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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
MCI Communications Corporation
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(Exact name of registrant as specified in its charter)
Delaware 52-0886267
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(State of incorporation or organization) (I.R.S. Employer
Identification No.)
1801 Pennsylvania Avenue, N.W.
Washington DC 20006
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
-------------------- ------------------------------
None.
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
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(Title of Class)
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<PAGE> PAGE 2
Item 1. Description of Registrant's Securities to be Registered.
On September 7, 1994, the Board of Directors of MCI
Communications Corporation (the "Company") declared a dividend of
one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $.10 per share and
Class A common stock, par value $.10, of the Company (the "Common
Shares"). The payment of the dividend of the Rights was subject
to the closing of the transactions contemplated by the Amended
and Restated Investment Agreement dated as of January 31, 1994
(the "Investment Agreement") between the Company and British
Telecommunications plc ("BT"), which has now occurred. On
September 30, 1994, the record date committee of the Board of
Directors, pursuant to the authorization of the Board of
Directors of the Company, established that the dividend is
payable on October 11, 1994 (the "Record Date") to the
stockholders of record on that date. Prior to the Distribution
Date (as defined below), the Rights will also be attached to all
future issuances of Common Shares. Each Right entitles the
registered holder to purchase from the Company one one-hundredth
of a share of Series E Junior Participating Preferred Stock, par
value $.10 per share (the "Preferred Shares") of the Company at a
price of $100 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement dated as
of September 30, 1994 (the "Rights Agreement") between the
Company and Mellon Bank, N.A., as Rights Agent (the "Rights
Agent").
The Rights will become exercisable on the date (the
"Distribution Date") that is the earlier of (i) 10 days following
a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") have acquired
beneficial ownership of 10% or more of the outstanding Common
Shares (more than 20.1% of the outstanding Common Shares in the
case of share acquisitions by BT) or (ii) 10 business days (or
such later date as may be determined by action of the Board of
Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement
or announcement of an intention to make a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 10% or more of the
outstanding Common Shares (more than 20.1% of the outstanding
Common Shares in the case of a tender offer or exchange offer
commenced or announced by BT). BT will not be deemed an Acquiring
Person solely by virtue of the shares of Class A Common Stock it
acquires pursuant to the Investment Agreement or any shares of
Common Stock issued upon conversion of such shares of Class A
Common Stock. The Rights will be evidenced, with respect to any
of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate together with a copy of
this Summary of Rights.
The Rights Agreement provides that, until the
Distribution Date (or earlier redemption or expiration of the
<PAGE> PAGE 3
Rights), the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new
issuances of Common Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights, will also constitute the
transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the
Distribution Date and thereafter such separate Right Certificates
alone will evidence the Rights. The Rights Agreement provides
that anything therein or in the Rights to the contrary
notwithstanding, Rights may be issued subsequent to the
Distribution Date under certain circumstances as set forth in the
Rights Agreement.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on September 30, 2004 (the "Final
Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed or exchanged by the
Company, in each case as described below.
The Purchase Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred
Shares with a conversion price, less than the then-current market
price of the Preferred Shares or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights are also subject to
adjustment in the event of a stock split of the Common Shares or
a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares
occurring, in any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the
Rights will not be redeemable, except as otherwise provided under
Section 9 of the Company's Certificate of Incorporation. Each
Preferred Share will be entitled to a preferential quarterly
dividend payment of the greater of $1 per share or 100 times the
<PAGE> PAGE 4
dividend declared per Common Share. In the event of liquidation,
the holders of the Preferred Shares will be entitled to a
preferential liquidation payment of the greater of $100 per share
or 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes, voting together with the Common
Shares. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Shares'
dividend, liquidation and voting rights, the value of the one
one-hundredth interest in a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common
Share.
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, each holder of a
Right (other than Rights beneficially owned by the Acquiring
Person, which will become void), will thereafter have the right
to receive upon exercise that number of shares of Common Stock
having a market value of two times the exercise price of the
Right.
In the event that, after a person or group has become
an Acquiring Person, the Company is acquired in a merger or other
business combination transaction or 50% or more of its
consolidated assets or earning power are sold, proper provision
will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become
void) will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price, that number
of shares of common stock of the acquiring company which at the
time of such transaction will have a market value of two times
the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share,
which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on
the last trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person
becomes such, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"), provided that pursuant to the
Company's Certificate of Incorporation, during the four years
following the closing of the transactions with BT contemplated
under the Investment Agreement, so long as any shares of Class A
Common Stock remain outstanding, such redemption will also
require the affirmative vote of the holders of 75% of all the
Company's outstanding voting securities. In addition, under the
Investment Agreement, during the six years thereafter, the
<PAGE> PAGE 5
Company has agreed with BT that, without BT's consent, it will
not redeem the Rights unless it has followed certain auction
procedures set forth in the Investment Agreement. The redemption
of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive the
Redemption Price.
At any time after any person or group becomes an
Acquiring Person and prior to the acquisition by such person or
group of 50% or more of the outstanding Common Shares, the Board
of Directors of the Company may exchange the Rights (other than
Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one share of
Common Stock, or one one-hundredth of a Preferred Share (or of a
share of a class or series of the Company's preferred stock
having equivalent rights, preferences and privileges), per Right
(subject to adjustment).
Subject to the consent rights of BT under the
certificate of incorporation and the Investment Agreement, for so
long as Rights are then redeemable, the Company may, except with
respect to the redemption price, amend the Rights in any manner.
After the Rights are no longer redeemable the Company may amend
the Rights in any manner that does not adversely affect the
interests of holders of the Rights or cause the Rights again to
become redeemable.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
Item 2. Exhibits.
4(a) Rights Agreement, dated as of September 30, 1994, between
the Company and Mellon Bank, N.A. which includes the
Certificate of Designations for the Series E Junior
Participating Preferred Stock as Exhibit A, the form of
Right Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Shares as Exhibit C. Pursuant to the
Rights Agreement, printed Right Certificates will not be
mailed until as soon as practicable after the earlier of the
tenth day after public announcement that a person or group
has acquired beneficial ownership of 10% or more of the
Common Shares (more than 20.1% in the case of BT) or the
tenth business day after a person commences, or announces
its intention to commence, a tender offer or exchange offer
the consummation of which would result in the beneficial
ownership by a person or group of 10% or more of the Common
Shares (more than 20.1% in the case of BT).
99(a)Press Release dated September 30, 1994.
<PAGE> PAGE 6
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
MCI COMMUNICATIONS CORPORATION
DATED: September 30, 1994 By: /S/EDWARD G. FREITAG
------------------------
Edward G. Freitag
Assistant Secretary
<PAGE> PAGE 1
EXHIBIT INDEX
Exhibit No. Description
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4(a) Rights Agreement, dated as of September
30, 1994, between the Company and Mellon
Bank, N.A. which includes the
Certificate of Designations for the
Series E Junior Participating Preferred
Stock as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary
of Rights to Purchase Preferred Shares
as Exhibit C. Pursuant to the Rights
Agreement, printed Right Certificates
will not be mailed until as soon as
practicable after the earlier of the
tenth day after public announcement that
a person or group has acquired
beneficial ownership of 10% or more of
the Common Shares (more than 20.1% in
the case of BT) or the tenth business
day after a person commences, or
announces its intention to commence, a
tender offer or exchange offer the
consummation of which would result in
the beneficial ownership by a person or
group of 10% or more of the Common
Shares (more than 20.1% in the case of
BT).
99(a) Press Release dated September 30, 1994.
