SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 4, 1997
(Date of earliest event reported)
COMDISCO, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-7725 36-2687938
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
6111 North River Road, Rosemont, Illinois 60018
(Address of Principal Offices, including zip code)
(847) 698-3000
(Registrant's telephone number, including area code)
Item 5. Other Events
On November 4, 1997, the Board of Directors of the
Registrant declared a dividend distribution of one right (a "Right") for
each outstanding share of the Registrant's Common Stock, $0.10 par value
per share ("Common Stock"), to stockholders of record at the close of
business on November 17, 1997 (the "Record Date"). The Board of Directors
of the Registrant also authorized the issuance of one Right for each
share of Common Stock issued after the Record Date and prior to the
earliest of the Distribution Date (as defined below), the redemption,
exchange or expiration of the Rights. Except as set forth below and
subject to adjustment as provided in the Rights Agreement (defined
below), each Right entitles the registered holder to purchase from the
Registrant one one-thousandth of a share of Series C Junior Participating
Preferred Stock (the "Preferred Stock"), at a purchase price of $150 per
Right (the "Purchase Price"). The description and terms of the Rights are
set forth in a Rights Agreement, dated as of November 17, 1997 (the
"Rights Agreement"), between the Registrant and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent.
Upon payment of the dividend at the close of business on
the Record Date, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates (as defined below) will be distributed. The Rights will
separate from the Common Stock upon the earliest of (i) 10 days following
a public announcement that a person or group (an "Acquiring Person"),
together with persons affiliated or associated with it, has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date")
provided, however, that any person (an "Existing Holder") who, on the
Record Date, is the beneficial owner of 20% or more of the outstanding
Common Stock, or any successor in interest (as that term is used in the
Rights Agreement) of an Existing Holder shall not be considered an
Acquiring Person, (ii) 10 business days (or such later date as the Board
of Directors of the Registrant shall determine) following the commencement
of a tender offer or exchange offer that would result in a person or group
beneficially owning 15% or more of such outstanding shares of Common Stock,
or (iii) 10 business days following a determination by the Board of
Directors of the Registrant that a person (an "Adverse Person"), alone or
together with its affiliates and associates, has become the beneficial
owner of more than 10% of the Common Stock and that (a) such beneficial
ownership is intended to cause the Registrant to repurchase the Common
Stock beneficially owned by such person or to cause pressure on the
Registrant to take action or enter into transactions intended to provide
such person with short-term financial gain under circumstances where the
Board of Directors of the Registrant determines that the best long-term
interests of the Registrant would not be served by taking such action or
entering into such transactions at the time or (b) such beneficial
ownership is causing or reasonably likely to cause a material adverse
impact on the business or prospects of the Registrant; provided, however,
that the Board of Directors of the Registrant shall not declare to be
an Adverse Person any Existing Holder or any person which has reported or
is required to report its ownership of Common Stock on Schedule 13G under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
on Schedule 13D under the Exchange Act which Schedule 13D does not state
any intention to, or reserve the right to, control or influence the
Registrant or engage in certain other actions, so long as such person
neither reports nor is required to report such ownership other than as
described in this proviso (the earliest of such dates, the "Distribution
Date").
Until the Distribution Date (or earlier redemption or
expiration of the Rights), (i) the Rights will be transferred with and
only with the Common Stock (except in connection with redemption of the
Rights), (ii) new Common Stock certificates issued after the Record Date
upon transfer, replacement or new issuance of Common Stock will contain a
notation incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common Stock outstanding
will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights will first become exercisable on the
Distribution Date and will expire at the close of business on November
17, 2007 (the "Final Expiration Date"), unless earlier redeemed or
exchanged by the Registrant as described below. Notwithstanding the
foregoing, the Rights will not be exercisable after the occurrence of a
Triggering Event (defined below) until the Registrant's right of
redemption has expired.
As soon as practicable after the Distribution Date,
separate certificates evidencing the Rights (the "Rights Certificates")
will be mailed to holders of record of the Common Stock as of the close
of business on the Distribution Date and, thereafter, such separate
Rights Certificates alone will evidence the Rights. Except for shares of
Common Stock issued or sold after the Distribution Date pursuant to the
exercise of stock options or under any employee benefit plan or
arrangement granted or awarded prior to the Distribution Date, or the
exercise, conversion or exchange of securities issued by the
Registrant, and except as otherwise determined by the Board of Directors,
only shares of Common Stock issued prior to the Distribution Date will be
issued with Rights.
In the event that any person shall become (a) an Acquiring
Person (except (i) pursuant to an offer for all outstanding shares of
Common Stock which the independent directors determine to be fair to and
otherwise in the best interest of the Registrant and its stockholders
after receiving advice from one or more investment banking firms (a
"Qualifying Offer") and (ii) for certain persons who report their
ownership on Schedule 13G under the Exchange Act, or on Schedule 13D
under the Exchange Act, provided that they do not state any intention to,
or reserve the right to, control or influence the Registrant and such
persons certify that they became an Acquiring Person inadvertently and
they agree that they will not acquire any additional shares of Common
Stock) or (b) an Adverse Person (either such event is referred to herein
as a "Triggering Event"), then the Rights will "flip-in" and entitle each
holder of a Right, except as provided below, to purchase, upon exercise
at the then-current Purchase Price, that number of shares of Common Stock
having a market value of two times such Purchase Price.
Any Rights beneficially owned at any time on or after the
earlier of the Distribution Date and the Stock Acquisition Date by an
Acquiring Person, an Adverse Person or an affiliate or associate of an
Acquiring Person or an Adverse Person (whether or not such ownership is
subsequently transferred) will become null and void upon the occurrence
of a Triggering Event, and any holder of such Rights will have no right
to exercise such Rights.
