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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 11, 1998
(December 8, 1998)
SIGNATURE INNS, INC.
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(Exact name of registrant as specified in its charter)
Indiana 0-9659 35-1426996
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
250 East 96th Street, Suite 450
Indianapolis, Indiana 46240
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 581-1111
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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On December 8, 1998, the Board of Directors of Signature Inns, Inc.
(the "Company") and Harris Trust and Savings Bank, as Rights Agent, amended and
restated the Company's Amended and Restated Rights Agreement (the "Second
Amended and Restated Rights Agreement"). The Second Amended and Restated Rights
Agreement excludes from the definition of Acquiring Person any Person that the
Board of Directors determines to have inadvertently and in good faith become an
"Acquiring Person" (as defined in the Second Amended and Restated Rights
Agreement) and who promptly thereafter divests themselves of a sufficient number
of shares so as to no longer be an Acquiring Person. The Second Amended and
Restated Rights Agreement also deletes the term Continuing Director in its
entirety from the Rights Agreement. Consistent with such deletion, the Second
Amended and Restated Rights Agreement removes all references to the need for
Continuing Director decision-making, such decision-making now being vested in
the Board of Directors.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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99.1 Press Release dated December 8, 1998.
99.2 Second Amended and Restated Rights Agreement, dated December
8, 1998, between Signature Inns, Inc. and Harris Trust and
Savings Bank, including Form of Rights Certificate (Exhibit A)
and Form of Summary of Rights (Exhibit B).
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SIGNATURE INS, INC.
Date: December 11, 1998 By: /s/ John D. Bontreger
--------------------------
Name: John D. Bontreger
-------------------------
Title: President And Secretary
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EXHIBIT INDEX
-------------
No. Exhibit
- --------- -------------------------------------------------------------
99.1 Press Release dated December 8, 1998.
99.2 Second Amended and Restated Rights Agreement, dated December 8, 1998,
between Signature Inns, Inc. and Harris Trust and Savings Bank,
including Form of Rights Certificate (Exhibit A) and Form of Summary
of Rights (Exhibit B).
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EXHIBIT 99.1
PRESS RELEASE
The following is the text of a press release issued by Signatures Inns, Inc. on
December 8, 1998, relating to the amendment of its shareholder rights plan.
Indianapolis, Indiana, December 8, 1998 -- Signature Inns, Inc.
(Nasdaq: SGNS; SGNSP) announced that its Board of Directors amended its existing
shareholder rights plan by adopting an amended and restated shareholder rights
plan (the "Second Amended and Restated Rights Agreement"). The Second Amended
and Restated Rights Agreement excludes from the definition of Acquiring Person
any Person the Board of Directors determines to have inadvertently and in good
faith become an Acquiring Person and who promptly thereafter divests themselves
of a sufficient number of shares so as to no longer be an Acquiring Person. The
Second Amended and Restated Rights Agreement also deletes the term Continuing
Director, removes all references to the need for Continuing Director
decision-making, and vests such decision-making in the Board of Directors.
<PAGE> 1
EXHIBIT 99.2
SIGNATURE INNS, INC.
and
HARRIS TRUST AND SAVINGS BANK
RIGHTS AGENT
---------------
SECOND AMENDED AND RESTATED
RIGHTS AGREEMENT
DATED DECEMBER 8, 1998
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
Section 1. Certain Definitions...................................................................... 1
Section 2. Appointment of Rights Agent.............................................................. 6
Section 3. Issuance of Rights Certificates.......................................................... 7
Section 4. Form of Rights Certificates.............................................................. 9
Section 5. Countersignature and Registration........................................................10
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;Mutilated,
Destroyed, Lost or Stolen Rights Certificates............................................10
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights............................11
Section 8. Cancellation and Destruction of Rights Certificates......................................14
Section 9. Reservation and Availability of Capital Stock............................................14
Section 10. Series One Preferred Stock Record Date...................................................16
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights..............16
Section 12. Certificate of Adjusted Exercise Price or Number of Shares...............................24
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.....................24
Section 14. Fractional Rights and Fractional Shares..................................................28
Section 15. Rights of Action.........................................................................29
Section 16. Agreement of Rights Holders..............................................................30
Section 17. Rights Certificate Holder Not Deemed a Stockholder.......................................30
Section 18. Concerning the Rights Agent..............................................................31
Section 19. Merger or Consolidation or Change of Name of Rights Agent................................31
Section 20. Duties of Rights Agent...................................................................32
</TABLE>
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<TABLE>
<S> <C> <C>
Section 21. Change of Rights Agent..................................................................34
Section 22. Issuance of New Rights Certificates.....................................................35
Section 23. Redemption..............................................................................36
Section 24. Exchange................................................................................37
Section 25. Notice of Certain Events................................................................38
Section 26. Notices.................................................................................39
Section 27. Supplements and Amendments..............................................................39
Section 28. Determinations and Actions by the Board of Directors, etc...............................40
Section 29. Successors..............................................................................41
Section 30. Benefits of this Agreement..............................................................41
Section 31. Severability............................................................................41
Section 32. Governing Law...........................................................................42
Section 33. Counterparts............................................................................42
Section 34. Descriptive Headings....................................................................42
Section 35. Effective Date..........................................................................42
Signatures............................................................................................43
Exhibit A. Form of Rights Certificate............................................................ A-1
Exhibit B. Summary of Rights Agreement........................................................... B-1
</TABLE>
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SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
--------------------------------------------
SECOND AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of the 8th day
of December, 1998 (the "Agreement"), between Signature Inns, Inc., an Indiana
corporation (the "COMPANY"), and Harris Trust and Savings Bank (the "RIGHTS
AGENT").
R E C I T A L S
---------------
WHEREAS, on September 19, 1996 (the "RIGHTS DIVIDEND DECLARATION
DATE"), the Board Directors of the Company (the "Board") authorized and declared
a distribution of one Right (as defined in SECTION 1 hereof) for each share of
the Company's common stock, without par value ("COMMON STOCK"), outstanding on
the Record Date (as defined in SECTION 1 hereof), subject to the execution of
this Agreement and to certain other conditions, and the issuance of one Right
(as such number may hereinafter be adjusted pursuant hereto) with respect to
each share of Common Stock issued (whether originally issued or delivered from
the Company's treasury) between the Record Date and the earlier of the
Exercisability Date (as defined in SECTION 3(a) hereof) or the Expiration Date
(as defined in SECTION 7(a) hereof), each Right initially representing the right
to purchase, one hundredth of one share of a newly designated Series A Preferred
Stock, without par value;
WHEREAS, the Company and the Rights Agent entered into that certain
Rights Agreement, dated as of October 31, 1996 (the "Initial Rights Agreement");
and
WHEREAS, on January 15, 1997, the Board, in accordance with SECTION 27
of the Initial Rights Agreement and in connection with the Company's offering
(the "Preferred Offering") of Cumulative Convertible Preferred Stock, Series A,
without par value (the "Series A Preferred Stock"), determined it desirable and
in the best interests of the Company and its shareholders that the Initial
Rights Agreement be amended and restated in order to, among other things, (i)
redesignate each Right so that it represents the right to purchase, upon the
terms and subject to the conditions hereinafter set forth, one hundredth of one
share of Non-cumulative Preferred Stock, Series One, without par value (the
"Series One Preferred Stock"), having the relative rights, preferences and
limitations set forth in the Company's Amended and Restated Articles of
Incorporation (the "Articles of Incorporation") and (ii) amend the Exercise
Price (as herein defined) in connection with the Preferred Offering; and
WHEREAS, the Company and the Rights Agent entered into that certain
Amended and Restated Rights Agreement, dated as of January 17, 1998 (the
"Amended and Restated Rights Agreement"); and
WHEREAS, the Amended and Restated Rights Agreement provides that, under
circumstances contemplated hereby, the Company and the Rights Agent may amend
the Amended
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and Restated Rights Agreement without the consent of the holders of
certificates representing shares of Common Stock; and
WHEREAS, the Company and the Rights Agent wish to amend and restate the
Amended and Restated Rights Agreement in its entirety as follows:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "ACQUIRING PERSON" means (i) any Person which (or which, together
with all its Affiliates and Associates) shall be the Beneficial Owner of 20% or
more of the shares of Common Stock then outstanding (other than as a result of a
Permitted Offer) or (ii) any Adverse Person. Notwithstanding the foregoing, (x)
the term "Acquiring Person" shall not include the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries, or any trustee or fiduciary with respect to such plan acting in
such capacity, or John Bontreger (either alone or together with his Affiliates
and Associates); and (y) no Person shall become an "Acquiring Person" as the
result of (A) the acquisition of Common Stock (or other securities convertible
into shares of Common Stock or other rights with respect to Common Stock)
directly from the Company, or (B) an acquisition of Common Stock (or other
securities convertible into shares of Common Stock or other rights with respect
to Common Stock) by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person (alone or together with all Affiliates and Associates) to 20% or
more of the shares of Common Stock then outstanding; PROVIDED, HOWEVER, that if
a Person (together with its Affiliates and Associates) becomes the Beneficial
Owner of 20% or more of the Common Stock then outstanding by reason of share
purchases by the Company, and such Person (or an Affiliate or Associate)
subsequently becomes the Beneficial Owner of any additional Common Stock, then
such Person shall be deemed to be an "Acquiring Person." Notwithstanding the
foregoing, if the Board of Directors of the Company determines that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently and in good
faith, or without knowledge of the terms of the Agreement, and such Person
divests as promptly as practicable (but in no event more than thirty calendar
days following notification of its status as an "Acquiring Person" or such
charter period as may be determined by the Board of Directors) a sufficient
number of shares of Common Stock (or securities convertible into, exchangeable
into or exercisable for Common Stock) so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall be deemed not to be an "Acquiring Person"
for any purposes of this Agreement until such divestiture period has expired.