<PAGE> Exhibit 4(a)
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( 1 of 59 )
MCI COMMUNICATIONS CORPORATION
AND
MELLON BANK, N.A.,
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 30, 1994
<PAGE> Exhibit 4(a)
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 3
Section 3. Issue of Right Certificates 3
Section 4. Form of Right Certificates 5
Section 5. Countersignature and Registration 5
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates 5
Section 7. Exercise of Rights, Purchase Price;
Expiration Date of Rights 6
Section 8. Cancellation and Destruction of Right
Certificates 7
Section 9. Availability of Preferred Shares 7
Section 10. Preferred Shares Record Date 8
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights 8
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares 13
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earnings Power 14
Section 14. Fractional Rights and Fractional Shares 16
Section 15. Rights of Action 17
Section 16. Agreement of Right Holders 17
Section 17. Right Certificate Holder Not Deemed
a Stockholder 17
Section 18. Concerning the Rights Agent 17
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 18
Section 20. Duties of Rights Agent 18
i
<PAGE> Exhibit 4(a)
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Section 21. Change of Rights Agent 20
Section 22. Issuance of New Right Certificates 20
Section 23. Redemption 20
Section 24. Exchange 21
Section 25. Notice of Certain Events 22
Section 26. Notices 22
Section 27. Supplements and Amendments 22
Section 28. Successors 23
Section 29. Benefits of this Agreement 23
Section 30. Severability 23
Section 31. Governing Law 23
Section 32. Counterparts 23
Section 33. Descriptive Headings 23
ii
<PAGE> Exhibit 4(a)
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RIGHTS AGREEMENT
Agreement, dated as of September 30, 1994, between
MCI Communications Corporation, a Delaware corporation (the
"Company"), and Mellon Bank, N.A., a national banking association
(the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Company outstanding as of the close of business (as defined
below) on October 11, 1994 (the "Record Date"), each Right
representing the right to purchase one one-hundredth (subject to
adjustment) of a Preferred Share (as hereinafter defined), upon
the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each
Common Share that shall become outstanding between the Record
Date and the earliest of the Distribution Date, the Redemption
Date and the Final Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with
respect to Common Shares that shall become outstanding after the
Distribution Date and prior to the Redemption Date and the Final
Expiration Date in accordance with Section 22.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meaning indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, shall be the Beneficial
Owner (as such term is hereinafter defined) of 10% or more of the
Common Shares then outstanding, but shall not include an Exempt
Person (as such term is hereinafter defined); provided, however,
that if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring Person,"
has become such inadvertently, and such Person divests himself or
itself as promptly as practicable of beneficial ownership of a
sufficient number of Common Shares so that such Person would no
longer be an Acquiring Person, then such Person shall not be
deemed to be or have become an "Acquiring Person" for any
purposes of this Agreement. Notwithstanding the foregoing:
(i) BT shall not be deemed an Acquiring Person unless it becomes
the Beneficial Owner of more than 20.1% of the Common Shares then
outstanding, (ii) no Person (including BT) shall become an
"Acquiring Person" as the result of an acquisition of Common
Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares
beneficially owned by such Person to 10% or more (more than 20.1%
in the case of BT) of the Common Shares then outstanding,
1
<PAGE> Exhibit 4(a)
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provided, however, that if a Person shall become the Beneficial
Owner of 10% or more of the Common Shares then outstanding (more
than 20.1% in the case of BT) by reason of such share
acquisitions by the Company and thereafter become the Beneficial
Owner of any additional Common Shares, then such Person shall be
deemed to be an "Acquiring Person" unless upon the consummation
of the acquisition of such additional Common Shares such Person
does not own 10% or more (20.1% or more in the case of BT) of the
Common Shares then outstanding and (iii) BT shall not become an
"Acquiring Person" because it becomes the Beneficial Owner of any
Common Shares as a result of the acquisition of Common Shares
from the Company pursuant to Section 2 of the Investment
Agreement or upon the exercise of its equity purchase rights set
forth in Section 6 of the Investment Agreement or upon the
issuance of Common Shares upon conversion or exercise of
securities issued pursuant to such equity purchase rights,
provided, however, that if BT shall become the Beneficial Owner
of more than 20.1% of the Common Shares by reason of such
acquisition of such Common Shares from the Company or the
exercise of such equity purchase rights and shall thereafter
become the Beneficial Owner of any additional Common Shares, then
BT shall be deemed to be an "Acquiring Person" unless upon
consummation of the acquisition of such additional Common Shares
BT does not own more than 20.1% of the Common Shares then
outstanding. The phrase "then outstanding", when used with
reference to a Person's Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed
to own beneficially hereunder.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as in effect on the date of this
Agreement; provided that, when used to indicate a relationship
with BT, "Associate" shall mean a corporation or organization of
which BT is, directly or indirectly, the beneficial owner of 20%
or more of any class of voting securities, provided, however,
that, with respect to a corporation or organization that would
otherwise be an Associate of BT as of the date hereof, such
percentage shall be 23% or more and such percentage shall be
applied with reference to all outstanding voting securities,
provided further that the applicable percentage shall be 10% or
more and such percentage shall be applied with reference to any
class of voting securities if such corporation or organization
holds Voting Securities (as defined in the Investment Agreement)
in order to circumvent the purposes of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of,
shall be deemed to have "Beneficial Ownership" of and shall be
deemed to "beneficially own" any securities:
2
<PAGE> Exhibit 4(a)
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( 6 of 59 )
(i) which such Person or any of such Person's
Affiliates or Associates is deemed to beneficially own,
directly or indirectly within the meaning of Rule 13d-3 of
the General Rules and Regulations under the Exchange Act as
in effect on the date of this Rights Agreement;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement
or understanding (other than customary agreements with and
between underwriters and selling group members with respect
to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that 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, (y)
securities which such Person has a right to acquire on the
exercise of Rights at any time prior to the time a Person
becomes an Acquiring Person or (z) securities issuable upon
exercise of Rights from and after the time a Person becomes
an Acquiring Person if such Rights were acquired by such
Person or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to Section 3(a)
or Section 22 hereof ("original Rights") or pursuant to
Section 11(i) or Section 11(n) with respect to an adjustment
to original Rights; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, any security by reason of such
agreement, arrangement or understanding if the agreement,
arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the
proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
3
<PAGE> Exhibit 4(a)
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(d) "BT" shall mean British Telecommunications plc, a public
limited company organized and existing under the laws of England
and Wales, and its wholly-owned subsidiaries.
(e) "Business Day" shall mean any day other than a Saturday,
a Sunday, or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order to
close.
(f) "close of business" on any given date shall mean
5:00 P.M., New York City time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M.,
New York City time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference to the Company
shall mean shares of Common Stock and shares of the Class A
Common Stock, presently par value $.10 per share, of the Company.
"Common Shares" when used with reference to any Person other than
the Company shall mean the capital stock (or, in the case of an
unincorporated entity, the equivalent equity interest) with the
greatest voting power of such other Person or, if such other
Person is a subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.
(h) "Common Stock" shall mean the common stock, presently
par value $.10 per share, of the Company.
(i) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(j) "Exempt Person" shall mean the Company, any Subsidiary
(as such term is hereinafter defined) of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity or trustee holding Common Shares for or
pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company.
(k) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(l) "Investment Agreement" shall mean the Amended and
Restated Investment Agreement, dated as of January 31, 1994,
between BT and the Company, as the same may be amended,
supplemented or otherwise modified from time to time.
(m) "NASDAQ Stock Market" shall mean stock market operated
by National Association of Securities Dealers, Inc.
(n) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or
otherwise) of such entity.
4
<PAGE> Exhibit 4(a)
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(o) "Preferred Shares" shall mean shares of Series E Junior
Participating Preferred Stock, par value $.10 per share, of the
Company having the rights and preferences set forth in the Form
of Certificate of Designations attached to this Agreement as
Exhibit A.
(p) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(q) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(r) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such or such earlier date as a
majority of the Board of Directors shall become aware of the
existence of an Acquiring Person.