In the event that, following a Triggering Event, the
Registrant is acquired in a merger or other business combination in which
the Common Stock does not remain outstanding or is changed (other than a
merger following a Qualifying Offer) or 50% of the assets or earning
power of the Registrant and its Subsidiaries (as defined in the Rights
Agreement) (taken as a whole) is sold or otherwise transferred to any
person (other than the Registrant or any Subsidiary of the Registrant) in
one transaction or a series of related transactions, the Rights will
"flip-over" and entitle each holder of a Right, except as provided in the
preceding paragraph, to purchase, upon exercise of the Right at the
then-current Purchase Price, that number of shares of common stock of the
acquiring company (or, in certain circumstances, one of its affiliates)
which at the time of such transaction would have a market value of two
times such Purchase Price.
The Purchase Price is subject to adjustment from time to
time to prevent dilution upon the (i) declaration of a dividend on the
Preferred Stock payable in shares of Preferred Stock, (ii) subdivision of
the outstanding Preferred Stock, (iii) combination of the outstanding
Preferred Stock into a smaller number of shares, (iv) issuance of any
shares of the Registrant's capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Registrant is the continuing or
surviving corporation), (v) grant to holders of the Preferred Stock of
certain rights, options, or warrants to subscribe for Preferred Stock or
securities convertible into Preferred Stock at less than the current
market price of the Preferred Stock, or (vi) distribution to holders of
the Preferred Stock of other evidences of indebtedness, cash (other than
a regular quarterly cash dividend payable out of the earnings or retained
earnings of the Registrant), subscription rights, warrants, or assets
(other than a dividend payable in Preferred Stock, but including any
dividend payable in stock other than Preferred Stock).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an adjustment
of at least 1% of the Purchase Price.
At any time until the earlier of (i) fifteen days
following the Stock Acquisition Date and (ii) the Final Expiration Date,
the Registrant may redeem the Rights in whole, but not in part, at a
price of $0.01 per Right, subject to adjustments. The Registrant may not
redeem the Rights following a determination that any person is an
Adverse Person. The Registrant may, at its option, pay the redemption
price in cash, shares of Common Stock (based on the current market price
of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors of the
Registrant. Immediately upon the action of the Registrant's Board of
Directors ordering 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 applicable redemption price. In addition, after a
Triggering Event, at the election of the Board of Directors of the
Registrant, the outstanding Rights (other than those beneficially owned
by an Acquiring Person, Adverse Person or an affiliate or associate of an
Acquiring Person or Adverse Person) may be exchanged, in whole or in
part, for shares of Common Stock, or shares of preferred stock of the
Registrant having essentially the same value or economic rights as such
shares. Immediately upon the action of the Board of Directors of the
Registrant authorizing any such exchange, and without any further
action or any notice, the Rights (other than Rights which are not subject
to such exchange) will terminate and such Rights will only entitle
holders to receive the shares issuable upon such exchange.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Registrant, including,
without limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to stockholders or to the
Registrant, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common
Stock (or other consideration) of the Registrant or for common stock of
the acquiring company as set forth above.
At any time prior to the Distribution Date, the Registrant
may, without the approval of any holder of the Rights, supplement or
amend any provision of the Rights Agreement. Thereafter, the Rights
Agreement may be amended only (i) to cure ambiguities, (ii) to correct
inconsistent provisions, (iii) to shorten or lengthen any time period
thereunder (under certain circumstances only with the concurrence of a
majority of the Continuing Directors) or (iv) in ways that do not
adversely affect the Rights holders (other than an Acquiring Person or
Adverse Person). From and after the Distribution Date, the Rights
Agreement may not be amended to lengthen (x) a time period relating to
when the Rights may be redeemed at such time as the Rights are not then
redeemable, or (y) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights (other than an Acquiring
Person or Adverse Person).
As of June 30, 1997, there were 74,301,841 shares of
Common Stock outstanding. Each outstanding share of Common Stock on the
Record Date will receive one Right. Until the Distribution Date, the
Registrant will issue one Right with each share of Common Stock that
shall become outstanding so that all such shares will have attached
Rights. 200,000 shares of Preferred Stock have been reserved for issuance
upon exercise of the Rights.
The Rights have certain antitakeover effects. The Rights
will cause substantial dilution to a person or group that attempts to
acquire the Registrant on terms not approved by the Registrant's Board of
Directors. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors of the Registrant
since the Board of Directors may, at its option, at any time until ten
days following the Stock Acquisition Date, redeem all, but not less than
all, of the then outstanding Rights at the applicable redemption price.
The foregoing summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to
the Rights Agreement (which includes as Exhibit A the Certificate of
Designation, Preferences and Right of Series C Junior Participating
Preferred Stock and as Exhibit B the Form of Rights Certificate), a copy
of which is incorporated herein by reference to Exhibit 4.1 to this
registration statement. Copies of the Rights Agreement will be available
free of charge from the Registrant.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits. The following documents are filed as
exhibits to this current report.
4.1. Rights Agreement, dated as of November 17, 1997, between
the Registrant and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, which includes as Exhibit A
thereto the Certificate of Designation, Preferences and
Right of Series C Junior Participating Preferred Stock and
as Exhibit B thereto the Form of Rights Certificate.
Signature
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereto duly authorized.
November 6, 1997 COMDISCO, INC.
(Registrant)
By: /s/ Jeremiah M. Fitzgerald
Name: Jeremiah M. Fitzgerald
Title: Vice President
and General Counsel
Exhibit Index
Exhibit Description Page
4.1 Rights Agreement, dated as of November N/A
17, 1997, between the Registrant and
ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, which includes
as Exhibit A thereto the Certificate of
Designation, Preferences and Right of
Series C Junior Participating Preferred
Stock and as Exhibit B thereto the Form
of Rights Certificate.