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(b) "ADVERSE PERSON" means any person declared by the Board to be an
Adverse Person after (i) a determination by the Board that such Person, alone or
together with its Affiliates and Associates, has become the Beneficial Owner of
10% or more of the shares of Common Stock then outstanding; and (ii) a
determination by the Board, after reasonable inquiry and investigation
(including such consultation, if any, with such persons as such directors shall
deem appropriate), that:
(A) such Beneficial Ownership by such Person is intended to,
is reasonably likely to, or will either cause the Company to repurchase
the Common Stock (or other securities convertible into shares Common
Stock) beneficially owned by such Person or cause pressure on the
Company to take action or enter into a transaction or series of
transactions that would provide such Person with short-term financial
gain under circumstances where the Board determines that the best
long-term interests of the Company and its shareholders, but for the
actions and possible actions of such Person, would not be served by
taking such action or entering into such transactions or series of
transaction at that time; or
(B) such Beneficial Ownership is causing or reasonably likely
to cause a material adverse impact (including, but not limited to,
impairment of relationships with customers or impairment of the
Company's ability to maintain its competitive position) on the business
or prospects of the Company;
PROVIDED, HOWEVER, that the Board may not declare a Person to be an Adverse
Person if such person was the Beneficial Owner of 10% or more of the Common
Stock outstanding on the Close of Business on the day prior to the Effective
Date of this Agreement determined in accordance with SECTION 35 hereof, or if,
prior to the time that such Person acquired 10% or more of the Common Stock,
such Person provided to the Board a written statement of such Person's
acquisition of such Common Stock, together with any other information reasonably
requested of such Person by the Board, and the Board, based on such statement
and reasonable inquiry and investigation (including such consultation, if any,
with such persons as the directors shall deem appropriate), determines to notify
and notifies such Person in writing that it will not declare such Person to be
an Adverse Person; and PROVIDED, FURTHER, that the Board may expressly condition
in any manner a determination not to declare a Person an Adverse Person on such
conditions as the Board may select, including, without limitation, that such
Person shall not acquire more than a specified amount of Company stock and/or
that such Person shall not take actions inconsistent with the purposes and
intentions disclosed by such Person in the statement provided by such Person to
the Board. In the event that the Board should at any time determine, upon
reasonable inquiry and investigation (including consultation with such persons
as the directors shall deem appropriate), that such Person has not met or
complied with any condition specified by the Board, the Board may at any time
thereafter declare such Person to be an Adverse Person. No delay or failure by
the Board to declare a Person to be an Adverse Person shall in any way waive or
otherwise affect the power of the Board subsequently to declare a Person to be
an Adverse Person.
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(c) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as in
effect on the date of this Agreement.
(d) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be
deemed to "BENEFICIALLY OWN," any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3 of
the General Rules and Regulations under the Exchange Act (the "EXCHANGE
ACT REGULATIONS") as in effect on the date hereof; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any 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 given in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the Exchange Act and the Exchange Act Regulations, and
(B) is not reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report);
(ii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such other Person)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (i) of this paragraph (d)) or disposing of such securities
(other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities); or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of time
or upon the satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise;
PROVIDED, HOWEVER, that under this paragraph (d), a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," (x) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (y) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or (z)
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 Exercisability Date or pursuant
to SECTION 3(a) or SECTION 22 hereof (the "ORIGINAL RIGHTS") or pursuant to
SECTION 11(i) hereof in connection with an adjustment made with respect to any
Original Rights.
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Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "THEN OUTSTANDING," when used with reference to a
person's Beneficial Ownership of securities of the Company, shall mean the
number of securities then issued and outstanding together with the number of
such securities not then actually issued and outstanding which such Person would
be deemed to own beneficially hereunder.
(e) "BOARD" has the meaning set forth in the Recitals.
(f) "BUSINESS DAY" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in Indianapolis, Indiana are authorized or
obligated by law or executive order to close.
(g) "CLOSE OF BUSINESS" on any given date means 5:00 P.M.,
Indianapolis, Indiana local time, on such date; PROVIDED, HOWEVER, that if such
date is not a Business Day it shall mean 5:00 P.M., Indianapolis, Indiana local
time, on the next succeeding Business Day.
(h) "COMMON STOCK" of any Person other than the Company means such
Person's capital stock with the greatest voting power, or, if such Person shall
have no capital stock, the equity securities or other equity interest having
power to control or direct the management of such Person.
(i) "COMMON STOCK" means the shares of common stock, without par value,
of the Company or, in the event of a stock split or reverse stock split with
respect to such shares of Common Stock, the shares of Common Stock of the
Company resulting from such stock split or reverse stock split.
(j) [intentionally left blank]
(k) "EXERCISABILITY DATE" has the meaning set forth in SECTION 3(a)
hereof.
(l) "EXERCISE PRICE" has the meaning set forth in SECTION 7(b) hereof.
(m) "EXPIRATION DATE" has the meaning set forth in SECTION 7(a) hereof.
(n) "FINAL EXPIRATION DATE" has the meaning set forth in SECTION 7(a)
hereof.
(o) "PERMITTED OFFER" means a tender or exchange offer which is for all
outstanding shares of Common Stock (and/or other securities convertible into
shares of Common Stock) at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer and by at least a
majority of the members of the Board of Directors, to be adequate (taking into
account all factors that such Directors deem relevant including, without
limitation, prices that reasonably could be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value) and
otherwise in the best interests of the Company and its shareholders,
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other than the Person or any Affiliate or Associate thereof on whose basis the
offer is being made (taking into account all factors that such Directors may
deem relevant).
(p) "PERSON" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange
Act.
(q) "RECORD DATE" means the Close of Business on March 18, 1997.
(r) "REDEMPTION DATE" has the meaning set forth in SECTION 7(a) hereof.
(s) "REGISTRATION STATEMENT" means the Company's Registration Statement
on Form SB-2 (File No. 333-12735).
(t) "RIGHT" means one of the stock purchase rights created hereunder.
(u) "RIGHTS CERTIFICATE" has the meaning set forth in SECTION 3(a)
hereof.
(v) "RIGHTS DIVIDEND DECLARATION DATE" has the meaning set forth in the
Recitals.
(w) "SECTION 11(a)(ii) EVENT" means any event described in SECTION
11(a)(ii) hereof.
(x) "SECTION 13 EVENT" means any event described in clause (x), (y) or
(z) of SECTION 13(a) hereof.
(y) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such (unless
such date has occurred inadvertently as contemplated by the final sentence of
the definition of "Acquiring Person," in which case the Stock Acquisition Date
shall be postponed until the expiration of the thirty calendar day period or
such shorter period as may be determined by the Board of Directors).
(z) "SUBSIDIARY" means, with reference to any Person, any corporation
of which an amount of voting securities sufficient to elect at least a majority
of the directors of such corporation is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such Person.
(aa) "TRIGGERING EVENT" means any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. APPOINTMENT OF RIGHTS AGENT.
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The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
Section 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the earlier of:
(i) the Close of Business on the tenth Business Day after the
Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business
on the Record Date), and
(ii) the Close of Business on such date as a majority of the
Board shall determine, which date shall follow the commencement of a
tender offer (as determined by reference to Rule 14d-2(a) under the
Exchange Act) or exchange offer by any Person, if upon consummation
thereof such Person would become an Acquiring Person (the earlier of
(i) and (ii) above being the "EXERCISABILITY DATE"),
the Rights:
(x) will be evidenced (subject to the provisions of paragraph
(b) of this SECTION 3) by the certificates for shares of Common Stock
registered in the names of the holders thereof as of and subsequent to
the Record Date (which certificates for shares of Common Stock shall be
deemed also to be certificates for Rights) and not by separate
certificates, and
(y) will be transferable only in connection with the transfer
of the underlying shares of Common Stock (including a transfer to the
Company).
As soon as practicable after the Exercisability Date, the Rights Agent will send
at the expense of the Company by first-class, postage prepaid mail, to each
record holder of shares of Common Stock as of the Close of Business on the
Exercisability Date, at the address of such holder shown on the records of the
Company, a certificate for Rights, substantially in the form of EXHIBIT A
attached hereto (the "RIGHTS CERTIFICATE"), evidencing one Right for each share
of Common Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to SECTION 11 hereof, then 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 Exercisability
Date, the Rights will be evidenced solely by such Rights Certificates.
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(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights Agreement, in substantially the
form attached hereto as EXHIBIT B (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of Common Stock as of the Close of
Business on the Record Date at the address of such holder shown on the records
of the Company. With respect to certificates for Common Stock outstanding as of
the Record Date, until the earlier of the Exercisability Date, the Expiration
Date and the Final Expiration Date (as such terms are defined in this SECTION 3
and in SECTION 7 hereof), the Rights will be evidenced by such certificates for
Common Stock registered in the names of the holders thereof (together with a
copy of the Summary of Rights). Until the earlier of the Exercisability Date,
the Expiration Date and the Final Expiration Date, the surrender for transfer of
any certificate for Common Stock outstanding on the Record Date, with or without
a copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.