(s) "Subsidiary" of any Person shall mean any corporation or
other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect a majority of
the board of directors or other persons performing similar
functions are beneficially owned, directly or indirectly, by such
Person, and any corporation or other entity that is otherwise
controlled by such Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the
Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the tenth day after the Shares Acquisition Date or
(ii) the tenth business day (or such later date as may be
determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or
of the first public announcement of the intention of such Person
(other than an Exempt Person) to commence, a tender or exchange
offer the consummation of which would result in any Person
becoming the Beneficial Owner of Common Shares aggregating 10% or
more (more than 20.1% if such Person is BT) of the Common Shares
then outstanding (including any such date which is after the date
of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by the certificates for
Common Shares registered in the names of the holders thereof and
not by separate Right Certificates, and (y) the Rights will be
5
<PAGE> Exhibit 4(a)
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transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and
the Rights Agent will, if requested, send) by first-class,
insured, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date
(other than any Acquiring Person or any Associate or Affiliate of
an Acquiring Person), at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the
form of Exhibit B hereto (a "Right Certificate"), evidencing one
Right (subject to adjustment as provided herein) for each Common
Share so held. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights
to Purchase Preferred Shares, in substantially the form of
Exhibit C hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date (other than any
Acquiring Person or any Associate or Affiliate of any Acquiring
Person), at the address of such holder shown on the records of
the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in
the names of the holders thereof together with the Summary of
Rights. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights,
shall also constitute the transfer of the Rights associated with
the Common Shares represented thereby.
(c) Certificates issued for Common Shares (including,
without limitation, upon transfer of outstanding Common Shares,
disposition of Common Shares out of treasury stock or issuance or
reissuance of Common Shares out of authorized but unissued
shares) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement
between MCI Communications Corporation and Mellon Bank,
N.A., dated as of September 30, 1994 (the "Rights
Agreement") as the same may be amended from time to time,
the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal
executive offices of MCI Communications Corporation. Under
certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and
6
<PAGE> Exhibit 4(a)
------------
( 10 of 59 )
will no longer be evidenced by this certificate. MCI
Communications Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights
owned by or transferred to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement) and
certain transferees thereof will become null and void and
will no longer be transferable.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby. In the
event that the Company purchases or otherwise acquires any Common
Shares after the Record Date but prior to the Distribution Date,
any Rights associated with such Common Shares shall be deemed
cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend
shall not affect the enforceability of any part of this Rights
Agreement or the rights of any holder of the Rights.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof)
shall be substantially in the form set forth in Exhibit B hereto
and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of the NASDAQ
Stock Market or of any stock exchange on which the Rights may
from time to time be listed, or to conform to usage. Subject to
the provisions of Sections 11 and 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such
number of one one-hundredths of a Preferred Share as shall be set
forth therein at the price per one one-hundredth of a Preferred
Share set forth therein (the "Purchase Price"), but the number of
such one onehundredths of a Preferred Share and the Purchase
Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. (a) The
Right Certificates shall be executed on behalf of the Company by
the Chairman of the Board of Directors, the President, any of the
Vice Presidents, the Treasurer or the Controller of the Company,
either manually or by facsimile signature, shall have affixed
7
<PAGE> Exhibit 4(a)
------------
( 11 of 59 )
thereto the Company's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the
Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the
Person who signed such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any Person who, at the actual
date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement
any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at an office or agency designated for
such purpose, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. (a) Subject to the provisions of Sections
11(a)(ii) and 14 hereof, at any time after the close of business
on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates
(other than Right Certificates representing Rights that have
become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a
like number of one one-hundredths of a Preferred Share as the
Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or
exchanged at the office or agency of the Rights Agent designated
for such purpose. Thereupon the Rights Agent shall countersign
and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right
Certificates.
8
<PAGE> Exhibit 4(a)
------------
( 12 of 59 )
(b) Subject to the provisions of Section 11(a)(ii) hereof,
upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory
to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to
the Rights Agent for delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights, Purchase Price; Expiration
Date of Rights. (a) Except as otherwise provided herein, the
Rights shall become exercisable on the Distribution Date, and
thereafter the registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the office or
agency of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each one one-hundredth of
a Preferred Share as to which the Rights are exercised, at any
time which is both after the Distribution Date and prior to the
earliest of (i) the close of business on September 30, 2004 (the
"Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date")
or (iii) the time at which such Rights are exchanged as provided
in Section 24 hereof.
(b) The Purchase Price shall be initially $100 for each one
one-hundredth of a Preferred Share purchasable upon the exercise
of a Right. The Purchase Price and the number of one one-
hundredths of a Preferred Share or other securities or property
to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States
of America in accordance with paragraph (c) of this Section 7.
(c) Except as otherwise provided herein, upon receipt of a
Right Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of
the aggregate Purchase Price for the Preferred Shares to be
purchased and an amount equal to any applicable transfer tax
required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof, in cash or by certified check,
cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares
certificates for the number of Preferred Shares to be purchased
and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) requisition from the
9
<PAGE> Exhibit 4(a)
------------
( 13 of 59 )
depositary agent depositary receipts representing interests in
such number of one one-hundredths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs
the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to
be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after
receipt, promptly deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the
registered holder of any Right Certificate shall exercise less
than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assigns, subject
to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Right Certificates
to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
10
<PAGE> Exhibit 4(a)
------------
( 14 of 59 )
Section 9. Availability of Preferred Shares. (a) The
Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred
Shares or any Preferred Shares held in its treasury, the number
of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the Preferred Shares (and, following the time
that a Person becomes an Acquiring Person, shares of Common Stock
and other securities) issuable upon the exercise of Rights may be
listed or admitted to trading on the NASDAQ Stock Market or
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 or admitted to trading on the NASDAQ Stock Market or
listed on such exchange upon official notice of issuance upon
such exercise.
(c) From and after such time as the Rights become
exercisable, the Company shall use its best efforts to, if then
necessary to permit the issuance of Preferred Shares (and
following the time that a Person first becomes an Acquiring
Person, shares of Common Stock and other securities) upon the
exercise of Rights, register and qualify such Preferred Shares
(and following the time that a Person first becomes an Acquiring
Person, shares of Common Stock and other securities) under the
Securities Act and any applicable state securities or "Blue Sky"
laws (to the extent exemptions therefrom are not available),
cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such
registration and qualifications effective until the earlier of
the date as of which the Rights are no longer exercisable for
such securities and the Final Expiration Date. The Company may
temporarily suspend, for a period of time not to exceed 90 days,
the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to
become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction
unless the requisite qualification in such jurisdiction shall
have been obtained and until a registration statement under the
Securities Act (if required) shall have been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred
Shares (and, following the time that a Person becomes an
Acquiring Person, shares of Common Stock and other securities)
delivered upon exercise of Rights shall, at the time of delivery
of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
11
<PAGE> Exhibit 4(a)
------------
( 15 of 59 )
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance
or delivery of the Right Certificates or of any Preferred Shares
(or shares of Common Stock or other securities) upon the exercise
of Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for
the Preferred Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates or depositary
receipts for Preferred Shares upon the exercise of any Rights
until any such tax shall have been paid (any such tax being
payable by that holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's
reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each Person in
whose name any certificate for Preferred Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preferred
Shares transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares
on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares transfer books of the
Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled
to any rights of a holder of Preferred Shares for which the
Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights. The Purchase Price, the number of Preferred
Shares or other securities or property purchasable upon exercise
of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on
the Preferred Shares payable in Preferred Shares,
(B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares
12
<PAGE> Exhibit 4(a)
------------
( 16 of 59 )
(including any such reclassification in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books
of the Company were open, the holder would have owned upon
such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement and except
as otherwise provided in this Section 11(a)(ii), in the
event any Person becomes an Acquiring Person, each holder of
a Right, shall thereafter have the right to receive, upon
exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement
and in lieu of Preferred Shares, such number of shares of
Common Stock (or at the option of the Company, such number
of one one-hundredths of Preferred Shares) as shall equal
the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per
share market price of the Company's Common Stock (determined
pursuant to Section 11(d) hereof) on the date of the
occurrence of such event. Notwithstanding anything in this
Rights Agreement to the contrary, however, from and after
the time (the "invalidation time") when any Person first
becomes an Acquiring Person, any Rights that are
beneficially owned by (x) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (y) a
transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the invalidation
time or (z) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who became a transferee prior
to or concurrently with the invalidation time pursuant to
either (I) a transfer from the Acquiring Person to holders
of its equity securities or to any Person with whom it has
any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which
13
<PAGE> Exhibit 4(a)
------------
( 17 of 59 )
the Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose or effect
of avoiding the provisions of this paragraph, and subsequent
transferees of such Persons, shall be void without any
further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such
Rights under any provision of this Rights Agreement. The
Company shall use all reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but
shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. From and
after the invalidation time, no Right Certificate shall be
issued pursuant to Section 3 or Section 6 hereof that
represents Rights that are or have become void pursuant to
the provisions of this paragraph, and any Right Certificate
delivered to the Rights Agent that represents Rights that
are or have become void pursuant to the provisions of this
paragraph shall be cancelled. From and after the occurrence
of an event specified in Section 13(a) hereof, any Rights
that theretofore have not been exercised pursuant to this
Section 11(a)(ii) shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this
Section 11(a)(ii).