EXHIBIT 4.1
COMDISCO, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
------------------------------------
Rights Agreement
Dated as of November 17, 1997
Table of Contents
Section Page
1. Certain Definitions.................................................. 1
2. Appointment of Rights Agent.......................................... 7
3. Issue of Rights Certificates......................................... 7
4. Form of Rights Certificates.......................................... 9
5. Countersignature and Registration....................................10
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.............11
7. Exercise of Rights; Purchase Price; Expiration Date of Rights........12
8. Cancellation and Destruction of Rights Certificates..................15
9. Reservation and Availability of Capital Stock........................15
10. Preferred Stock Record Date..........................................17
11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights..................................................18
12. Certificate of Adjusted Purchase Price or Number of Shares...........29
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.30
14. Fractional Rights and Fractional Shares..............................33
15. Rights of Action.....................................................34
16. Agreement of Rights Holders..........................................35
17. Rights Certificate Holder Not Deemed a Stockholder...................36
18. Concerning the Rights Agent..........................................36
19. Merger or Consolidation or Change of Name of Rights Agent............37
20. Duties of Rights Agent...............................................37
21. Change of Rights Agent...............................................40
22. Issuance of New Rights Certificates..................................41
23. Redemption and Termination...........................................41
24. Exchange.............................................................42
25. Notice of Certain Events.............................................44
26. Notices..............................................................45
27. Supplements and Amendments...........................................46
28. Successors...........................................................46
29. Determinations and Actions by the Board of Directors, etc............47
30. Benefits of This Agreement...........................................47
31. Severability.........................................................47
32. Governing Law........................................................48
33. Counterparts.........................................................48
34. Descriptive Headings.................................................48
Exhibit A -- Certificate of Designation, Preferences and
Rights of Series C Junior Participating Preferred Stock
Exhibit B -- Form of Rights Certificate
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 17, 1997 (the
"Agreement"), between COMDISCO, INC., a Delaware corporation (the "Com-
pany"), and CHASEMELLON SHAREHOLDER SERVICES, L.L.C., a New Jersey
limited liability company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on November 4, 1997 (the "Rights Dividend Decla-
ration Date"), the Board of Directors of the Company authorized and
declared a dividend distribution of one Right for each share of common
stock, par value $0.10 per share, of the Company (the "Common Stock")
outstanding at the close of business on November 17, 1997 (the "Record
Date"), and has authorized the issuance of one Right (as such number may
be hereinafter adjusted pursuant to Section 11(i) or 11(p) hereof) for
each share of Common Stock of the Company issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and
the Distribution Date and, in certain circumstances provided in Section
22 hereof, after the Distribution Date, each Right initially representing
the right to purchase one one-thousandth of a share of Series C Junior
Participating Preferred Stock (the "Preferred Stock") of the Company
having the rights, powers and preferences set forth in the Exhibit A
attached hereto, upon the terms and subject to the conditions hereinafter
set forth (the "Rights").
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) (i) Except as provided in Clause (ii), "Acquiring
Person" shall mean any Person who or which, together with all Affiliates
and Associates of such Person, shall be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, but shall not
include (A) the Company, (B) any Subsidiary of the Company, (C) any
employee benefit plan of the Company or of any Subsidiary of the Company,
(D) any Person organized, appointed or established by the Company for or
pursuant to the terms of any such plan or (E) any Person who has reported
or is required to report such ownership (but less than 25%) on Schedule
13G under the Exchange Act (or any comparable or successor report) or on
Schedule 13D under the Exchange Act (or any comparable or successor
report) which Schedule 13D does not state any intention to or reserve the
right to control or influence the management or policies of the Company
or engage in any of the actions specified in Item 4 of such Schedule
(other than the disposition of the Common Stock) and, within 10 Business
Days of being requested by the Company to advise it regarding the same,
certifies to the Company that such Person acquired shares of Common Stock
representing in excess of 14.9% of the outstanding Common Stock
inadvertently or without knowledge of the terms of the Rights and who,
together with all Affiliates and Associates, thereafter does not acquire
additional shares of Common Stock while the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, provided, however,
that if the Person described in this clause (E) requested to so certify
fails to do so within 10 Business Days, then such Person shall become an
Acquiring Person immediately after such 10 Business Day Period.
(ii) None of the following shall be considered an
"Acquiring Person":
(A) any Person (an "Existing Holder") who, at the
Record Date, together with all Affiliates and Associates of such
Existing Holder, is the Beneficial Owner of 20% or more of the
shares of Common Stock then outstanding until such time as such
Existing Holder or any Affiliate or Associate of such Existing
Holder shall become the Beneficial Owner of any additional shares
of Common Stock or any other Person who is the Beneficial Owner
of any shares of Common Stock shall become an Affiliate or
Associate of such Existing Holder, if after giving effect to such
additional shares or the shares beneficially owned by such other
Person, such Existing Holder, together with all Affiliates and
Associates of such Existing Holder, shall be the Beneficial Owner
of 30% of more of the shares of Common Stock then outstanding;
(B) any Person (a "Passive Holder," which term shall
include any Existing Holder) who, solely as a result of a reduc-
tion in the number of shares of Common Stock outstanding due to
the repurchase of Common Stock by the Company, shall become,
together with all Affiliates and Associates of such Passive
Holder after such repurchase, the Beneficial Owner of 15% or
more (30% or more, in the case of any Existing Holder) of the
shares of Common Stock then outstanding, unless and until such
time as such Passive Holder or any Affiliate or Associate of such
Passive Holder shall become the Beneficial Owner of any
additional shares of Common Stock or any other Person who is the
Beneficial Owner of any shares of Common Stock shall become an
Affiliate or Associate of such Passive Holder, if after giving
effect to such additional shares or the shares beneficially owned
by such other Person, such Passive Holder, together with all
Affiliates and Associates of such Passive Holder, shall be the
Beneficial Owner of 15% or more (30% or more, in the case of any
Existing Holder) of the shares of Common Stock then outstanding.