(c) Rights shall, without any further action, be issued in respect of
all shares of Common Stock which are issued (including any shares of Common
Stock held in treasury) after the Record Date but prior to the earlier of the
Exercisability Date and the Expiration Date. Certificates representing such
shares of Common Stock issued after the Record Date shall bear the following
legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in the Second Amended and Restated
Rights Agreement between Signature Inns, Inc. (the "COMPANY") and
Harris Trust and Savings Bank (the "RIGHTS AGENT") dated as of December
8, 1998 (the "RIGHTS AGREEMENT"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal office of the stock transfer administration office of the
Rights Agent. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set forth in
the Rights Agreement, Rights issued to, or held by, any Person who is,
was or becomes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to certificates representing shares of Common Stock (whether or not
such certificates include the foregoing legend), until the earlier of the
Exercisability Date and the Expiration Date, (i) the Rights associated with the
shares of Common Stock represented by such certificates shall be evidenced by
such certificates alone, (ii) registered holders of the shares of Common Stock
shall also be the registered holders of the associated Rights, and (iii) the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the shares of Common Stock represented by such
certificates.
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Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase
Series One Preferred Stock and of assignment to be printed on the reverse
thereof) shall each be substantially in the form of EXHIBIT A attached hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or any rule or regulation thereunder
or with any rule or regulation of any stock exchange on which the Rights may
from time to time be listed, or to conform to usage. Subject to the provisions
of SECTION 11 and SECTION 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of one hundredths of a share
of Series One Preferred Stock as shall be set forth therein at the Exercise
Price, but the amount and type of securities, cash or other assets that may be
acquired upon the exercise of each Right and the Exercise Price thereof shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that represents
Rights that are beneficially owned by:
(i) an Acquiring Person or any Affiliate or Associate of an
Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee after the Acquiring
Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Affiliate or
Associate) to holders of equity interests therein, or to any Person
with whom such Acquiring Person (or Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the
transferred Rights, shares of Common Stock (or other securities
convertible into shares of Common Stock), or the Company, or (B) a
transfer which a majority of the Board has determined to be part of a
plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of SECTION 7(e) hereof, and any Rights Certificate
issued pursuant to SECTION 6 or SECTION 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence,
shall, upon the written direction of a majority of the Board, contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an
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<PAGE> 13
Acquiring Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby
may become null and void in the circumstances specified in SECTION 7(e)
of such Agreement.
The provisions of SECTION 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any Rights Certificate.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, Chief Executive Officer, President, any Vice
President, or Treasurer and shall be attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. The Rights Certificates shall be
countersigned by the Rights Agent, by manual signature (or by facsimile
signature if permitted by law) of an authorized officer, and no Rights
Certificate shall be entitled to any benefit under this Agreement or be valid
for any purpose unless so countersigned. A Rights Certificate bearing the manual
or facsimile signatures of individuals who were the proper officers of the
Company at the actual date of execution of such Rights Certificate shall bind
the Company, notwithstanding that such individuals or any of them ceased to hold
such offices prior to the countersignature of such Rights Certificate or did not
hold such offices at the date of execution of this Rights Agreement. Such
countersignature upon any Rights Certificate shall be conclusive evidence, and
the only evidence, that such Rights Certificate has been duly countersigned as
required hereunder.
(b) Following the Exercisability Date, the Rights Agent will keep or
cause to be kept, at its office designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the name and address of each holder of a Rights Certificate,
the number of Rights evidenced on its face by each Rights Certificate, and the
certificate number and date of each Rights Certificate.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR
STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of SECTIONS 4(b), 7(e) and 14 hereof, at
any time after the Close of Business on the Exercisability Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined, or exchanged for another
Rights Certificate or Certificates entitling the registered holder to purchase a
like number of one hundredths of a share of Series One Preferred Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitle
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent and shall execute and surrender
the Rights Certificate or
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<PAGE> 14
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment set forth on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
or former Beneficial Owner (or Affiliates or Associates thereof) of the Rights
represented by such Rights Certificate as the Company shall reasonably request;
whereupon the Rights Agent shall, subject to the provisions of SECTIONS 4(b),
7(e) and 14 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or
destroyed, upon request by the registered holder of the Rights represented
thereby, there shall be issued, in exchange for and upon cancellation of the
mutilated Rights Certificate, or in substitution for the lost, stolen or
destroyed Rights Certificate, a new Rights Certificate, in substantially the
form of the prior Rights Certificate, of like tenor and representing the
equivalent number of Rights; PROVIDED, HOWEVER, that a new Rights Certificate
shall be issued only upon reimbursement to the Company or the Rights Agent (as
the case may be) of all reasonable expenses incidental thereto, if such
reimbursement is requested by the Company or the Rights Agent; and PROVIDED
FURTHER, that, in the case of loss, theft or destruction of a Rights
Certificate, a new Rights Certificate shall be issued only upon receipt of
evidence satisfactory to the Company and the Rights Agent of such loss, theft or
destruction and, if requested by the Company or the Rights Agent, indemnity or
security reasonably satisfactory to the Company or the Rights Agent (as the case
may be).
Section 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE
OF RIGHTS.
(a) At any time after the Exercisability Date and prior to the earlier
of (i) the Close of Business on the tenth anniversary of the Record Date (the
"FINAL EXPIRATION DATE"), or (ii) the time at which the Rights are redeemed as
provided in SECTION 23 hereof (the "REDEMPTION DATE") (the earlier of (i) and
(ii) being the "EXPIRATION DATE"), the registered holder of any Rights
Certificate may, subject to the provisions of SECTION 7(e) hereof, exercise the
Rights evidenced thereby in whole or in part upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the aggregate
Exercise Price (as hereinafter defined) for the total number of one hundredths
of a share of Series One Preferred Stock (or, following a Triggering Event,
other securities, cash or other assets, as the case may be) for which such
surrendered Rights are then exercisable.
(b) The purchase price for each one hundredth of a share of Series One
Preferred Stock upon exercise of the Rights initially shall be $40, and subject
to adjustment from time to time as
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<PAGE> 15
provided in the next sentence and in SECTIONS 11 and 13(a) hereof (such purchase
price, as so adjusted, being the "EXERCISE Price"), and shall be payable in
accordance with paragraph (c) below. Anything in this Agreement to the contrary
notwithstanding, in the event that, at any time after the effective date of this
Agreement and prior to the Exercisability Date, the Company shall (i) declare a
dividend on the Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock; THEN, in any such case, each share of
Common Stock outstanding following such dividend, subdivision, combination or
reclassification shall continue to have a Right associated therewith, and the
Exercise Price following any such event shall be proportionately adjusted to
equal the result obtained by multiplying the Exercise Price immediately prior to
such event by a fraction, the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of Common
Stock outstanding immediately following the occurrence of such event. The
adjustment provided for in the preceding sentence shall be made successively
whenever such a dividend is declared or such a subdivision, combination or
reclassification is effected.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment in the manner described below, with respect to each Right
so exercised, of the Exercise Price for the one hundredth of a share of Series
One Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) to be purchased thereby, and of an amount
equal to any applicable transfer tax required to be paid by the holder in
accordance with SECTION 6 hereof or evidence satisfactory to the Company of
payment of such tax), the Rights Agent shall, subject to SECTION 20(j) hereof,
thereupon promptly:
(i) requisition from the transfer agent for the Series One
Preferred Stock certificates for such total number of one hundredths of
a share of Series One Preferred Stock as are to be purchased, and the
Company will direct the transfer 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 Series One Preferred Stock
certificates, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder; and
(iv) after receipt of such cash, if any, deliver the same to
or upon the order of the registered holder of such Rights Certificate.
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<PAGE> 16
In the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to SECTION 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate. The payment of the Exercise Price (as
such amount may be reduced pursuant to SECTION 11(a)(iii) hereof) may be made in
cash or by certified or bank check or bank draft payable to the order of the
Company. The Company reserves the 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 Series One Preferred Stock would be
issued.
(d) In the event of an exercise of the Rights by a holder pursuant to
SECTION 11(a)(ii) hereof, the Rights Agent shall return such Rights Certificate
to the registered holder thereof after imprinting, stamping, or otherwise
indicating thereon that the rights represented by such Rights Certificate no
longer include the rights provided by SECTION 11(a)(ii) of the Rights Agreement.
In addition, in the event that the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing the Rights remaining unexercised (and, if some of the
Rights exercised were exercised pursuant to SECTION 11(a)(ii), indicating by
imprint, stamp or otherwise the number of Rights remaining which continue to
include rights provided by SECTION 11(a)(ii)) shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of SECTION 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by any of the Persons described below shall be null and void
without any further action, and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise:
(i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person;
(ii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee after the Acquiring
Person becomes such; or
(iii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Affiliate or
Associate) to holders of equity interests therein, or to any Person
with whom such Acquiring Person (or Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the
transferred Rights, shares of Common Stock (or other securities
convertible into shares of Common Stock), or the Company, or (B) a
transfer which a majority of the Board has determined to be part of a
plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of this SECTION 7(e).