(iii) The Company may at its option substitute for a
share of Common Stock issuable upon the exercise of Rights
in accordance with the foregoing subparagraph (ii) such
number or fractions of Preferred Shares having an aggregate
current market value equal to the current per share market
price of a share of Common Stock. In the event that there
shall not be sufficient shares of Common Stock issued but
not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Board of Directors shall,
to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party
(A) determine the excess of (1) the value of the shares of
Common Stock issuable upon the exercise of a Right in
accordance with the foregoing subparagraph (ii) (the
"Current Value") over (2) the then current Purchase Price
multiplied by the number of one one-hundredths of Preferred
Shares for which a Right was exercisable immediately prior
to the time that the Acquiring Person became such (such
excess, the "Spread"), and (B) with respect to each Right
(other than Rights which have become void pursuant to
Section 11(a)(ii)), make adequate provision to substitute
for the shares of Common Stock issuable in accordance with
subparagraph (ii) upon exercise of the Right and payment of
the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) Preferred Shares or other equity
securities of the Company (including, without limitation,
14
<PAGE> Exhibit 4(a)
------------
( 18 of 59 )
shares or fractions of shares of preferred stock which, by
virtue of having dividend, voting and liquidation rights
substantially comparable to those of the shares of Common
Stock, are deemed in good faith by the Board of Directors to
have substantially the same value as the shares of Common
Stock (such Preferred Shares and shares or fractions of
shares of preferred stock are hereinafter referred to as
"Common Share equivalents"), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, having a value which, when added to the value of
the shares of Common Stock actually issued upon exercise of
such Right, shall have an aggregate value equal to the
Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been
determined by the Board of Directors upon the advice of a
nationally recognized investment banking firm selected in
good faith by the Board of Directors; provided, however, if
the Company shall not make adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days
following the date that the Acquiring Person became such
(the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, to the extent permitted by
applicable law and any material agreements then in effect to
which the Company is a party, upon the surrender for
exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number or fractions
of Preferred Shares (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If, upon the date any Person
becomes an Acquiring Person, the Board of Directors shall
determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, then, if the
Board of Directors so elects, the thirty (30) day period set
forth above may be extended to the extent necessary, but not
more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, is
herein called the "Substitution Period"). To the extent
that the Company determines that some action need be taken
pursuant to the second and/or third sentence of this
Section 11(a)(iii), the Company (x) shall provide, subject
to Section 11(a)(ii) hereof and the last sentence of this
Section 11(a)(iii) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such second sentence and
to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
15
<PAGE> Exhibit 4(a)
------------
( 19 of 59 )
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the shares
of Common Stock shall be the current per share market price
(as determined pursuant to Section 11(d)(i)) on the
Section 11(a)(ii) Trigger Date and the per share or
fractional value of any "Common Share equivalent" shall be
deemed to equal the current per share market price of the
Common Shares. The Board of Directors of the Company may,
but shall not be required to, establish procedures to
allocate the right to receive shares of Common Stock upon
the exercise of the Rights among holders of Rights pursuant
to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe
for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible
into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred
shares) less than the then current per share market price of
the Preferred Shares (determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in
effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares and equivalent
preferred shares outstanding on such record date plus the
number of Preferred Shares and equivalent preferred shares
which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which
shall be the number of Preferred Shares and equivalent
preferred shares outstanding on such record date plus the
number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase
(or into which the convertible securities so to be offered
are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may
be paid in a consideration part or all of which shall be in
a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of
16
<PAGE> Exhibit 4(a)
------------
( 20 of 59 )
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.
Preferred Shares and equivalent preferred shares owned by or
held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred
Shares (including any such distribution made in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be
the then current per share market price of the Preferred
Shares (determined pursuant to Section 11(d) hereof) on such
record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company whose
determination shall be described in a statement filed with
the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share, and
the denominator of which shall be such current per share
market price (determined pursuant to Section 11(d) hereof)
of a Preferred Share; provided, however, that in no event
shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of
one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) (i) Except as otherwise provided herein, for the
purpose of any computation hereunder, the "current per share
market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be
the average of the daily closing prices per share of such
Security for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per
share market price of the Security is determined during a
period following the announcement by the issuer of such
17
<PAGE> Exhibit 4(a)
------------
( 21 of 59 )
Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible
into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the
expiration of 30 Trading Days after the ex-dividend date for
such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either
case as reported by the principal consolidated transaction
reporting system with respect to securities listed or
admitted to trading on the NASDAQ Stock Market or, if the
Security is not listed or admitted to trading on the NASDAQ
Stock Market, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on
which the Security is listed or admitted to trading or, if
the Security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in
use, or, if on any such date the Security is not quoted by
any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of
Directors of the Company. The term "Trading Day" shall mean
a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open
for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, if
the Preferred Shares are publicly traded, the "current per
share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in
Section 11(d)(i). If the Preferred Shares are not publicly
traded but the Common Stock is publicly traded, the "current
per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price
of the shares of Common Stock as determined pursuant to
Section 11(d)(i) multiplied by one hundred (appropriately
adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof). If
neither the Common Stock nor the Preferred Shares are
publicly traded, "current per share market price" shall mean
the fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent.
18
<PAGE> Exhibit 4(a)
------------
( 22 of 59 )
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one ten-thousandth of a
Preferred Share or share of Common Stock or other share or
security as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of
(i) three years from the date of the transaction which
requires such adjustment or (ii) the date of the expiration
of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to
the Preferred Shares contained in Sections 11(a)(i), 11(b),
11(c) and 11(i), and the provisions of Sections 7, 9, 10 and
13 with respect to the Preferred Shares shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-hundredths of
a Preferred Share purchasable from time to time hereunder
upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment
of the Purchase Price as a result of the calculations made
in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one ten-
thousandth of a Preferred Share) obtained by (i) multiplying
(x) the number of one one-hundredths of a share covered by a
Right immediately prior to such adjustment by (y) the
Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
19
<PAGE> Exhibit 4(a)
------------
( 23 of 59 )
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of
Rights, in substitution for any adjustment in the number of
one one-hundredths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company
may, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof,
the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a
Preferred Share issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par
value, if any, of the Preferred Shares or other shares of
capital stock issuable upon exercise of the Rights, the
20
<PAGE> Exhibit 4(a)
------------
( 24 of 59 )
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 fully paid and
nonassessable Preferred Shares or other such shares at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective
as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock
or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision
of the Preferred Shares, issuance wholly for cash of any
Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable
for Preferred Shares, dividends on Preferred Shares payable
in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter
made by the Company to holders of its Preferred Shares shall
not be taxable to such stockholders.
(n) Anything in this Rights Agreement to the contrary
notwithstanding, in the event that at any time after the
date of this Agreement and prior to the Distribution Date,
the Company shall (i) declare or pay any dividend on the
Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment of
dividends in Common Shares) into a greater or lesser number
of Common Shares, then in any such case, the number of
Rights associated with each Common Share then outstanding,
or issued or delivered thereafter shall be proportionately
adjusted so that the number of Rights thereafter associated
with each Common Share following any such event shall equal
the result obtained by multiplying the number of Rights
associated with each Common Share immediately prior to such
21
<PAGE> Exhibit 4(a)
------------
( 25 of 59 )
event by a fraction the numerator of which shall be the
total number of Common Shares outstanding immediately prior
to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding
immediately following the occurrence of such event.