Each of the Existing Holder's successors in interest that would
beneficially own, as a result of the transfer to such successor
of any shares of Common Stock beneficially owned by an Existing
Holder ("Existing Holder Shares"), 15% or more of the shares of
Common Stock then outstanding shall be treated as an Existing
Holder. An Existing Holder's successors in interest shall be (i)
the beneficiaries (whether by testate or intestate succession) of
the Existing Holder's estate and the trustee (in his fiduciary
capacity) or beneficiary of any trust who obtains (by reason of
the Existing Holder's death) beneficial ownership of any Exist-
ing Holder Shares (ii) the Existing Holder's estate, (iii) donees
of the Existing Holder who are the Existing Holder's lineal
descendants (including Persons adopted prior to attaining the
age of 21 years) and the spouses of such lineal descendants (iv)
Qualified Charitable Organizations, (v) trusts for the exclusive
benefit of Persons listed in clauses (iii) and (iv) (including
split interest trusts and the trustee (in his fiduciary capacity)
of any such trust, (vi) partnerships, limited liability companies
and corporations in which the Persons listed in clause (iii)
are the exclusive partners, members or shareholders, as the case
may be, and (vii) the Affiliates and Associates of the Persons
listed in the foregoing clauses (i) through (vi); or
(C) any Person who shall have become an Acquiring
Person solely as the result of an acquisition of Common Stock by
the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned
by a Person to 15% or more of the Common Stock of the Company
then outstanding as determined above; provided, however, that if
a Person becomes the Beneficial Owner of 15% or more of the
Common Stock of the Company then outstanding (as determined
above) solely by reason of purchases of Common Stock by the
Company and shall, after such purchases by the Company, become
the Beneficial Owner of any additional shares of Common Stock by
any means whatsoever, then such Person shall be deemed to be an
Acquiring Person.
(b) "Adverse Person" shall mean any Person declared to be
an Adverse Person by the Board of Directors upon determination that the
criteria set forth in Section 11(a)(ii)(B) apply to such Person;
provided, however, that the Board of Directors shall not declare any
Existing Holder to be an Adverse Person; provided, further, that the
Board of Directors shall not declare any Person who is the Beneficial
Owner of 10% or more of the outstanding Common Stock of the Company to be
an Adverse Person if such Person has reported or is required to report
such ownership on Schedule 13G under the Exchange Act (or any comparable
or successor report) or on Schedule 13D under the Exchange Act (or any
comparable or successor report) which Schedule 13D does not state any
intention to or reserve the right to control or influence the management
or policies of the Company or engage in any of the actions specified in
Item 4 of such Schedule (other than the disposition of the Common Stock)
so long as such Person neither reports nor is required to report such
ownership other than as described in this proviso to Section 1(b).
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and as
in effect on the date of this Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner" of,
and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise
of conversion rights, exchange rights, other rights, warrants or
options, or otherwise; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange, or (B) securities issuable upon exercise
of Rights at any time prior to the occurrence of a Triggering
Event, or (C) securities issuable upon exercise of Rights from
and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person's Affiliates
or Associates prior to the Distribution Date or pursuant to
Section 3(a) hereof or Section 22 hereof (the "Original Rights")
or pursuant to Section 11(i) or 11(p) hereof in connection
with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right
to vote or dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (A) arises solely
from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by
such Person on 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 (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy
as described in the proviso to subparagraph (ii) of this
paragraph (d)) or disposing of any voting securities of the
Company;
provided, however, that nothing in this paragraph (d) shall cause a
Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such
acquisition.
(e) "Business Day" shall mean any day other than a Satur-
day, 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 Stock" shall mean the common stock, par value
$0.10 per share, of the Company, except that "Common Stock" when used
with reference to any Person other than the Company shall mean the
capital stock of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or
direct the management, of such Person.
(h) "Current Market Price" shall have the meaning as-
cribed to such term in Section 11(d) hereof.
(i) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(j) "Preferred Stock" shall mean shares of Series C Junior
Participating Preferred Stock, par value $0.10 per share, of the Company,
and, to the extent there are not a sufficient number of shares of Series
C Junior Participating Preferred Stock authorized to permit the full
exercise of the Rights, any other series of Preferred Stock, par value
$0.10 per share, of the Company designated for such purpose containing
terms substantially similar to the terms of the Series C Junior
Participating Preferred Stock.
(k) "Qualified Charitable Organization" shall mean a
charitable organization described in all of Section 170(c), Section
2055(a) and Section 2522(a) of the Internal Revenue Code of 1986, as
amended (or any successor or substitute statute), contributions to which
are deductible for United States income, estate and gift tax purposes at
the time of any transfer to or for the benefit of or in trust for such
organization.
(l) "Section 11 Event" shall mean any event described in
Section 11(a)(ii)(A)or (B).
(m) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(n) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(o) "Subsidiary" shall mean, with reference to any Person,
any corporation of which an amount of voting securities sufficient to
elect at least a majority of the directors of such corporation is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
(p) "Triggering Event" shall mean any Section 11 Event or
any Section 13 Event.
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 Stock) in
accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time
appoint such Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the close of business on the
tenth day after the Stock Acquisition Date (or, if the tenth day after
the Stock Acquisition Date occurs before the Record Date, the close of
business on the Record Date), (ii) the close of business on the tenth
Business Day (or such later date as the Board of Directors shall
determine) after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any
Person organized, appointed or established by the Company for or pursuant
to the terms of any such plan) is first published or sent or given within
the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act, if upon consummation thereof, such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding or (iii) the close of business on the tenth Business Day
after the Board of Directors determines, pursuant to the criteria set
forth in Section 11(a)(ii)(B) hereof, that a Person is an Adverse Person
(the earliest of (i), (ii) and (iii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for
the Common Stock registered in the names of the holders of the Common
Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company).