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<PAGE> 17
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 or any other Person as a result of its failure
to make any determination under this SECTION 7(e) or such SECTION 4(b) with
respect to an Acquiring Person or its Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner or former Beneficial
Owner (or Affiliates or Associates thereof) of the Rights represented by such
Rights Certificate 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 this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any Rights Certificates acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Rights Certificates to the
Company, or, at the written request of the Company, shall 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.
(a) The Company shall (i) at all times prior to the Expiration Date
cause to be reserved and kept available out of its authorized and unissued
shares of Series One Preferred Stock, or any authorized and issued shares of
Series One Preferred Stock held in its treasury, the number of shares of Series
One Preferred Stock that, as provided in this Agreement, including, without
limitation, SECTION 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights; and (ii) at all times following the
occurrence of a Section 11(a)(ii) Event, shall so reserve and keep available a
sufficient number of any other securities that may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
(b) The Company shall use its best efforts:
(i) as soon as practicable following (A) the occurrence of a
Section 11(a)(ii) Event and a determination by the Company in
accordance with SECTION 11(a)(iii) hereof of
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<PAGE> 18
the consideration to be delivered by the Company upon exercise of the
Rights or (B) if so required by law, the Exercisability Date, to file a
registration statement on an appropriate form under the Securities Act
of 1933, as amended (the "SECURITIES ACT"), with respect to the
securities that may be acquired upon exercise of the Rights;
(ii) to cause such registration statement to become effective
as soon as practicable after the date of such filing (such date being
the "REGISTRATION DATE");
(iii) to cause such registration statement to remain effective
(and to include a prospectus complying with the requirements of the
Securities Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for the securities covered by such
registration statement, and (B) the Expiration Date; and
(iv) as soon as practicable following the Registration Date,
to take such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable
state securities or "blue sky" laws.
The Company may temporarily suspend the exercisability of the Rights, for a
period of time not to exceed ninety (90) days after the date set forth in
subclause (A) or (B), whichever applies, of clause (i) of the first sentence of
this SECTION 9(b) in order to prepare and file such registration statement and
permit it to become effective. Upon any such suspension of exercisability, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended and, upon termination of such suspension,
the Company shall issue a public announcement stating that the suspension is no
longer in effect. In addition, if the Company shall determine that a
registration statement is required following the Exercisability Date, the
Company may temporarily suspend the exercisability of the Rights until such time
as such registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted under
applicable law, or a registration statement, as described above, shall not have
been declared effective.
(c) The Company shall take such action as may be necessary to ensure
that all one hundredths of a share of Series One Preferred Stock (and, following
the occurrence of a Triggering Event, any other securities) that may be
delivered upon exercise of Rights shall be, at the time of delivery of the
certificates for such securities, duly and validly authorized and issued, and
fully paid and nonassessable.
(d) So long as the shares of Series One Preferred Stock (and, after the
occurrence of a Triggering Event, any other securities) issuable upon the
exercise of the Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
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<PAGE> 19
(e) The Company may pay or may require the Rights holder to pay any
documentary, stamp or transfer tax imposed in connection with the issuance or
delivery of the Rights Certificates or certificates for shares of Series One
Preferred Stock (or, following the occurrence of a Triggering Event, any other
securities or other assets) upon the exercise of Rights. The Company shall not
be required to issue or deliver any certificates for shares of Series One
Preferred Stock (or any other securities, cash or assets, as the case may be) to
or in the name of the registered holder upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. SERIES ONE PREFERRED STOCK RECORD DATE.
Each Person in whose name any certificate for a number of one
hundredths of a share of Series One Preferred Stock (or, following the
occurrence of a Triggering Event, other securities) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such fractional shares of Series One Preferred Stock or other securities
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Exercise Price (and any applicable transfer taxes) was made; PROVIDED,
HOWEVER, that if the date of such surrender and payment is a date upon which the
Series One Preferred Stock (or other securities) transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
securities fractional or otherwise on, and such certificate shall be dated as
of, the next succeeding Business Day on which the Series One Preferred Stock (or
other securities) transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to
securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions, or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER AND KIND OF
SHARES OR NUMBER OF RIGHTS.
The Exercise Price, the number and kind of securities covered by each
Right, and the number of Rights outstanding are subject to adjustment from time
to time as provided in this SECTION 11.
(a) (i) In the event that the Company, at any time after the
date of this Agreement, shall (A) declare a dividend on the Series One
Preferred Stock payable in shares of Series One Preferred Stock, (B)
subdivide the outstanding Series One Preferred Stock, (C) combine the
outstanding Series One Preferred Stock into a smaller number of shares,
or (D) issue any shares of its capital stock in a reclassification of
the Series One Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which
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<PAGE> 20
the Company is the continuing or surviving corporation), except as
otherwise provided in this SECTION 11(a) and SECTION 7(e) hereof, the
Exercise 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 Series One
Preferred Stock or other capital stock, as the case may be, issuable on
such date upon exercise of the Rights, shall be proportionately
adjusted so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the Exercise Price then
in effect, the aggregate number and kind of shares of Series One
Preferred Stock or other capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date, such
holder would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or
reclassification; PROVIDED, HOWEVER, that if the record date for any
such dividend, subdivision, combination or reclassification shall occur
prior to the Exercisability Date, the Company shall make an appropriate
adjustment to the Exercise Price in lieu of adjusting (as described
above) the number of shares of Series One Preferred Stock (or other
capital stock, as the case may be) issuable upon exercise of the
Rights. If an event occurs which would require an adjustment under both
this SECTION 11(a)(i) and SECTION 11(a)(ii) hereof, the adjustment
provided for in this SECTION 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to SECTION
11(a)(ii) hereof.
(ii) In the event that any Person shall become an
Acquiring Person, other than pursuant to any
transaction set forth in SECTION 13(a) hereof, then,
promptly following the occurrence of such event (a
"SECTION 11(a)(ii) EVENT"), proper provision shall be
made so that each holder of a Right (except as
provided below and in SECTION 7(e) hereof) shall
thereafter have, and proper provision shall be made
so that each such holder shall have, the right to
receive, upon exercise thereof at a price equal to
the then current Exercise Price in accordance with
the terms of this Agreement, in lieu of a number of
one hundredths of a share of Series One Preferred
Stock, such number of shares of Common Stock as shall
equal the result obtained by (x) multiplying the then
current Exercise Price by the number of one
hundredths of a share of Series One Preferred Stock
for which a Right was potentially exercisable
immediately prior to the first occurrence of a
Section 11(a)(ii) Event (such that if the Right was
potentially exercisable for one hundredth of one
share of Series One Preferred Stock immediately prior
to such Section 11(a)(ii) Event, the Exercise Price
would be multiplied by one), and dividing that
product by (y) 50% of the current market price (as
determined pursuant to SECTION 11(d) hereof) per
share of the Common Stock on the date of the first
occurrence of a Section 11(a)(ii) Event (such number
of shares, the "ADJUSTMENT SHARES").
(iii) In the event that the number of shares of
Common Stock which are authorized by the Company's Articles of
Incorporation but are not outstanding and are not
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reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph
(ii) of this SECTION 11(a), the Company shall:
(A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the
"CURRENT VALUE") over (2) the Exercise Price (such excess
being the "SPREAD"); and
(B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon
payment of the applicable Exercise Price, (1) cash, (2) a
reduction in the Exercise Price, (3) other equity securities
of the Company, (such other equity securities being referred
to as "CAPITAL STOCK EQUIVALENTS"), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, such substituted items having an aggregate value
equal to the Current Value, where such aggregate value has
been determined by a majority of the Board of Directors after
receiving advice from a nationally recognized investment
banking firm;
PROVIDED, HOWEVER, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to SECTION 23(a) expires (the later of (x) and (y)
being referred to herein as the "SECTION 11(a)(ii) TRIGGER DATE"), then
the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Exercise
Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash shall have an aggregate value
equal to the Spread. To the extent that the Company determines that
some action need be taken pursuant to the first sentence of this
SECTION 11(a)(iii), the Company shall provide, subject to SECTION 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights. For purposes of this SECTION 11(a)(iii), the value of the
Common Stock shall be the current market price (as determined pursuant
to SECTION 11(d) hereof) per share of Common Stock on the Section
11(a)(ii) Trigger Date and the value of any "common stock equivalent"
shall be deemed to have the same value as the Common Stock on such
date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Series One Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Series One Preferred Stock
(or shares having the same rights, privileges and preferences as shares of
Series One Preferred Stock ("EQUIVALENT PREFERRED STOCK")) or securities
convertible into Series One Preferred Stock or equivalent preferred stock at a
price per share of Series One Preferred Stock or per share of equivalent
preferred stock (or having a conversion price per share, if a security
convertible into Series One Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to SECTION 11(d) hereof)
per share of Series One Preferred Stock on such record
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<PAGE> 22
date, THEN the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the sum of the number
of shares of Series One Preferred Stock outstanding on such record date plus the
number of shares of Series One Preferred Stock which the aggregate offering
price of the total number of shares of Series One 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 Series One Preferred Stock outstanding on such record date plus the
number of additional shares of Series One 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, 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 Series One Preferred Stock owned by or
held for the account of the Company or any Subsidiary shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Exercise Price shall be adjusted
to be the Exercise Price which would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of shares of Series One Preferred Stock (including any such
distribution made in connection with a share exchange or merger in which the
Company is the continuing 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 shares of Series One
Preferred Stock but including any dividend payable in stock other than Series
One Preferred Stock) or subscription rights or warrants (excluding those
referred to in SECTION 11(b) hereof), THEN the Exercise Price to be in effect
after such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the then current market price (as determined pursuant to SECTION
11(d) hereof) per share of Series One Preferred Stock on such record date less
the fair market value (as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights) 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 Series One
Preferred Stock and the denominator of which shall be such current market price
(as determined pursuant to SECTION 11(d) hereof) per share of Series One
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 Exercise Price shall be adjusted to be the Exercise Price which would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "CURRENT
MARKET PRICE" per share of Common Stock (or, after the occurrence of a
Triggering Event, any other securities) on any
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<PAGE> 23
date shall be deemed to be the average of the daily closing prices per share of
such Common Stock or other securities for the thirty (30) consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
PROVIDED, HOWEVER, that if, prior to the expiration of such requisite thirty
Trading Day period, the issuer announces either (A) a dividend or distribution
on such Common Stock (or other securities) payable in such Common Stock (or
other securities) or securities convertible into such Common Stock (or other
securities), other than the Rights, or (B) any subdivision, combination or
reclassification of such Common Stock (or other securities), THEN, following the
ex-dividend date for such dividend or the record date for such subdivision, as
the case may be, the "current market price" shall be properly adjusted to take
into account such event. The closing price for each day shall be, if the shares
of Common Stock (or other securities) are listed and admitted to trading on a
national securities exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such shares are listed or admitted to
trading or, if such shares of Common Stock (or other securities) are not listed
or admitted to trading on any national securities exchange, the last quoted
sales price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported on The Nasdaq Stock Market's
National Market (the "Nasdaq National Market") or such other system then in use,
or, if on any such date such shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the shares of Common Stock (or other securities)
selected by the Board. If on any such date no market maker is making a market in
such shares, the fair value of such shares on such date as determined in good
faith by the Board, shall be used. The term "TRADING DAY" shall mean a Business
Day or, if such shares are listed or admitted to trading on any national
securities exchange, a day on which the principal national securities exchange
on which such shares are listed or admitted to trading is open for the
transaction of business.