(o) The Company agrees that, after the earlier of the
Distribution Date or the Shares Acquisition Date, it will
not, except as permitted by Sections 23, 24 or 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 diminish substantially or eliminate the
benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Section 11 or 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment, and a brief statement
of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares
or the Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have
knowledge of any such adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earnings Power. (a) In the event, directly or
indirectly, at any time after any Person has become an Acquiring
Person, (i) the Company shall merge with and into any other
Person, (ii) any Person shall consolidate with the Company, or
any Person shall merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other
securities of any other Person (or of the Company) or cash or any
other property, or (iii) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person (other than the Company or one or more of its
wholly-owned Subsidiaries), then upon the first occurrence of
such event, proper provision shall be made so that: (A) each
holder of record of a Right (other than Rights which have become
void pursuant to Section 11(a)(ii)) shall thereafter have the
right to receive, upon the exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the time that any Person first
became an Acquiring Person (as subsequently adjusted thereafter
22
<PAGE> Exhibit 4(a)
------------
( 26 of 59 )
pursuant to Sections 11(a)(i), 11(b), 11(c) and 11(i)), in
accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of validly issued, fully paid and
non-assessable and freely tradeable Common Shares of the
Principal Party (as defined herein) not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately
prior to the time that any Person first became an Acquiring
Person (as subsequently adjusted thereafter pursuant to
Sections 11(a)(i), 11(b), 11(c) and 11(i)) and (2) dividing that
product by 50% of the then current per share market price of the
Common Shares of such Principal Party (determined pursuant to
Section 11(d)(i) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; provided that the
Purchase Price and the number of Common Shares of such Principal
Party issuable upon exercise of each Right shall be further
adjusted as provided in Section 11(f) of this Rights Agreement to
reflect any events occurring in respect of such Principal Party
after the date of the such consolidation, merger, sale or
transfer; (B) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger,
sale or transfer, all the obligations and duties of the Company
pursuant to this Rights Agreement; (C) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and
(D) such issuer shall take such steps (including, but not limited
to, the reservation of a sufficient number of its shares of
Common Stock in accordance with Section 9 hereof) in connection
with such consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter
be applicable, as nearly as reasonably may be, in relation to the
shares of Common Stock thereafter deliverable upon the exercise
of the Rights; provided that, upon the subsequent occurrence of
any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party,
each holder of a Right shall thereupon be entitled to receive,
upon exercise of a Right and payment of the Purchase Price as
provided in this Section 13(a), such cash, shares, rights,
warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such
transaction, owned the Common Shares of the Principal Party
purchasable upon the exercise of a Right pursuant to this
Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the
Rights in accordance with the terms hereof for such cash, shares,
rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (i) or
(ii) of the first sentence of Section 13(a) hereof: (A) the
23
<PAGE> Exhibit 4(a)
------------
( 27 of 59 )
Person that is the issuer of the securities into which
Common Shares are converted in such merger or consolidation,
or, if there is more than one such issuer, the issuer the
Common Shares of which has the greatest aggregate market
value of shares outstanding or (B) if no securities are so
issued, (x) the Person that is the other party to the
merger, if such Person survives said merger, or, if there is
more than one such Person, the Person the Common Shares of
which has the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to
the merger does not survive the merger, the Person that does
survive the merger (including the Company if it survives) or
(z) the Person resulting from the consolidation; and
(ii) in the case of any transaction described in (iii)
of the first sentence in Section 13(a) hereof, the Person
that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same
portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such
Persons as is the issuer of Common Shares having the
greatest aggregate market value of shares outstanding;
provided, however, that in any such case described in the
foregoing clause (b)(i) or (b)(ii), (1) if the Common Shares of
such Person are not at such time or have not been continuously
over the preceding 12-month period registered under Section 12 of
the Exchange Act, and if such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and
have been so registered, the term "Principal Party" shall refer
to such other Person, or (2) if such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
Shares of all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate market
value of shares outstanding, or (3) if such Person is owned,
directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in clauses (1) and (2) above shall
apply to each of the owners having an interest in the venture as
if the Person owned by the joint venture was a Subsidiary of both
or all of such joint venturers, and the Principal Party in each
such case shall bear the obligations set forth in this Section 13
in the same ratio as its interest in such Person bears to the
total of such interests.
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) hereof
unless prior thereto the Company and the Principal Party involved
therein shall have executed and delivered to the Rights Agent an
24
<PAGE> Exhibit 4(a)
------------
( 28 of 59 )
agreement confirming that the requirements of Sections 13(a) and
(b) hereof shall promptly be performed in accordance with their
terms and that such consolidation, merger, sale or transfer of
assets shall not result in a default by the Principal Party under
this Rights Agreement as the same shall have been assumed by the
Principal Party pursuant to Sections 13(a) and (b) hereof and
providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and
the securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such
registration statement to become effective as soon as
practicable after such filing and use its best efforts to
cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, and similarly
comply with applicable state securities laws;
(ii) use its best efforts, if the Common Shares of the
Principal Party shall be listed or admitted to trading on
the NASDAQ Stock Market or on a national securities
exchange, to list or admit to trading (or continue the
listing of) the Rights and the securities purchasable upon
exercise of the Rights on NASDAQ Stock Market or such
securities exchange and, if the Common Shares of the
Principal Party shall not be listed or admitted to trading
on NASDAQ Stock Market or a national securities exchange, to
cause the Rights and the securities purchasable upon
exercise of the Rights to be reported by such other system
then in use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in
all respects with the requirements for registration on Form
10 (or any successor form) under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Shares of the
Principal Party subject to purchase upon exercise of
outstanding Rights.
(d) Furthermore, in case the Principal Party which is to be
a party to a transaction referred to in this Section 13 has
provision in any of its authorized securities or in its
certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than
to holders of Rights pursuant to this Section 13), in connection
with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, Common Shares of such Principal
Party at less than the then current market price per share
25
<PAGE> Exhibit 4(a)
------------
( 29 of 59 )
(determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Shares of such
Principal Party at less than such then current market price, or
(ii) providing for any special payment, tax or similar provisions
in connection with the issuance of the Common Shares of such
Principal Party pursuant to the provisions of Section 13, then,
in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction unless
prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or
that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or
as a consequence of, the consummation of the proposed
transaction.
(e) The Company covenants and agrees that it shall not, at
any time after a Person first becomes an Acquiring Person, enter
into any transaction of the type contemplated by (i)-(iii) of
Section 13(a) hereof if (x) at the time of or immediately after
such consolidation, merger, sale, transfer or other transaction
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, (y) prior to, simultaneously with or
immediately after such consolidation, merger, sale, transfer of
other transaction, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of
its Affiliates or Associates or (z) the form or nature of
organization of the Principal Party would preclude or limit the
exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares. (a)
The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid
to the registered holders of the Right Certificates with regard
to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the NASDAQ Stock Market or, if the Rights
are not listed or admitted to trading on the NASDAQ Stock Market,
26
<PAGE> Exhibit 4(a)
------------
( 30 of 59 )
as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
are integral multiples of one one-hundredth of a Preferred
Share). Interests in fractions of Preferred Shares in integral
multiples of one one-hundredth of a Preferred Share may, at the
election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented
by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a
Preferred Share, the Company shall pay to the registered holders
of Right Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of
the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share
(as determined pursuant to Section 11(d)(i) hereof) 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 right to receive any fractional Rights or
any fractional shares upon exercise of a Right (except as
provided above).
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
27
<PAGE> Exhibit 4(a)
------------
( 31 of 59 )
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), on his own behalf and for his own
benefit, may enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise
act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
Common Shares;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights
Agent if surrendered at the office or agency of the Rights
Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat
the Person in whose name the Right Certificate (or, prior to
the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates
or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
28
<PAGE> Exhibit 4(a)
------------
( 32 of 59 )
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by
such Right 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 and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate
for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person
or Persons, or otherwise upon the advice of counsel as set forth
in Section 20 hereof.