As soon as practicable after the Distribution Date, the Rights Agent
will send by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of
the Company, one or more right certificates, in substantially the form of
Exhibit B hereto (the "Rights Certificates"), evidencing one Right for
each share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(i) or 11(p) hereof,
at the time of distribution of the Rights Certificates, the Company shall
make the necessary and appropriate rounding adjustments (in accordance
with Section 14(a) hereof) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates.
(b) With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for the Common Stock and
the registered holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of the Distribution
Date or the Expiration Date (as such term is defined in Section 7
hereof), the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of
Common Stock which are issued (whether originally issued or delivered
from the Company's treasury) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date or, in certain
circumstances provided in Section 22 hereof, after the Distribution Date.
Certificates representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement be-
tween Comdisco, Inc. (the "Company") and ChaseMellon Shareholder
Services, L.L.C., dated as of November 17, 1997, as from time to
time amended (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued
to, or held by, any Person who is, was or becomes an Acquiring
Person or an Adverse Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by such certificates
shall be evidenced by such certificates alone and registered holders of
Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of one
one-thousandths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per one
one-thousandth of a share, the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by (i) an
Acquiring Person, an Adverse Person or any Associate or Affiliate of an
Acquiring Person or Adverse Person, (ii) a transferee of an Acquiring
Person or Adverse Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person or Adverse Person becomes
such, or (iii) a transferee of an Acquiring Person or Adverse Person (or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person or Adverse Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person or Adverse Person to
holders of equity interests in such Acquiring Person or Adverse Person or
to any Person with whom such Acquiring Person or Adverse Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of
any other Rights Certificate referred to in this sentence, shall contain
(to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person, Adverse Person or an Affiliate or Associate of an
Acquiring Person or Adverse Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights Certificate and
the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall
be countersigned by the Rights Agent, either manually or by facsimile
signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed
any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such
Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated
as the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates
and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Section 4(b), Section
7(e) and Section 14 hereof, at any time after the close of business on
the Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Certificates (other than
Rights Certificates representing Rights that have been exchanged pursuant
to Section 24 hereof) may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered
holder to purchase a like number of one one-thousandths of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate
or Certificates to be transferred, split up, combined or exchanged at the
principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate or Certificates until the registered
holder shall have completed and signed the certificate contained in the
form of assignment set forth on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e), 14 and
24 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu
of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder
of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate on the reverse
side thereof duly executed, to the Rights Agent at the principal office
or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number
of one one-thousandths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earliest of
(i) the close of business on November 17, 2007 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof, or (iii), the time at which such Rights are ex-
changed pursuant to Section 24 hereof (the earliest of (i), (ii) and
(iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-thousandth of a
share of Preferred Stock pursuant to the exercise of a Right shall
initially be $150, and shall be subject to adjustment from time to time
as provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price
per one one-thousandth of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased as
set forth below and an amount equal to any applicable transfer tax, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly
(i) (A) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent for
such shares) certificates for the total number of one one-thousandths of
a share of Preferred Stock to be purchased, and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a
share of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with
such request, (ii) requisition from the Company the amount of cash, if
any, to be paid in lieu of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified bank check or
bank draft payable to the order of the Company. In the event that the
Company is obligated to issue other securities (including Common Stock)
of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so
that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate. The Company
reserves the right to require prior to the occurrence of a Triggering
Event that, upon any exercise of Rights, a number of Rights be exercised
so that only whole shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a
new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered
to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the con-
trary, from and after the first occurrence of a Section 11 Event, any
Rights beneficially owned by (i) an Acquiring Person, an Adverse Person
or an Associate or Affiliate of an Acquiring Person or Adverse Person,
(ii) a transferee of an Acquiring Person or Adverse Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person or Adverse Person becomes such, or (iii) a transferee of an
Acquiring Person or Adverse Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person or Adverse Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person or Adverse Person to holders of equity interests in
such Acquiring Person or Adverse Person or to any Person with whom the
Acquiring Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action, and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or Adverse
Person or any of their respective Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the con-
trary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such exercise,
and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or any of its agents, be delivered to the
Rights Agent for cancellation or in cancelled form, or, if surrendered to
the Rights Agent, shall be cancelled by it, and no Rights Certificates
shall be issued in lieu thereof except as expressly permitted by any of
the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to
be reserved and kept available out of its authorized and unissued shares
of Preferred Stock (and, following the occurrence of a Triggering Event,
out of its authorized and unissued shares of Common Stock and/or other
securities or out of any authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, shares of Common Stock and/or other
securities) that, as provided in this Agreement including Section
11(a)(iii) hereof, will be sufficient to permit the exercise in full of
all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, follow-
ing the occurrence of a Triggering Event, shares of Common Stock and/or
other securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange, the Company
shall use its best efforts to cause, from and after such time as the
Rights become exercisable (but only to the extent that it is reasonably
likely that the Rights will be exercised), all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first
occurrence of a Section 11 Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement (including in accordance with Section
11(a)(iii) hereof), or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect
to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. The Company may temporarily suspend,
for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained or the exercise thereof shall
not be permitted under applicable law or a registration statement shall
not 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 one one-thousandths of
a share of Preferred Stock (and, following the occurrence of a Triggering
Event, shares of Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable.
(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 Rights Certificates and of any certificates for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Rights Certificates
to a Person other than, or the issuance or delivery of a number of one
one-thousandths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or to issue or deliver any certificates
for a number of one one-thousandths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) in a name
other than that of the registered holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificates at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax is
due.