(ii) For the purpose of any computation of the current market
price per share of Series One Preferred Stock, if the shares of Series One
Preferred Stock are not publicly held or not so listed or traded, "current
market price" per share of the Series One Preferred Stock shall be conclusively
determined to be the current market price per share of the Common Stock as
determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. If neither the Common Stock nor the Series
One Preferred Stock is publicly held or so listed or traded, the "current market
price" per share of Series One Preferred Stock shall mean the fair value per
share as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Exercise Price;
PROVIDED, HOWEVER, that any adjustments which by reason of this SECTION 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this SECTION 11 shall be made
to the nearest cent or to the nearest one ten-thousandth of a share of Common
Stock (or other securities) or one hundred-thousandth of
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a share of Series One Preferred Stock. 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 SECTIONS
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Series One
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Exercise Price thereof shall be subject to
adjustment from time to time in the manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Series One Preferred Stock
contained in SECTIONS 11(a), (b), (c), (e), (g), (h), (i), (j), (k), and (m),
and the provisions of SECTIONS 7, 9, 10, 13 and 14 hereof with respect to the
Series One 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 Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of shares of Series One
Preferred Stock (or other securities or amount of cash or combination thereof)
that may be acquired from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
SECTION 11(i) hereof, upon each adjustment of the Exercise Price as a result of
the calculations made in SECTIONS 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of one hundredths
of a share of Series One Preferred Stock or other securities (calculated to the
nearest one-millionth of a share) obtained by
(i) multiplying (x) the number of one hundredths of a share of
Series One Preferred Stock or other securities covered by a Right
immediately prior to this adjustment by (y) the Exercise Price in
effect immediately prior to such adjustment of the Exercise Price; and
(ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of Rights, in lieu of any adjustment in the
number of one hundredths of a share of Series One Preferred Stock (or other
securities) that may be acquired upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one hundredths of a share of Series One Preferred
Stock (or other securities) for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Exercise Price in effect immediately
prior to
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adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Exercise
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of such public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this SECTION 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
SECTION 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Exercise 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 Exercise Price or
the number of one hundredths of a share of Series One Preferred Stock (or other
securities) issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Exercise Price per
one hundredth of a share and the number of one hundredths of a share of Series
One Preferred Stock (or other securities) which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Exercise Price below the then par value, if any, of the number of one
hundredths of a share of Series One Preferred Stock (or other securities)
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such fully paid and nonassessable number
of one hundredths of a share of Series One Preferred Stock (or other securities)
at such adjusted Exercise Price.
(l) In any case in which this SECTION 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of that number of one hundredths of a share of Series One Preferred Stock and
shares of other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the number of one hundredths of a share of
Series One Preferred Stock and shares of other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Exercise
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.
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(m) Anything in this SECTION 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Exercise 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 shall determine to be
advisable in order that any (i) consolidation or subdivision of the Series One
Preferred Stock, (ii) issuance wholly for cash of any shares of Series One
Preferred Stock at less than the current market price, (iii) issuance wholly for
cash of shares of Series One Preferred Stock or securities which by their terms
are convertible into or exchangeable for shares of Series One Preferred Stock,
(iv) stock dividends or (v) issuance of rights, options or warrants referred to
in this SECTION 11, hereafter made by the Company to holders of its Series One
Preferred Stock, shall not be taxable to such holders or shall reduce the taxes
payable by such holders.
(n) The Company shall not, at any time after the Exercisability Date:
(i) consolidate with any other Person (other than a Subsidiary
of the Company in a transaction which complies with SECTION 11(o)
hereof);
(ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with SECTION
11(o) hereof); or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions,
assets, cash flow or earning power aggregating more than 50% of the
assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each
of which complies with SECTION 11(o) hereof);
IF
(x) at the time of or immediately after such consolidation,
merger or sale, there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to
be afforded by the Rights; or
(y) prior to, simultaneously with, or immediately after such
share exchange, merger or sale, the Person which constitutes, or would
constitute, the "Principal Party" for purposes of SECTION 13(a) hereof
shall have distributed or otherwise transferred to its stockholders (or
other persons holding an equity interest in such Person) Rights
previously owned by such Person or any of its Affiliates and
Associates;
PROVIDED, HOWEVER, that this SECTION 11(n) shall not affect the ability of any
Subsidiary of the Company to effect a share exchange with, merge with or into,
or sell or transfer assets or earning power to, the Company or any other
Subsidiary of the Company.
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(o) After the Exercisability Date, the Company shall not, except as
permitted by SECTION 23 or SECTION 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
Section 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER
OF SHARES.
Whenever an adjustment is made as provided in SECTION 11 and 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
Common Stock, a copy of such certificate, and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if prior to the Exercisability Date,
to each 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 and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly:
(x) the Company shall consolidate with, or merge with and
into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with SECTION 11(o) hereof), and the Company
shall not be the continuing or surviving corporation of such share
exchange or merger,
(y) any Person (other than a Subsidiary of the Company in a
transaction which complies with SECTION 11(o) hereof) shall effect a
consolidation with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such share exchange
or merger and, in connection with such share exchange or merger, all or
part of the outstanding shares of Common Stock shall be converted into
or exchanged for stock or other securities of any other Person or cash
or any other property, or
(z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer) to any
Person or Persons (other than the Company or any of its Subsidiaries in
one or more transactions each of which complies with SECTION 11(o)
hereof), in one or more transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning
power of the Company and its Subsidiaries (taken as a whole),
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<PAGE> 28
(any such event described in clause (x), (y) or (z) above being a "SECTION 13
EVENT"); THEN, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in SECTION 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Exercise Price (disregarding any adjustment
of the Exercise Price pursuant to SECTION 11(a)(ii) hereof), 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), which shares shall not be subject to any
liens, encumbrances, rights of first refusal, transfer restrictions or
other adverse claims, as shall be equal to the result obtained by:
(A) multiplying the then current Exercise Price by
the number of one hundredths of a share of Series One
Preferred Stock for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of
one hundredths of a share of Series One Preferred Stock for
which a Right was exercisable immediately prior to the first
occurrence of such Section 11(a)(ii) Event by the Exercise
Price in effect immediately prior to such first occurrence),
and
(B) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be the "Exercise
Price" for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to SECTION 11(d)
hereof) per share of the common stock of such Principal Party
on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations
and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the
provisions of SECTION 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of
its common stock) in connection with the consummation of any such
transaction as may be necessary to ensure that the provisions of this
Agreement shall thereafter be applicable to its shares of common stock
thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of SECTION 11(a)(ii) hereof shall be of no
further effect following the first occurrence of any Section 13 Event.
