights Certificates
alone will represent the Rights. All shares of Common Stock, Class C Common
Stock and Class B Common Stock issued prior to the Distribution Date will be
issued with the appropriate Rights. Shares of Common Stock, Class C Common Stock
and Class B Common Stock issued after the Distribution Date in connection with
certain employee benefit plans or upon conversion of certain securities will be
issued with appropriate Rights. Except as otherwise determined by the Board of
Directors, no other shares of Common Stock, Class C Common Stock or Class B
Common Stock issued after the Distribution Date will be issued with Rights.
C-2
<PAGE>
In the event (a "Flip-In Event") that a person becomes an
Acquiring Person (except pursuant to a tender or exchange offer for all
outstanding shares of Common Stock and Class C Common Stock at a price and on
terms that a majority of the independent directors of the Company determines to
be fair to and otherwise in the best interests of the Company and its
stockholders (a "Permitted Offer")), each holder of a Voting Class Right will
thereafter have the right to receive, upon exercise of such Right, a number of
shares of Common Stock and each holder of a Class B Common Right will thereafter
have the right to receive, upon exercise of such Right, a number of shares of
Class B Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a Current Market Price (as defined in the
Rights Agreement) equal to approximately two times the exercise price of the
Right. Notwithstanding the foregoing, following the occurrence of any Triggering
Event, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by or transferred to an Acquiring
Person (or by certain related parties) will be null and void in the
circumstances set forth in the Rights Agreement. However, Rights are not
exercisable following the occurrence of any Flip-In Event until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event (a "Flip-Over Event") that, at any time from and
after the time an Acquiring Person becomes such, (i) the Company is acquired in
a merger or other business combination transaction (other than certain mergers
that follow a Permitted Offer), or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights that
are voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of shares of common stock of the acquiring company having a
Current Market Price equal to two times the exercise price of the Right. Flip-In
Events and Flip-Over Events are collectively referred to as "Triggering Events."
The number of outstanding Rights associated with a share of
Common Stock, Class C Common Stock or Class B Common Stock, or the number of
Fractional Shares of Preferred Stock issuable upon exercise of a Right and the
Purchase Price, are subject to adjustment in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Common Stock, Class C
Common Stock or Class B Common Stock occurring prior to the Distribution Date.
The Purchase Price payable, and the number of Fractional Shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution in the event of
certain transactions affecting the Preferred Stock.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional shares of Preferred Stock that are not integral
multiples of a Fractional Share are required to be issued and, in lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock on the last trading date prior to the date of exercise or certificates of
scrip or warrants maybe issued entitling the holders thereof to receive a full
share in return for such scrip or warrants aggregating a full share. Pursuant to
the Rights Agreement, the Company reserves the
C-3
<PAGE>
right to require prior to the occurrence of a Triggering Event that, upon any
exercise of Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.
At any time until the date of the first date of public
announcement of the occurrence of a Flip-In Event, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right, payable, at the
option of the Company, in cash, shares of Common Stock, in the case of holders
of Voting Class Rights, or Class B Common Stock, in the case of holders of Class
B Common Rights, or such other consideration as the Board of Directors may
determine. Immediately upon the effectiveness of the action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive the $.01 redemption
price.
In the event that prior to the Distribution Date, the Class B
Common Stock is converted, in whole or in part, into Common Stock or Class C
Common Stock, as the case may be, the Class B Common Rights attached to the
shares of Class B Common Stock will be converted to Voting Class Rights pursuant
to a conversion ratio equivalent to the conversion ratio used for converting the
Class B Common Stock to Common Stock. In the event that on or after the
Distribution Date, all outstanding shares of Class B Common Stock are converted
into shares of Common Stock or Class C Common Stock, as the case may be, all
Class B Common Rights then outstanding will be converted to Voting Class Rights
pursuant to a conversion ratio equivalent to the conversion ratio used for
converting the Class B Common Stock to Common Stock or Class C Common Stock, as
the case may be.
At any time after the occurrence of a Flip-In Event and prior
to a person's becoming the beneficial owner of 50% or more of the aggregate of
the shares of Common Stock and Class C Common Stock then outstanding or the
occurrence of a Flip-Over Event, the Company may exchange the Rights (other than
Rights owned by an Acquiring Person or an Affiliate or an associate of an
Acquiring Person, which will have become void),in whole or in part, at an
exchange ratio of one share of Common Stock, in the case of holders of Voting
Class Rights, or Class B Common Stock, in the case of holders of Class B Common
Rights, and/or other equity securities deemed to have the same value as one
share of Common Stock, per Voting Class Right, or one share of Class B Common
Stock, per Class B Common Right, subject to adjustment.
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
should not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock or Class B Common Stock (or other
consideration) of the Company or for the common stock of the acquiring company
as set forth above or are exchanged as provided in the preceding paragraph.
C-4
<PAGE>
Other than the redemption price, any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company as long
as the Rights are redeemable. Thereafter, the provisions of the Rights Agreement
other than the redemption price may be amended by the Board of Directors in
order to cure any ambiguity, defect or inconsistency, to make changes that do
not materially adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person), or to shorten or lengthen any time
period under the Rights Agreement; provided, however, that no amendment to
-------- -------
lengthen 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 the Company's Registration
Statement on Form S-1. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by references to the Rights
Agreement, which is incorporated herein by reference.
C-5