Section 10. Preferred Stock Record Date. Each person in
whose name any certificate for a number of one one-thousandths of a share
of Preferred Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such fractional shares of
Preferred Stock (or Common Stock and/or other securities, as the case may
be) represented thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books
of the Company are closed, such Person shall be deemed to have become the
record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may
be) transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights. The Purchase Price, the number and kind of
shares covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the
Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification
of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the case may be,
issuable on such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Preferred
Stock or capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Company were open,
he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Person, at any time after the Rights
Dividend Declaration Date, shall become an Acquiring Person,
unless the event causing such Person to become an Acquiring
Person is a transaction set forth in Section 13(a) hereof, or is
an acquisition of shares of Common Stock pursuant to a tender
offer or exchange offer for all outstanding shares of Common
Stock at a price and on terms determined by at least a majority
of the members of the Board of Directors who are not officers of
the Company and who are not representatives, nominees, Affiliates
or Associates of an Acquiring Person, after receiving advice from
one or more investment banking firms, to be (a) at a price which
is fair to stockholders (taking into account all factors which
such members of the Board deem relevant, including, without
limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interests of
the Company and its stockholders (a "Qualifying Offer"), or
(B) the Board of Directors of the Company shall
declare any Person to be an Adverse Person, upon a determination
that such Person, alone or together with its Affiliates and
Associates, has, at any time after this Agreement has been filed
with the Securities and Exchange Commission as an exhibit to a
filing under the Exchange Act, become the Beneficial Owner of a
number of shares of Common Stock which the Board of Directors of
the Company determines to be substantial (which number of shares
shall in no event represent less than 10% of the outstanding
shares of Common Stock) and a determination by the Board of
Directors of the Company, after reasonable inquiry and inves-
tigation, including consultation with such persons as such
directors shall deem appropriate and consideration of such
factors as are permitted by applicable law, that (a) such
Beneficial Ownership by such Person is intended to cause the
Company to repurchase the shares of Common Stock beneficially
owned by such Person or to cause pressure on the Company to take
action or enter into a transaction or series of transactions
intended to provide such Person with short-term financial gain
under circumstances where the Board of Directors determines that
the best long-term interests of the Company would not be served
by taking such action or entering into such transaction or series
of transactions at that time or (b) such Beneficial Ownership is
causing or reasonably likely to cause a material adverse impact
(including, but not limited to, impairment of relationships with
customers or impairment of the Company's ability to maintain its
competitive position) on the business or prospects of the
Company, on the Company's employees, customers or suppliers or
on the communities in which the Company operates or is located,
then, promptly following the occurrence of any event described in Section
11(a)(ii)(A) or (B) hereof, proper provision shall be made so that each
holder of a Right (except as provided below and in Section 7(e) hereof)
shall thereafter have the right to receive, upon exercise thereof, at the
then current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-thousandths of a share of
Preferred Stock, such number of shares of Common Stock as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the
then number of one one-thousandths of a share of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence
of a Section 11 Event, and (y) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of
the Current Market Price (determined pursuant to Section 11(d) hereof)
per share of Common Stock on the date of such first occurrence (such
number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Common
Stock which are authorized by the Company's Certificate of
Incorporation, but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights, are not
sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall: (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right,
subject to Section 7(e) hereof, make adequate provision to
substitute for the Adjustment Shares, upon the exercise of a
Right and payment of the applicable Purchase Price, (1) cash, (2)
a reduction in the Purchase Price, (3) Common Stock or other
equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock, such as the
Preferred Stock, which the Board of Directors of the Company has
deemed to have essentially the same value or economic rights as
shares of Common Stock (such shares or units of shares of pre-
ferred stock are referred to herein as "Common Stock Equiva-
lents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has
been determined by the Board of Directors of the Company based
upon the advice of a nationally recognized investment banking
firm selected by the Board of Directors of the Company; provided,
however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence
of a Section 11 Event and (y) the date on which the Company's
right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread.
If the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in
full of the Rights, 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, the "Substitution Period"). To the extent that the
Company determines that some action should be taken pursuant to
the first and/or second sentences of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek
stockholder approval for such authorization of additional shares
and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of
each Adjustment Share shall be the Current Market Price per share
of the Common Stock on the Section 11(a)(ii) Trigger Date and the
per share or per unit value of any Common Stock Equivalent
shall be deemed to have the Current Market Price per share of the
Common Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all
holders of Preferred Stock entitling them to subscribe for or purchase
(for a period expiring within forty-five (45) calendar days after such
record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock
("equivalent preferred stock")) or securities convertible into Pre-
ferred Stock or equivalent preferred stock at a price per share of
Preferred Stock or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred
Stock or equivalent preferred stock) less than the Current Market Price
per share of Preferred Stock on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of
shares of Preferred Stock which the aggregate offering price of the total
number of shares of Preferred Stock and/or equivalent preferred stock
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current
Market Price, and the denominator of which shall be the number of shares
of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all
of which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by
or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of
the earnings or retained earnings of the Company), assets (other than a
dividend payable in Preferred Stock, but including any dividend payable
in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price
to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of
the Rights) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator of
which shall be such Current Market Price per share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date
is fixed, and in the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price which would
have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii)
hereof, the "Current Market Price" per share of Common Stock on
any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the thirty (30)
consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii)
hereof, the "Current Market Price" per share of Common Stock on
any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market
Price per share of Common Stock is determined during a period
following the announcement by the issuer of the Common Stock of
(A) any dividend or distribution on such Common Stock, payable in
shares of such Common Stock or securities convertible into shares
of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common
Stock, and the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification shall not have occurred prior
to the commencement of the requisite thirty (30) Trading Day
period or ten (10) Trading Day period, as set forth above, then,
and in each such case, the "Current Market Price" shall be
properly adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares
of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such system, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined in good
faith by the Board of Directors of the Company shall be used. The
term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common Stock
are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so
listed or traded, "Current Market Price" per share shall mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common
Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(d),
the "Current Market Price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 1,000 (as such
number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Agreement)
multiplied by the Current Market Price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "Current Market Price" per
share of the Preferred Stock shall mean the fair value per share
as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least one percent (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 ten-thousandth of a share of Common Stock or other share
or one millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of
(i) three (3) years from the date of the transaction which mandates such
adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock other than Preferred Stock, thereafter the number of such
other shares so receivable upon exercise of any Right and the Purchase
Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provi-
sions with respect to the Preferred Stock contained in Sections 11(a),
(b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-thousandths of a share of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by (i) multiplying (x)
the number of one one-thousandths of a share covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu
of any adjustment in the number of one one-thousandths of a share of