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(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of SECTION 13(a) hereof, (A) the Person that
is the issuer of any securities into which shares of Common Stock are
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer of common stock that has the highest
aggregate current market price (determined pursuant to SECTION 11(d)
hereof) and (B) if no securities are so issued, the Person that is the
other party to such merger or consolidation, or, if there is more than
one such Person, the Person the common stock of which has the highest
aggregate current market price (determined pursuant to SECTION 11(d)
hereof); and
(ii) in the case of any transaction described in clause (z) of
the first sentence of SECTION 13(a) hereof, the Person that is the
party receiving the largest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power transferred pursuant to
such transaction or transactions or if the Person receiving the largest
portion of the assets or earning power cannot be determined, whichever
Person the common stock of which has the highest aggregate current
market price (determined pursuant to SECTION 11(d) hereof); PROVIDED,
HOWEVER, that in any such case:
(A) if the common stock of such Person is not at such
time, and has not been continuously over the preceding
twelve-month period, registered under Section 12 of the
Exchange Act ("REGISTERED COMMON STOCK"), or such Person is
not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other
Person;
(B) if the common stock of such Person is not
Registered Common Stock or such Person is not a corporation,
and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another
Person which has Registered Common Stock outstanding,
"Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person;
(C) if the common stock of such Person is not
Registered Common Stock or such Person is not a corporation,
and such Person is directly or indirectly controlled by more
than one Person, and one or more of such other Persons has
Registered Common Stock outstanding, "Principal Party" shall
refer to whichever of such other Persons is the issuer of the
Registered Common Stock having the highest aggregate current
market price (determined pursuant to SECTION 11(d) hereof);
and
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(D) if the common stock of such Person is not
Registered Common Stock or such Person is not a corporation,
and such Person is directly or indirectly controlled by more
than one Person, and none of such other Persons have
Registered Common Stock outstanding, "Principal Party" shall
refer to whichever ultimate parent entity is the corporation
having the greatest stockholders equity or, if no such
ultimate parent entity is a corporation, shall refer to
whichever ultimate parent entity is the entity having the
greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its common stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
SECTION 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this SECTION 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement
under the Securities Act with respect to the common stock that may be
acquired upon exercise of the Rights, (B) cause such registration
statement to remain effective (and to include a prospectus complying
with the requirement of the Securities Act) until the Expiration Date,
and (C) as soon as practicable following the execution of such
agreement, take such action as may be required to ensure that any
acquisition of such common stock upon the exercise of the Rights
complies with any applicable state securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(d) In case the Principal Party which is to be a party to a transaction
referred to in this SECTION 13 has a provision in any of its authorized
securities or in its certificate of incorporation or Bylaws or other instrument
governing its corporate affairs, which provision would have the effect of
(i) causing such Principal Party to issue, in connection with,
or as a consequence of, the consummation of a transaction referred to
in this SECTION 13, shares of common stock of such Principal Party at
less than the then current market price per share (determined pursuant
to SECTION 11(d) hereof) or securities exercisable for, or convertible
into, common stock of such Principal Party at less than such then
current market price (other than to holders of Rights pursuant to this
SECTION 13); or
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(ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the common stock of such
Principal Party pursuant to the provisions of SECTION 13;
THEN, in such event, the Company shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The provisions of this SECTION 13 shall similarly apply to
successive mergers or share exchanges or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in SECTION 13(a)
hereof.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the Persons to which such
fractional Rights would otherwise be issuable an amount in cash equal to such
fraction of the market value of a whole Right. For purposes of this SECTION
14(a), the market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of the
Rights for any day shall be:
(i) if the Rights are listed or admitted to trading on a
national securities exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed
or admitted to trading; or
(ii) if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted sales price; or
(iii) if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported on the Nasdaq
National Market or such other system then in use; or
(iv) if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by a majority of the Board of Directors; or
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<PAGE> 32
(v) if on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as
determined in good faith by a majority of the Board of Directors, which
determination shall be described in a statement filed with the Rights
Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Series One Preferred Stock (other than fractions which are integral multiples of
one hundredth of a share of Series One Preferred Stock) (or other securities)
upon exercise of the Rights or to distribute certificates which evidence such
fractional shares of Series One Preferred Stock (other than fractions which are
integral multiples of one hundredth of a share of Series One Preferred Stock)
(or other securities). In lieu of such fractional shares of Series One Preferred
Stock that are not integral multiples of one hundredth of a share of Series One
Preferred Stock (or other securities), the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the then current market
value of one hundredth of a share of Series One Preferred Stock (or other
securities). For purposes of this SECTION 14(b), the current market value of one
hundredth of a share of Series One Preferred Stock (or other securities) shall
be the closing price (as the term "closing price" is used in SECTION 11(d)
hereof) of one hundredth of a share of Series One Preferred Stock (or other
securities) for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Right, expressly
waives his or her right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this SECTION 14.
Section 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, other than rights of
action vested in the Rights Agent pursuant to SECTION 18 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the
Exercisability Date, the registered holders of certificates representing shares
of Common Stock); and any registered holder of a Rights Certificate (or, prior
to the Exercisability Date, of a certificate representing shares of Common
Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Exercisability Date, of a certificate
representing shares of Common Stock), may, in his own behalf and for his own
benefit, enforce (and may institute and maintain any suit, action or proceeding
against the Company or any other Person to enforce, or otherwise act in respect
of) his right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
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Section 16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Exercisability Date, the Rights shall be
transferable only in connection with the transfer of Common Stock;
(b) after the Exercisability Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates duly executed;
(c) subject to SECTION 6(a) and SECTION 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name a Rights Certificate (or, prior to the Exercisability Date, the
associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificate or the
associated Common Stock Certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of
SECTION 7(e) hereof, shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or any other Person as a result of
its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; PROVIDED, HOWEVER, that
the Company must use its best efforts to have any such order, decree
or ruling lifted or otherwise overturned as promptly as practicable.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the shares of
Series One Preferred Stock or any other securities of the Company which may at
any time be issuable on the exercise of the Rights represented thereby; nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or, except as provided in SECTION
25 hereof, to receive notice of meetings or other actions affecting
stockholders,
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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.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses, including reasonable
fees and disbursements of its counsel, incurred in connection with the execution
and administration of this Agreement and the exercise and performance of its
duties hereunder. The Company shall indemnify the Rights Agent, its officers,
employees, agents and directors for, and hold each of them harmless against, any
losses, expenses, claims, damages or liabilities incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent or such other indemnified party in
connection with the acceptance or administration of this Agreement and
performance hereunder, including without limitation, the costs and expenses of
defending against any claim of liability therefrom, directly or indirectly, and
will promptly reimburse the Rights Agent for legal and other expenses reasonably
incurred in defending any such loss, expense, claim, damage or liability. The
indemnity provided herein shall survive the expiration of the Rights and the
termination of this Agreement. The costs and expenses reasonably and actually
incurred by the Rights Agreement in successfully enforcing a claim for
indemnification shall be paid by the Company.
(b) The Rights Agent shall be protected by the indemnity provided by
this Section 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 or the performance of its duties hereunder in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to have been signed, executed
and, where necessary, verified or acknowledged by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stockholder services businesses of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties hereto; PROVIDED, HOWEVER, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of SECTION 21 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
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have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations expressly
imposed by this Agreement (and no implied duties or obligations shall be read
into this Agreement against the Rights Agent) upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person, Affiliate
or Associate and the determination of "current market price") be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be specified
herein) may be deemed to be conclusively proved and established by a certificate
signed by any person reasonably believed by the Rights Agent to be the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; provided, however, that such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall 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
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(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.
(d) The Rights Agent is serving as an administrative agent and,
accordingly, shall not have any responsibility for the validity or legality of
any provision of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or for the validity, legality or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or failure
by the Company to satisfy conditions contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 7(e) hereof) without actual knowledge of such change, nor shall it be
responsible for any adjustment required under the provisions of SECTION 11 or
SECTION 13 hereof or for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt by the Rights Agent of the certificate describing any
such adjustment contemplated by SECTION 12 hereof); 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 Common Stock or any other
securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock or any other securities will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(e) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the performance by the Rights Agent of its duties under this
Agreement.
(f) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties; and it shall not be liable to the Company, the holder of any
Rights Certificate or any stockholder of the Company for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer or for any delay in acting while awaiting instructions. Any
application by the Rights Agent for written instructions from the Company may,
at the option of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Rights Agreement and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any such officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective
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date in the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(g) 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 offer
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.
(h) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct if reasonable care was exercised in the selection and
continued employment thereof.
(i) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of its rights hereunder if
the Rights Agent in its sole judgment shall have reasonable grounds for
believing that repayment of such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, either has not
been completed, has not been signed, or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with the Company. If such certificate has been completed and signed, the Rights
Agent may assume without further inquiry that the Rights Certificate is not
owned by a person described in SECTION 4(b) or SECTION 7(e) hereof and shall
not be charged with any knowledge to the contrary.
(k) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
Section 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the Common Stock and
the Series One Preferred Stock by registered or certified mail, and at the
expense of the Company to the holders of Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30)
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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 Stock and the
Series One Preferred Stock by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to
make such appointment within a period of thirty (30) days after giving notice
of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or any state of the
United States, in good standing, and may be the Company or a Subsidiary of the
Company. 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 Stock
and the Series One Preferred Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this SECTION 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or the Rights
to the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change made in accordance with the provisions of this Agreement in
the Exercise Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Common Stock following the
Exercisability Date and prior to the Expiration Date, the Company:
(i) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and
(ii) may, in any other case, if deemed necessary or
appropriate by the Board, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
PROVIDED, HOWEVER, that no such Rights Certificate shall be issued if,
and to the extent that (x) the Company shall be advised by counsel that
such issuance would
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create a significant risk of material adverse tax consequences to the
Company or the person to whom such Rights Certificate would be issued,
or (y) appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. REDEMPTION.