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
stock transfer or corporate trust powers of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto; provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any
of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any
29
<PAGE> Exhibit 4(a)
------------
( 33 of 59 )
of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
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 Right Certificates shall
have been countersigned but not delivered the Rights Agent may
adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right certificates either in
its prior name or in its changed name and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board
of Directors, the President, any Vice President, the
Treasurer, the Controller or the Secretary of the Company
and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence,
bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals
30
<PAGE> Exhibit 4(a)
------------
( 34 of 59 )
contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor
shall it be responsible for any change in the exercisability
of the Rights (including the Rights becoming void pursuant
to Section 11(a)(ii) hereof) or any adjustment in the terms
of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 and 24, or
the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate furnished pursuant to Section
12, describing such change or adjustment); nor shall it by
any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of
its duties hereunder from any person reasonably believed by
the Rights Agent to be one of the Chairman of the Board of
Directors, the President, any Vice President, the Secretary,
the Controller or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action
taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting
while waiting for those 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
31
<PAGE> Exhibit 4(a)
------------
( 35 of 59 )
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 officer of the Company actually receives such
application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in
response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment thereof.
(j) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer,
the certificate contained in the form of assignment or the
form of election to purchase set forth on the reverse
thereof, as the case may be, has not been completed to
certify the holder is not an Acquiring Person (or an
Affiliate or Associate thereof), a Rights Agent shall not
take any further action with respect to such requested
exercise of transfer without first consulting with the
Company.
Section 21. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Shares or Preferred Shares by registered or certified mail, and
to the holders of the Right Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing, mailed to the Rights Agent
32
<PAGE> Exhibit 4(a)
------------
( 36 of 59 )
or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of 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 Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and
doing business under the laws of the United States or the State
of New York (or of any other state of the United States so long
as such corporation is authorized to do business as a banking
institution in the State of New York), in good standing, having
an office in the State of New York, which is authorized under
such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50 million.
After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such forms as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale
of Common Shares following the Distribution Date and prior to the
earlier of the Redemption Date and the Expiration Date, the
33
<PAGE> Exhibit 4(a)
------------
( 37 of 59 )
Company may with respect to Common Shares so issued or sold
pursuant to (i) the exercise of stock options, (ii) under any
employee plan or arrangement, (iii) upon the exercise, conversion
or exchange of securities notes or debentures issued by the
Company or (iv) a contractual obligation of the Company, in each
case existing prior to the Distribution Date, issue Rights
Certificates representing the appropriate number of Rights in
connection with such issuance or sale.
Section 23. Redemption. (a) The Board of Directors of the
Company may, at any time prior to such time as any Person first
becomes an Acquiring Person, redeem all but not less than all the
then outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (the
redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a)
of this Section 23 (or at such later time as the Board of
Directors may establish for the effectiveness of such
redemption), 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. 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, the Company shall mail a notice of redemption to all
the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books
of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of redemption shall state the method by which the payment of the
Redemption Price will be made.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after any Person first
becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of
Section 11(a)(ii) hereof) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
any Person (other than an Exempt Person), together with all
34
<PAGE> Exhibit 4(a)
------------
( 38 of 59 )
Affiliates and Associates of such Person, becomes the Beneficial
Owner of Common Shares aggregating 50% or more of the Common
Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action
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 the Rights
so exchanged at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the shares of
Common Stock 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 may, in its
discretion, take such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange of
the Rights. In the event that the Company shall determine not to
take such action or shall, after good faith effort, be unable to
take such action as may be necessary to authorize such additional
shares of Common Stock, the Company shall substitute, to the
extent of such insufficiency, for each share of Common Stock that
would otherwise be issuable upon exchange of a Right, a number of
Preferred Shares or fractions thereof (or equivalent preferred
shares as such term is defined in Section 11(b)), having an
aggregate value equal to the current per share market price of
one share of Common Stock (determined pursuant to Section 11(d)
hereof) as of the date of issuance of such Preferred Shares or
fractions thereof (or equivalent preferred shares).
(d) The Company shall not, in connection with any exchange
pursuant to this Section 24, 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
35
<PAGE> Exhibit 4(a)
------------
( 39 of 59 )
such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock. For the
purposes of this paragraph (d), the current market value of a
whole share of Common Stock shall be the closing price of a share
of Common Stock (as determined pursuant to the second sentence of
Section 11(d)(i) 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 at any time after the earlier of the Distribution
Date or the Shares Acquisition Date propose (i) to pay any
dividend payable in stock of any class to the holders of its
Preferred Shares or to make any other distribution to the holder
of its Preferred Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect the liquidation, dissolution or
winding up of the Company, or (v) to declare or pay any dividend
on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of dividends in
Common Shares), then, in each such case, the Company shall give
to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of such proposed action, 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
liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of the Common Shares
and/or Preferred Shares, 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 10 days prior to the record
date for determining holders of the Preferred Shares for purposes
of such action, and in the case of any such other action, at
least 10 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever shall be the
earlier.
(b) In case any event described in Section 11(a)(ii) or
Section 13 shall occur then the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate
(or if occurring prior to the Distribution Date, the holders of
Common Shares) in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such
event and the consequences of such event to holders of Rights
under Section 11(a)(ii) and Section 13 hereof.
Section 26. Notices. Notices or demands authorized by this
36
<PAGE> Exhibit 4(a)
------------
( 40 of 59 )
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington D.C. 20006
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Mellon Securities Trust Company
85 Challenger Road
Ridgefield Park, New Jersey 07660
Attention: Marie Sandhauer
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments. Except as provided
in the penultimate sentence of this Section 27, for so long as
the Rights are then redeemable, the Company may in its sole and
absolute discretion, and the Rights Agent shall if the Company so
directs, supplement or amend any provision of this Rights
Agreement in any respect without the approval of any holders of
the Rights. At any time when the Rights are no longer
redeemable, except as provided in the penultimate sentence of
this Section 27, the Company may, and the Rights Agent shall, if
the Company so directs, supplement or amend this Rights Agreement
without the approval of any holders of Rights Certificates in
order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) shorten or lengthen any
time period hereunder, or (iv) change or supplement the
provisions hereunder in any manner which the Company may deem
necessary or desirable; provided that no such supplement or
amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person), and no such amendment may
cause the rights again to become redeemable or cause the
Agreement again to become amendable other than in accordance with
this sentence. Notwithstanding anything contained in this Rights
37
<PAGE> Exhibit 4(a)
------------
( 41 of 59 )
Agreement to the contrary, no supplement or amendment shall be
made which changes the Redemption Price. Upon the delivery of a
certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment.
Section 28. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. 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 Right
Certificates (and, prior to the Distribution Date, the Common
Shares) 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 Right Certificates (and, prior to the Distribution
Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant
or restriction of this Agreement or applicable to this Agreement
is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed
entirely within such State.
Section 32. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 33. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
38
<PAGE> Exhibit 4(a)
------------
( 42 of 59 )
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and
year first above written.
Attest: MCI COMMUNICATIONS CORPORATION
By By /S/BERT C. ROBERTS, JR.
---------------------- --------------------------
Name: Name: BERT C. ROBERTS, JR.
Title: Title:CHAIRMAN
MELLON BANK, N.A.
Attest:
By By /S/PAUL BUCHBAUM
----------------------- --------------------------
Name: Name: PAUL BUCHBAUM
Title: Title: SENIOR VICE-PRESIDENT
39
<PAGE> Exhibit 4(a)
------------
( 43 of 59 )
Exhibit A
[to Form of Rights
Agreement]
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES E JUNIOR PARTICIPATING PREFERRED STOCK
OF
MCI COMMUNICATIONS CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-------------------------------
MCI Communications Corporation, a corporation organized and
existing under the General Corporation Law of the State of
Delaware (hereinafter called the "Company"), hereby certifies
that the following resolution was adopted by the Board of
Directors of the Company as required by Section 151 of the
General Corporation Law at a meeting duly called and held on
September 7, 1994:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of the Company (hereinafter
called the "Board of Directors" or the "Board") in accordance
with the provisions of the Restated Certificate of Incorporation,
as amended to date (hereinafter called the "Certificate of
Incorporation"), the Board of Directors hereby creates a series
of Preferred Stock, par value $.10 per share (the "Preferred
Stock"), of the Company and hereby states the designation and
number of shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series E Junior Participating
Preferred Stock" (the "Series E Preferred Stock") and the number
of shares constituting the Series E Preferred Stock shall be
10,000,000. Such number of shares may be increased or decreased
by resolution of the Board of Directors; provided, that no
decrease shall reduce the number of shares of Series E Preferred
Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Company convertible
into Series E Preferred Stock.