Preferred Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-thousandths of a share of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-thousandths of a share and the number of
one one-thousandths of a share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjust-
ment reducing the Purchase Price below the then stated value, if any, of
the number of one one-thousandths of a share of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable such
number of one one-thousandths of a share of Preferred Stock at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of one one-thousandths of a
share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of
one one-thousandths of a share of Preferred Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive
such additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwith-
standing, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that in their good faith judgment
the Board of Directors of the Company shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at less
than the Current Market Price, (iii) issuance wholly for cash of shares
of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock dividends
or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or permit
any Subsidiary to sell or transfer), in one transaction or a series of
related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately
after such consolidation, merger or sale there are any rights, warrants
or other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously
with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if
at the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, or (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, the number of Rights associated with
each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights thereafter associated with each
share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction the
numerator which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(q) The failure of the Board of Directors to declare a
Person to be an Adverse Person following such Person becoming the
Beneficial Owner of shares of Common Stock representing 10% or more of
the outstanding shares of Common Stock shall not imply that such Person
is not an Adverse Person or limit the Board of Directors' right at any
time in the future to declare such Person to be an Adverse Person.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in Section
11 and Section 13 hereof, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (b) promptly file with the Rights
Agent, and with each transfer agent for the Preferred Stock and the
Common Stock, a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 hereof. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, following the Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), and
the Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger, all or part
of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer), in
one transaction or a series of related 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 Person or Persons
(other than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof), then, and
in each such case (except as may be contemplated by Section 13(d)
hereof), proper provision shall be made so that: (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter have
the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and
freely tradeable shares of Common Stock of the Principal Party (as such
term is hereinafter defined), 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-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11 Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such
one one-thousandths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11 Event by the
Purchase Price in effect immediately prior to such first occurrence) and
dividing that product (which, following the first occurrence of a Section
13 Event shall be referred to as the "Purchase Price" for each Right and
for all purposes of this Agreement) by (2) 50% of the Current Market
Price per share of the Common Stock of such Principal Party on the date
of consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in
connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a), the Person that is
the issuer of any securities for or into which shares of Common
Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is
the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; and (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is
the issuer of the Common Stock having the greatest aggregate market
value.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any such Section 13 Event, the Principal
Party will
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration state-
ment to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the
Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights
under blue sky laws of such jurisdiction, as may be necessary
or appropriate; and
(iii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that
a Section 13 Event shall occur at any time after the first occurrence of
a Section 11 Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section
13(a).
(d) Notwithstanding anything in this Agreement to the con-
trary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons (or a wholly-owned Subsidiary of any
such Person or Persons) who acquired shares of Common Stock pursuant to a
Qualifying Offer, (ii) the price per share of Common Stock offered in
such transaction is not less than the price per share of Common Stock
paid to all holders of shares of Common Stock whose shares were purchased
pursuant to such Qualifying Offer, and (iii) the form of consideration
being offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of consideration
paid pursuant to such Qualifying Offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights hereunder
shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions
of Rights, except prior to the Distribution Date as provided in Section
11(p) hereof, or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid
to the registered holders of the Rights Certificates with regard to which
such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right.
For purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any day
shall be 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 New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the
Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported
by NASDAQ or such other system then in use or, if on any such date the
Rights are not quoted by any such system, the average of the closing bid
and asked prices as furnished by a professional market maker making a
market in the Rights selected by the Board of Directors of the Company.
If on any such date no such market maker is making a market in the Rights
the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock).
In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred Stock, the Compa-
ny may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one one-thousandth of a
share of Preferred Stock. For purposes of this Section 14(b), the current
market value of one one-thousandth of a share of Preferred Stock shall be
one one-thousandth of the closing price of a share of Preferred Stock (as
determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common
Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of
one (1) share of Common Stock. For purposes of this Section 14(c), the
current market value of one share of Common Stock shall be the closing
price per share of Common Stock (determined pursuant to Section 11(d)(i)
hereof) on the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered holders
of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in
such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent and only
if surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name
a Rights Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent, subject to the last sentence of Section 7(e) hereof, shall
be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the con-
trary, neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as
soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the
holder of the number of one one-thousandths of a share of Preferred
Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reason-
able compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending against
any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by
it in connection with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
or shareholder services business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person or Adverse Person and the determination of "Current
Market Price") be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed
by the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for
its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates or be required to verify the same (except
as to its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any breach
by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11, Section 13 or
Section 24 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common
Stock or Preferred Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, ac-
knowledge 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 the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company or any designee of any of the
foregoing, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action
taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(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,
however, reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or
in the exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or the form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take
any further action with respect to such requested exercise or transfer
without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days' notice in writing mailed to
the Company, and to each transfer agent of the Common Stock and Preferred
Stock, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to
make such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent
or by any registered holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the Company),
then any registered holder of a Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the laws
of the United States or of the State of New York or Illinois (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 or Illinois), in good standing, having a principal office in the
State of New York or Illinois which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examina-
tion by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100,000,000 and which shall otherwise meet any requirements imposed by
the New York Stock Exchange on transfer agents and registrars. After
appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity
of the Rights, Rights Agreement or the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection with
the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company
(a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded as of the Distribution Date, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom
such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its op-
tion, at any time prior to the earlier of (i) the close of business on