(a) The Rights may be redeemed by action of the Board pursuant to
paragraph (b) of this SECTION 23 and shall not be redeemed in any other manner.
Notwithstanding anything contained or implied in this Agreement to the contrary,
the Rights shall not be exercisable after the occurrence of a Section 11(a)(ii)
Event until such time as the Company's right of redemption hereunder have
expired.
(b) The Board may, at its option, at any time prior to the earlier of
(i) the Close of Business on the tenth Business Day after the Stock Acquisition
Date or, if the Stock Acquisition Date shall have occurred prior to the Record
Date, the Close of Business on the tenth day following the Record Date, or (ii)
the Final Expiration Date, redeem all, but not less than all, of the then
outstanding Rights at a redemption price of $.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the current per share
market price of shares of Common Stock at the time of redemption determined
pursuant to SECTION 11(d) hereof) or any other form of consideration deemed
appropriate by the Board; provided that if the Company elects to pay the
Redemption Price in shares of Common Stock, the Company shall not be required to
issue fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount of cash equal to the same fraction of the
current per share market price of a whole share of Common Stock.
(c) Immediately upon the action of the Board ordering the redemption of
the Rights pursuant to paragraph (b) of this SECTION 23, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. The Company shall promptly give public
notice of any such redemption; PROVIDED, HOWEVER, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (b), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Exercisability Date, on the registry books of the transfer agent for the
Common Stock of the Company. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that
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specifically set forth in this SECTION 23 or in SECTION 24 hereof and other
than in connection with the purchase of shares of Common Stock prior to the
Exercisability Date.
Section 24. EXCHANGE.
(a) The Board may, at its option, at any time after any Person becomes
an Acquiring Person, exchange all or any part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of SECTION 11(a)(ii) hereof) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board shall not
be empowered to effect such exchange at any time after any Acquiring Person
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to paragraph (a) of this SECTION 24, 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 equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; PROVIDED, HOWEVER, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company shall promptly mail a notice of any such exchange to all of the
holders of such Rights at their 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 for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of SECTION 11(a)(ii) hereof)
held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this SECTION 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current per share market price
of a whole share of Common Stock. For the purposes of this paragraph (d), the
current market price of a whole share of Common Stock shall be the closing price
of a share of Common Stock (as determined
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pursuant to the second and third sentences of SECTION 11(d) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this SECTION
24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Exercisability Date,
(i) to pay any dividend payable in stock of any class to the
holders of Series One Preferred Stock or to make any other distribution
to the holders of Series One Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the
company);
(ii) to offer to the holders of Series One Preferred Stock
rights or warrants to subscribe for or to purchase any additional
shares of Series One Preferred Stock or shares of stock of any class or
any other securities, rights or options;
(iii) to effect any reclassification of its Series One
Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Series One Preferred Stock);
(iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction
which complies with SECTION 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with SECTION 11(o) hereof); or
(v) to effect the liquidation, dissolution or winding up of
the Company;
THEN, in each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with SECTION 26 hereof, a
notice of such proposed action (which shall specify the record date for the
purposes of such stock dividend or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Series One Preferred
Stock, if any such date is to be fixed), and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least twenty (20)
days prior to the record date for determining holders of the shares of Series
One Preferred Stock for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Series One Preferred Stock, whichever shall be the earlier; PROVIDED,
HOWEVER, that no such notice shall be required pursuant to this SECTION 25 if
any Subsidiary of the Company effects a
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consolidation or merger with or into, or effects a sale or other transfer of
assets or earning power to, any other Subsidiary of the Company.
(b) In case any of the events set forth in SECTION 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with SECTION 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) hereof, and (ii) all
references in the preceding paragraph to Series One Preferred Stock shall be
deemed thereafter to refer to Common Stock and/or, if appropriate, other
securities.
Section 26. NOTICES.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including by telex, telegram or
cable) and be mailed or sent or delivered, if to the Company, at the following
address (until another address is filed in writing by the Company):
Signature Inns, Inc.
250 East 96th Street
Suite 450
Indianapolis, Indiana 46240
Attention: Mr. John Bontreger
and, if to the Rights Agent, at the following address (until another address is
filed in writing by the Rights Agent):
Harris Trust and Savings Bank
311 W. Monroe Street
14th Floor
Chicago, IL 60606
Attention: Mr. Tom Blatchford
All said notices shall be deemed given upon receipt. 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
Exercisability Date, to the holder of certificates representing shares of Series
One Preferred 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.
Prior to the Exercisability Date and subject to the penultimate
sentence of this SECTION 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any
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provision of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Exercisability Date and
subject to the penultimate sentence of this SECTION 27, the Company and the
Rights Agent shall, if the Company by action of the Board so directs,
supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions
herein;
(iii) to shorten or lengthen any time period hereunder; or
(iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which
shall be consistent with, and for the purpose of fulfilling, the
objectives of the Board in adopting this Agreement, including any
change in the number or class of shares of capital stock of the Company
for which the Rights are potentially exercisable prior to a Triggering
Event;
PROVIDED, HOWEVER, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights; and PROVIDED, FURTHER,
that this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence (A) subject to SECTION 31 hereof, a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Without limiting the foregoing, the Company
may at any time prior to such time as any Person becomes an Acquiring Person
amend this Agreement to change the Exercise Price hereunder. Upon the delivery
of a certificate from an appropriate officer of the Company or, so long as any
Person is an Acquiring Person hereunder, from the majority of the Board of
Directors, 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. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment which changes the rights
and duties of the Rights Agent under this Agreement shall be effective without
the consent of the Rights Agent, and no supplement or amendment shall be made
which changes the Redemption Price, the Exercise Price, the Expiration Date or
the number of shares of Common Stock (or other securities) for which a Right is
exercisable without the approval of a majority of the Board of Directors. Prior
to the Exercisability Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
Section 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS, ETC.
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For all purposes of this Agreement, any calculation of the number of
shares of Common Stock or other securities outstanding at any particular time,
including for purposes of determining the particular percentage of outstanding
shares of Common Stock of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange
Act Regulations as in effect on the date hereof. Except as otherwise
specifically provided herein, the Board shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
or by a majority of the Board in good faith (x) shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) shall not subject the Board or any member thereof to any
liability to the holders of the Rights.
Section 29. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 30. BENEFITS OF THIS AGREEMENT.
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 Exercisability Date, registered holders
of shares of 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 Exercisability Date, registered holders of
shares of Common Stock).
Section 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; PROVIDED, HOWEVER, that
notwithstanding anything in this Agreement to the contrary, if (i) any such
term, provision, covenant or restriction is held by such court or authority to
be invalid, void or unenforceable, and a majority of the Board determines in its
good faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement; and (ii) at the time
of such holding by such court or authority, the Rights are not redeemable, then
the right of redemption set forth in SECTION
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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 a majority of the
Board as described above.
Section 32. GOVERNING LAW.
This Agreement, each Right and each Rights Certificate issued hereunder
shall be governed by, and construed in accordance with, the laws of the State of
Indiana.
Section 33. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same instrument.
Section 34. DESCRIPTIVE HEADINGS.
The headings contained in this Agreement are for descriptive purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
Section 35. EFFECTIVE DATE.
Notwithstanding anything contained or implied in this Agreement to the
contrary, this Agreement shall become effective only in the event that the
Registration Statement is declared effective by the SEC. In the event such
Registration Statement is, for any reason, not declared effective by the SEC or
is withdrawn or otherwise terminated by the Company, this Agreement shall be of
no force or effect.
42
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
SIGNATURE INNS, INC.
By: /s/ John D. Bontreger
----------------------------------
Name: John D. Bontreger
Title: President and Secretary
HARRIS TRUST AND SAVINGS BANK
By: /s/ Thomas J. Blatchford
----------------------------------
Name: Thomas J. Blatchford
Title: Trust Administrator
43
<PAGE> 47
EXHIBIT A
---------
[Form of Rights Certificate]
Certificate No. ___________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS
AGREEMENT). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED
IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
SIGNATURE INNS, INC.
This certifies that [ ], or registered assigns, is the registered
holder of the number of Rights set forth above, each of which entitles the
registered holder thereof, subject to the terms and conditions of the Second
Amended and Restated Rights Agreement dated December 8, 1998 (the "Rights
Agreement") between Signature Inns, Inc., an Indiana corporation (the
"Company"), and Harris Trust and Savings Bank, as Rights Agent (the "Rights
Agent", which term shall include any successor Rights Agent under the Rights
Agreement), to purchase from the
- --------
* The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
<PAGE> 48
Company at any time after the Exercisability Date (as such term is defined in
the Rights Agreement) and prior to the Expiration Date (as such term is defined
in the Rights Agreement) at the office of the Rights Agent or its successor
designated for such purpose, one-hundredth of one fully paid nonassessable
share of Series One Preferred Stock, without par value, of the Company (the
"Series One Preferred Stock") at the Exercise Price initially of $40 per one
hundredth of one share of Series One Preferred Stock, upon presentation and
surrender of this Rights Certificate with the Election to Purchase and related
certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares of Series One Preferred Stock which may
be purchased upon exercise thereof) set forth above, and the Exercise Price per
share set forth above shall be subject to adjustment in certain events as
provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement) or, under certain circumstances described in the Rights Agreement, a
transferee of any such Acquiring Person, Associate or Affiliate, such Rights
shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase shares of
capital stock of an entity other than the Company or receive cash or other
assets, all as provided in the Rights Agreement.