A-1
<PAGE> Exhibit 4(a)
------------
( 44 of 59 )
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of
any series of preferred stock of the Company (the "Preferred
Stock") (or any similar stock) ranking prior and superior to the
Series E Preferred Stock with respect to dividends, the holders
of shares of Series E Preferred Stock, in preference to the
holders of Common Stock, par value $.10 per share of the Company
(the "Common Stock"), of Class A Common Stock, par value $.10 per
share of the Company ("Class A Common Stock") and of any other
stock of the Company ranking junior to the Series E Preferred
Stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the
purpose, semi-annual dividends payable in cash on the first day
of June and December in each year (each such date being referred
to herein as a "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the first issuance of a share or
fraction of a share of Series E Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a)
$1 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock, declared on
the Common Stock since the immediately preceding Dividend Payment
Date or, with respect to the first Dividend Payment Date, since
the first issuance of any share or fraction of a share of
Series E Preferred Stock. In the event the Company shall at any
time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the amount to which
holders of shares of Series E Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series E Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during
the period between any Dividend Payment Date and the next
subsequent Dividend Payment Date, a dividend of $1 per share on
the Series E Preferred Stock shall nevertheless be payable on
such subsequent Dividend Payment Date.
A-2
<PAGE> Exhibit 4(a)
------------
( 45 of 59 )
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series E Preferred Stock from the Dividend
Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record
date for the first Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series E Preferred Stock entitled to receive
a quarterly dividend and before such Dividend Payment Date, in
either of which events such dividends shall begin to accrue and
be cumulative from such Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the
shares of Series E Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders
of shares of Series E Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date
shall be not more than 60 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of
Series E Preferred Stock shall have the following voting rights;
(A) Subject to the provision for adjustment hereinafter
set forth and except as otherwise provided in the
Certificate of Incorporation or required by law, each share
of Series E Preferred Stock shall entitle the holder thereof
to 100 votes on all matters upon which the holders of the
Company are entitled to vote. In the event the Company
shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share
to which holders of shares of Series E Preferred Stock were
entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in the
Certificate of Incorporation or in any other Certificate of
Designations creating a series of Preferred Stock or any
similar stock, and except as otherwise required by law, the
holders of shares of Series E Preferred Stock and the
holders of shares of Common Stock and any other capital
A-3
<PAGE> Exhibit 4(a)
------------
( 46 of 59 )
stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series E Preferred Stock shall
have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking
any corporate action.
Section 4. Certain Restrictions.
(A) Whenever semi-annual dividends or other dividends or
distributions payable on the Series E Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Series E Preferred Stock outstanding shall have been
paid in full, the Company shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (as to
dividends) to the Series E Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(as to dividends) with the Series E Preferred Stock, except
dividends paid ratably on the Series E Preferred Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) except as and to the extent permitted under
Section 9 of the Certificate of Incorporation, redeem or
purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series E
Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the
Company ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series E
Preferred Stock;
(iv) except as and to the extent permitted under
Section 9 of the Certificate of Incorporation, redeem or
purchase or otherwise acquire for consideration any shares
of Series E Preferred Stock, or any shares of stock ranking
on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series E Preferred
Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as
A-4
<PAGE> Exhibit 4(a)
------------
( 47 of 59 )
the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the
Company to purchase or otherwise acquire for consideration any
shares of stock of the Company unless the Company could, under
paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series E
Preferred Stock purchased or otherwise acquired by the Company in
any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof.
Section 6. Liquidation, Dissolution or Winding Up. Upon
any liquidation, dissolution or winding up of the Company, no
distribution shall be made (A) to the holders of the Common
Stock, of the Class A Common Stock or of shares of any other
stock of the Company ranking junior upon liquidation, dissolution
or winding up to the Series E Preferred Stock unless, prior
thereto, the holders of shares of Series E Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders
of shares of Series E Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares
of Common Stock, or (B) to the holders of shares of stock ranking
on a parity upon liquidation, dissolution or winding up with the
Series E Preferred Stock, except distributions made ratably on
the Series E Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding
up. In the event the Company shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of
shares of Series E Preferred Stock were entitled immediately
prior to such event under the proviso in clause (A) of the
preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
A-5
<PAGE> Exhibit 4(a)
------------
( 48 of 59 )
Section 7. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series E Preferred
Stock shall at the same time be similarly exchanged or changed
into an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Company
shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series E Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. No Redemption. The shares of Series E Preferred
Stock shall not be redeemable from any holder, except as, and to
the extent permitted under Section 9 of the Certificate of
Incorporation.
Section 9. Rank. The Series E Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up of the
Company, junior to all series of any other class of Preferred
Stock and senior to the Common Stock and the Class A Common
Stock.
Section 10. Amendment. If any proposed amendment to the
Certificate of Incorporation (including this Certificate of
Designations) would alter, change or repeal any of the
preferences, powers or special rights given to the Series E
Preferred Stock so as to affect the Series E Preferred Stock
adversely, then the holders of the Series E Preferred Stock shall
be entitled to vote separately as a class upon such amendment,
and the affirmative vote of two-thirds of the outstanding shares
of the Series E Preferred Stock, voting separately as a class,
shall be necessary for the adoption thereof, in addition to such
other vote as may be required by the General Corporation Law of
the State of Delaware.
A-6
<PAGE> Exhibit 4(a)
------------
( 49 of 59 )
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Company by its Chairman of the Board of
Directors and attested by its Secretary this 7th day of
September, 1994.
__________________________________
Chairman of the Board of Directors
Attest:
______________________________
Secretary
A-7
<PAGE> Exhibit 4(a)
------------
( 50 of 59 )
Exhibit B
[to Form of Rights
Agreement]
Form of Right Certificate
Certificate No. R -- Rights
NOT EXERCISABLE AFTER SEPTEMBER 30, 2004 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND
WILL NO LONGER BE TRANSFERABLE.
Right Certificate
MCI COMMUNICATION CORPORATION
This certifies that or registered assigns, is the
registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of
September 30, 1994 (the "Rights Agreement"), between MCI
Communications Corporation, a Delaware corporation (the
"Company"), and Mellon Bank, N.A. (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to
5:00 P.M., New York City time, on September 30, 2004 at the
office or agency of the Rights Agent designated for such purpose,
or of its successor as Rights Agent, one one-hundredth of a fully
paid non-assessable share of Series E Junior Participating
Preferred Stock, par value $.10 per share (the "Preferred
Shares"), of the Company, at a purchase price of $100 per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of one one-
hundredths of a Preferred Share which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of ,
1994, based on the Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price, the
number of one one-hundredths of a Preferred Share which may be
purchased upon the exercise of the Rights and the number of
Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
B-1
<PAGE> Exhibit 4(a)
------------
( 51 of 59 )
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, as the same
may be amended from time to time, which terms, provisions and
conditions are hereby incorporated herein by reference and made a
part hereof and to which Rights Agreement reference is hereby
made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent,
the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive
offices of the Company and the above-mentioned office or agency
of the Rights Agent. The Company will mail to the holder of this
Right Certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office or agency of the
Rights Agent designated for such purpose, may be exchanged for
another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed by the
Company at a redemption price of $.01 per Right or (ii) may be
exchanged in whole or in part for Preferred Shares or shares of
the Company's Common Stock, par value $.10 per share.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of the Preferred Shares or of any other
securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement) or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right certificate shall have
B-2
<PAGE> Exhibit 4(a)
------------
( 52 of 59 )
been exercised as provided in the Rights Agreement. This Right
Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of .
ATTEST: MCI COMMUNICATIONS CORPORATION
By ___________________________ By ___________________________
Countersigned:
_______________________________,
as Rights Agent
By ___________________________
Authorized Signature
B-3
<PAGE> Exhibit 4(a)
------------
( 53 of 59 )
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED ______________ hereby sells, assigns and
transfer unto
_________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ____________________ Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with
full power of substitution.