<PAGE> 49
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal office of the Rights Agent and are
available from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company under certain circumstances
at its option at a redemption price of $.001 per Right, payable at the Company's
option in cash or in Common Stock, subject to adjustment in certain events as
provided in the Rights Agreement.
No fractional shares of Series One Preferred Stock (other than
fractions which are integral multiples of one hundredth of a share of Series One
Preferred Stock) will be issued upon the exercise of any Right or Rights
evidenced hereby, but in lieu thereof a cash payment will be made, as provided
in the Rights Agreement.
<PAGE> 50
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 Series One
Preferred Stock or of any other securities which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the 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.
WITNESS the signature of the proper officers of the Company. Dated as
of ________ __, _______.
ATTEST: SIGNATURE INNS, INC.
____________________________ By:_________________________________
Title:______________________ Title:______________________________
Countersigned:
____________________________
By _________________________
Authorized Signature
<PAGE> 51
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto_______________________________________________
(Please print name and address of transferee)
______________________________________________________________________ this
Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________Attorney, to
transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated:__________________________, [____].
------------------------------------------
Signature
Signature Guaranteed:
<PAGE> 52
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_______________, [____] ____________________________________
Signature
Signature Guaranteed:
_______________________________________________________________________________
NOTICE
------
This signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signature must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
<PAGE> 53
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate)
To: SIGNATURE INNS, INC.
The undersigned hereby irrevocably elects to exercise
______________________ Rights represented by this Rights Certificate to
purchase the number of hundredths of a share of Series One Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
________________________________________________________
(Please print name and address)
________________________________________________
Please insert social security
or other identifying number:____________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
________________________________________________________
(Please print name and address)
________________________________________________
Please insert social security
or other identifying number:____________________________
Dated:_________________________, [____].
__________________________________________
Signature
Signature Guaranteed:
_______________________________________________________________________________
<PAGE> 54
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated:_______________, [____] ____________________________________
Signature
Signature Guaranteed:
_______________________________________________________________________________
NOTICE
------
This signature to the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signature must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
<PAGE> 55
EXHIBIT B
---------
SUMMARY OF RIGHTS AGREEMENT
Each holder of shares of Common Stock of SIGNATURE INNS, INC. (the
"Company") as of the close of business on March 18, 1997 (the "Record Date")
will receive a distribution of one Stock Purchase Right (a "Right") per share of
the Common Stock in accordance with and pursuant to the Rights Agreement. A
Right will also accompany each share of the Common Stock issued following the
Record Date. Each Right, when it first becomes exercisable, entitles the holder
to purchase from the Company one hundredth of one share of Series One Preferred
Stock at an initial exercise price of $40 per one-hundredth of one share (the
"Exercise Price"), subject to adjustment.
Exercisability of Rights. Initially, the Rights will not be exercisable
or transferable apart from the shares of the Common Stock with respect to which
they are distributed, and will be evidenced only by the certificates
representing shares of Common Stock. The Rights will become exercisable and
transferable apart from the Common Stock on a date (the "Exercisability Date")
that is the earlier of (a) the close of business on the tenth business day after
the Stock Acquisition Date, defined as the first date of a public announcement
that a person or group of affiliated or associated persons has become an
Acquiring Person (as defined below); or (b) the close of business on such date
as a majority of the Company's Board of Directors shall determine, which date
may occur only following the commencement of a tender or exchange offer that, if
consummated, would result in a person or group becoming an Acquiring Person. The
Rights will be exercisable from the Exercisability Date until the Expiration
Date (which is the earlier of (x) the close of business on the tenth anniversary
of the Record Date (the "Final Expiration Date") or (y) the date the Rights are
redeemed by the Company (the "Redemption Date")), at which time they will
expire.
With certain exceptions described in the Rights Agreement, a person or
group becomes an Acquiring Person when such person or group acquires or obtains
the rights to acquire beneficial ownership of 20% or more of the then
outstanding shares of the Common Stock (other than as a result of a Permitted
Offer, as defined below), or 10% or more of such shares if the Company's Board
of Directors, after reasonable inquiry and investigation, declares the acquiring
person an Adverse Person under guidelines set forth in the Rights Agreement. A
"Permitted Offer" is a tender or exchange offer for all outstanding shares of
the Common Stock upon terms that a majority of the members of the Board of
Directors determines to be adequate and in the best interests of the Company and
its shareholders. The Board of Directors may declare any person to be an Adverse
Person after it determines that (i) such person, alone or together with its
affiliates and associates, has become the beneficial owner of 10% or more of the
Company's Common Stock and (ii) after reasonable inquiry and investigation, such
Person's ownership in the Company is reasonably likely (x) to cause the Company
to take action that would provide such person with short-term gain to the
detriment of the long-term interests of the Company and its shareholders, or (y)
to have a material adverse impact on the business or prospects of the Company.
<PAGE> 56
Transferability of Rights. Prior to the Exercisability Date, the Rights
will not be transferable apart from the shares of the Common Stock to which they
are attached. Thus, the surrender or transfer of any Common Stock certificate
prior to that date will also constitute the transfer of the Rights associated
with the shares represented by such certificate. As soon as practicable after
the Exercisability Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to each record holder of shares of the Common
Stock as of the close of business on the Exercisability Date and, in certain
circumstances, holders of certain shares issued after the Exercisability Date.
Flip-In Rights. Upon the occurrence of an Exercisability Date (a
"Flip-In Event"), each holder of a Right will thereafter have the right (the
"Flip-In Right") to receive, upon exercise, the number of shares of the Common
Stock (or, in certain circumstances, at the discretion of the Company's Board of
Directors, cash, property, other securities of the Company or other
consideration) having a market value immediately prior to the Flip-In Event
equal to two times the then current Exercise Price of the Right; PROVIDED,
HOWEVER, that any Right that is (or, in certain circumstances specified in the
Rights Agreement, was) beneficially owned by an Acquiring Person (or any of its
affiliates or associates) will become null and void upon the occurrence of the
Flip-In Event. Cash will be paid in lieu of issuing fractional shares of Series
One Preferred Stock pursuant to an exercise of the Rights.
Flip-Over Rights. If, at any time following a Stock Acquisition Date,
either (i) the Company is acquired in a merger or other business combination
transaction, or (ii) the Company sells or otherwise transfers more than 50% of
its aggregate assets, cash flow, or earning power, each holder of a Right
(except Rights previously voided as described above) will thereafter have the
right (the "Flip-Over Right") to receive, upon exercise, shares of common stock
of the Acquiring Person having a value equal to two times the then current
Exercise Price of the Right. The Flip-Over Right shall be exercisable apart
from, and regardless of the exercise or surrender of, the Flip-In Right.
Redemption of the Rights. At any time prior to the earlier of (i) the
close of business on the tenth business day following the Stock Acquisition
Date, or (b) the close of business on the Final Expiration Date, and in certain
other circumstances, the Company's Board of Directors may redeem the Rights, in
whole but not in part, at a Redemption Price of $.001 per Right.
Exchange of the Rights. At any time after any person becomes an
Acquiring Person, the Board of Directors may exchange the Rights (other than
Rights owned by such Acquiring Person which have become void), in whole or in
part, at an exchange ratio of one share of Common Stock per right.
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after such Acquiring Person becomes the
beneficial owner of 50% or more of the shares of Common Stock then outstanding.
Amendment of the Rights Agreement. At any time prior to the
Exercisability Date, the Board of Directors may amend any provision of the
Rights Agreement in any manner. Thereafter, the
<PAGE> 57
Board may amend the Rights Agreement in certain respects, including generally
(a) to shorten or lengthen any time period under the Rights Agreement or (b) in
any manner that the Company's Board of Directors deems necessary or desirable,
so long as such amendment is consistent with and for the purpose of fulfilling
the objectives of the Board in originally adopting the Rights Plan. Certain
amendments (including changes to the Redemption Price, Exercise Price,
Expiration Date, or number of shares for which a Right is exercisable), whether
prior to the Exercisability Date or thereafter, are permitted only upon
approval by a majority of the Board of Directors.
Non-cumulative Preferred Stock, Series One. Each one hundredth of a
share of Series One Preferred Stock, if issued, will have one vote per hundredth
of a share and will vote on all matters submitted to a vote of the Company's
shareholders, except as otherwise required by law. Subject to prior dividend
rights and sinking fund or redemption or purchase rights which may be applicable
to any other series of Series One Preferred Stock, the holders of the Series One
Preferred Stock will be entitled to share ratably in such dividends, if any, as
may be declared from time to time by the Company's Board of Directors in its
discretion out of funds legally available therefor with respect to the Series
One Preferred Stock and on a one hundred-to-one basis with respect to the Common
Stock. The holders of each one-hundredth of a share of Series One Preferred
Stock are entitled to share in any assets remaining after satisfaction of all
prior claims upon liquidation of the Company, including prior claims of any
other series of preferred stock, ratably with the holders of each share of the
Company's Common Stock. Holders of the Series One Preferred Stock will have no
preemptive or other subscription rights, and the Series One Preferred Stock is
not subject to call.