Dated: __________________________
__________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
________________________________________________________________
(To be completed)
The undersigned hereby certifies that the Rights evidenced
by this Right Certificate are not beneficially owned by, and were
not acquired by the undersigned from, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights
Agreement).
__________________________
Signature
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
B-4
<PAGE> Exhibit 4(a)
------------
( 54 of 59 )
To MCI COMMUNICATIONS CORPORATION:
This undersigned hereby irrevocably elects to exercise _____
___ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares be issued in
the name of:
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivery to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
Dated: _____________________________
__________________________
Signature
(Signature must conform to holder specified on Right
Certificate)
Signature Guaranteed:
Signature must be guaranteed by a member of 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.
_________________________________________________________________
(To be completed)
The undersigned certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, and were not
acquired by the undersigned from, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights
Agreement)
__________________________
Signature
B-5
<PAGE> Exhibit 4(a)
------------
( 55 of 59 )
_________________________________________________________________
NOTICE
The signature in the Form of Assignment or Form of Election
to Purchase, as the case may be, must conform to the name as
written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form
of Assignment or the Form of Election to Purchase, as the case
may be, is not completed, the Company and the Rights Agent will
deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
<PAGE> Exhibit 4(a)
------------
( 56 of 59 )
Exhibit C
[to Form of Rights
Agreement]
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO
ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS DE
FINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFER-
EES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
Preferred Shares
On September 7, 1994, the Board of Directors of MCI
Communications Corporation (the "Company") declared a dividend of
one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $.10 per share and
Class A common stock, par value $.10, of the Company (the "Common
Shares"). The dividend is payable on October 11, 1994 (the
"Record Date") to the stockholders of record on that date. Each
Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Series E Junior Participating
Preferred Stock, par value $.10 per share (the "Preferred
Shares") of the Company at a price of $100 per one one-hundredth
of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set
forth in a Rights Agreement dated as of September 30, 1994 (the
"Rights Agreement") between the Company and Mellon Bank, N.A., as
Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") have acquired beneficial
ownership of 10% or more of the outstanding Common Shares (more
than 20.1% of the outstanding Common Shares in the case of share
acquisitions by British Telecommunications plc ("BT")) or
(ii) 10 business days (or such later date as may be determined by
action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of
10% or more of the outstanding Common Shares (more than 20.1% of
the outstanding Common Shares in the case of a tender offer or
exchange offer commenced or announced by BT) (the earlier of such
dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share
certificate together with a copy of this Summary of Rights.
The Rights Agreement provides that, until the Distribution
C-1
<PAGE> Exhibit 4(a)
------------
( 57 of 59 )
Date (or earlier redemption or expiration of the Rights), the
Rights will be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption or expiration
of the Rights), new Common Share certificates issued after the
Record Date upon transfer or new issuances of Common Shares will
contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date,
even without such notation or a copy of this Summary of Rights,
will also constitute the transfer of the Rights associated with
the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close
of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on September 30, 2004 (the "Final
Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed or exchanged by the
Company, in each case as described below.
The Purchase Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred
Shares with a conversion price, less than the then-current market
price of the Preferred Shares or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights are also subject to
adjustment in the event of a stock split of the Common Shares or
a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares
occurring, in any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights
will not be redeemable, except as otherwise provided under
Section 9 of the Certificate of Incorporation. Each Preferred
Share will be entitled to a minimum preferential quarterly
dividend payment of $1 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per Common
Share. In the event of liquidation, the holders of the Preferred
C-2
<PAGE> Exhibit 4(a)
------------
( 58 of 59 )
Shares will be entitled to a minimum preferential liquidation
payment of $100 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each
Preferred Share will have 100 votes, voting together with the
Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive 100
times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth
interest in a Preferred Share purchasable upon exercise of each
Right should approximate the value of one Common Share.
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision
shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter
be void), will thereafter have the right to receive upon exercise
of the Right at the then current exercise price of the Right,
that number of Common Shares having a market value of two times
the exercise price of the Right.
In the event that, after a person or group has become an
Acquiring Person, the Company is acquired in a merger or other
business combination transaction or 50% or more of its
consolidated assets or earning power are sold, proper provision
will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become
void) will thereafter have the right to receive, upon the
exercise thereof of the Right at the then current exercise price
of the Right, that number of shares of common stock of the person
with whom the Company has engaged in the foregoing transaction
which number of shares at the time of such transaction will have
a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of
50% or more of the outstanding Common Shares, the Board of
Directors of the Company may exchange the Rights (other than
Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one Common
Share, or one one-hundredth of a Preferred Share (or of a share
of a class or series of the Company's preferred stock having
equivalent rights, preferences and privileges), per Right
(subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share,
C-3
<PAGE> Exhibit 4(a)
------------
( 59 of 59 )
which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on
the last trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes
such, the Board of Directors of the Company may redeem the Rights
in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
For so long as Rights are then redeemable, the Company may,
except with respect to the redemption price, amend the Rights in
any manner. After the Rights are no longer redeemable the
Company may amend the Rights in any manner that does not
adversely affect the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-K dated September 30, 1994. A
copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to
the Rights Agreement, as the same may be amended from time to
time, which is hereby incorporated herein by reference.
C-4
Exhibit 99(a)
---------------
( 1 of 2 )
BT/MCI WILL COMPLETE $4.3 BILLION DOLLAR
ALLIANCE TRANSACTION
WASHINGTON, DC, September 30, 1994--MCI Communications
Corporation (NASDAQ:MCIC) and British Telecommunications plc (BT)
said they expect to consummate one of the industry's largest
global alliances today. This follows the U.S. District Court's
(Washington, D.C.) approval earlier this week of the consent
decree entered after antitrust review by the Department of
Justice (DoJ).
Today's action will complete BT's 20 percent investment in
MCI for $4.3 billion. The issue of 108.5 million shares of Class
A common stock, for which BT will pay MCI $3.5 billion, when
aggregated with the stock BT acquired from MCI last year for $830
million, will mean BT owns 135.9 million shares of MCI's Class A
common stock. The companies also will complete the sale to MCI
of a 24.9 percent equity interest in Concert, the joint venture
company launched early this summer to provide advanced global
communications services to multinational customers. BT and MCI
will be investing $1 billion in Concert over the next several
years.
BT is entitled to have three seats on MCI's Board of
Directors. The companies said that Michael Hepher, BT's Group
Managing Director and Alfred Mockett, managing director for BT
Global Communications will serve in that capacity, with another
board member to be named later. MCI's Chairman and CEO, Bert C.
Roberts, Jr. also will join the BT Board.
"This is the beginning of a new era in global communications
as we and BT fulfill our shared vision to make true global
networking a reality," said Bert C. Roberts, Jr., MCI Chairman
and CEO.
"Our alliance has been held to a high standard of approval.
The U.S. and British telecommunications industries are the two
most open in the world, yet the DoJ required MCI and BT to make
certain guarantees to assure there was no possibility of
anticompetitive behavior. If the alliances proposed by our
competitors are held to the same high standards, it will force
other countries to open their markets to real competition and a
level playing field," said Roberts.
The BT investment in MCI was approved by MCI stockholders at
a special meeting held in March, this year.
<PAGE> Exhibit 99(a)
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In a related measure, MCI's Board adopted a stockholders
rights plan, approved earlier by the company's stockholders, that
provides a dividend of one preferred share purchase right for
each outstanding share of MCI common stock and Class A common
stock owned by BT. Each right, which is not presently
exercisable, entitles the holder to purchase one one-hundredth of
a share of MCI Series E Junior Participating Preferred Stock at
an exercise price of $100. In the event that any person acquires
10 percent or more of the outstanding stock of MCI (more than
20.1 percent in BT's case), each holder of a right (other than
the acquiring person or group) will be entitled to purchase that
number of shares of MCI common stock having a market value of two
times the exercise price of the right. MCI agreed to adopt the
rights plan in connection with BT's investment and not in
response to any known effort to acquire MCI.
Distribution of the rights will be made on October 11, 1994,
payable to stockholders of record at the close of business on
that date.
Details of the rights distribution are contained in a letter
being sent to all MCI stockholders shortly.