the fifteenth day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the close
of business on the fifteenth day following the Record Date), or (ii) the
Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.01 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"). Notwithstanding the foregoing, the Board of Directors may not
redeem any Rights following a determination pursuant to Section
11(a)(ii)(B) that any Person is an Adverse Person. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall
not be exercisable after the first occurrence of a Section 11 Event until
such time as the Company's right of redemption set forth in the first
sentence of this Section 23(a) has expired. The Company may, at its
option, pay the Redemption Price in cash, shares of Common Stock (based
on the Current Market Price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the
Board of Directors.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, evidence of which
shall have been filed with the Rights Agent and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price for each Right so held. Promptly after
the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights
Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears
upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the Transfer Agent for the Common Stock.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its op-
tion, at any time after any Person becomes an Acquiring Person or is
determined to be an Adverse Person pursuant to Section 11(a)(ii)(B),
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 7(e) hereof) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar trans-
action occurring after the date hereof (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 the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
any such Subsidiary, or any entity holding Common Stock for or pursuant
to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of fifty percent
(50%) or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to subsection
(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 promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the 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 7(e) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute shares of Preferred Stock (or
equivalent preferred stock, as such term is defined in paragraph (b) of
Section 11 hereof) for shares of Common Stock exchangeable for Rights, at
the initial rate of one one-thousandth of a share of Preferred Stock (or
equivalent preferred stock) for each share of Common Stock, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to Section 3(A) of the rights, powers and
preferences attached hereto as Exhibit A, so that the fraction of a share
of Preferred Stock delivered in lieu of each share of Common Stock shall
have the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions
of shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional share 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 subsection (e), the "Current Market Value" of a whole
share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after
the Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other distribution
to the holders of Preferred Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings of the Company), or (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares of
stock of any class or any other securities, rights or options, or (iii)
to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or
with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one transaction or a series of
related transactions, of more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person
or Persons (other than the Company and/or any of its Subsidiaries in one
or more transactions each of which complies with Section 11(o) hereof),
or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder
of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the
holders of the shares of Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock
for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the shares
of Preferred Stock, whichever shall be the earlier.
(b) In case any Section 11 Event shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references
in the preceding paragraph to Preferred Stock shall be deemed thereafter
to refer to Common Stock and/or other securities.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
Comdisco, Inc.
6111 North River Road
Rosemont, Illinois 60018
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of
any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, New Jersey 07660
Attention: Reorganization Department
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate
(or, if prior to the Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this Section
27, the Company and, if so directed by the Company, the Rights Agent,
shall supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common
Stock and associated Rights. From and after the Distribution Date and
subject to the penultimate sentence of this Section 27, the Company may
and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights
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
and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person, Adverse Person or an
Affiliate or Associate of an Acquiring Person or Adverse Person);
provided, however, that this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person or Adverse Person and its Associates and Affiliates).
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. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 28. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors
and assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of
the number of shares of Common Stock or any other class of capital stock
outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of
which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company
shall have the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the Board
or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement, and
(ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or
not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes
of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board to any
liability to the holders of the Rights.
Section 30. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and the Board of Directors
of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in Section
23 hereof shall be reinstated and shall not expire until the close of
business on the tenth day following the date of such determination by the
Board of Directors. Without limiting the foregoing, if any provision
requiring a majority of the members of the Board of Directors who are not
officers of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person to act is held by any
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall be made by the Board of
Directors of the Company in accordance with applicable law and the
Company's Certificate of Incorporation and Bylaws.
Section 32. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such state
applicable to contracts made and to be performed entirely within such
state.
Section 33. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Rights Agreement to be duly executed and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first
above written.
Attest: COMDISCO, INC.
By By /s/ Philip A. Hewes
Name: Name: Philip A. Hewes
Title: Title: Senior Vice President/Legal
Attest: ChaseMellon Shareholder
Services, L.L.C., as Rights Agent
By By /s/ Laura Picone
Name: Name: Laura Picone
Title: Title: Vice President
EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES C JUNIOR
PARTICIPATING PREFERRED STOCK
of
COMDISCO, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned officer of Comdisco, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the said
Corporation, the said Board of Directors on November 4, 1997 adopted the
following resolution creating a series of 200,000 shares of Preferred
Stock designated as Series C Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the
Board of Directors of this Corporation in accordance with the provisions
of its Restated Certificate of Incorporation, a series of Preferred
Stock of the Corporation be and it hereby is created, and that the
designation and amount thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares
of such series, and the qualifications, limitations or restrictions
thereof are as follows:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series C Junior Participating Preferred
Stock" and the number of shares constituting such series shall be
200,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series C Junior Participating
Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series C Junior Participating Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of
(a) $1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends,
and 1,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common
Stock, par value $0.10 per share, of the Corporation (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series C Junior
Participating Preferred Stock. In the event the Corporation shall at any
time after November 4, 1997 (the "Rights Declaration Date") (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
amount to which holders of shares of Series C Junior Participating
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 Corporation shall declare a dividend or
distribution on the Series C Junior Participating Preferred Stock as
provided in Paragraph (A) above immediately after it declares a dividend
or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per share
on the Series C Junior Participating Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series C Junior Participating Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series C Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series C
Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series C Junior
Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series C Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior
to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series
C Junior Participating Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series C Junior Participating Preferred Stock
shall entitle the holder thereof to 1,000 votes on all matters submitted
to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of shares of
Series C Junior Participating 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 or by law, the
holders of shares of Series C Junior Participating Preferred Stock and
the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series C
Junior Participating Preferred Stock shall be in arrears in an
amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly
dividend period on all shares of Series C Junior Participating
Preferred Stock then outstanding shall have been declared and
paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Series C
Junior Participating Preferred Stock) with dividends in arrears
in an amount equal to six (6) quarterly dividends thereon, voting
as a class, irrespective of series, shall have the right to elect
two (2) directors.
(ii) During any default period, such voting right of
the holders of Series C Junior Participating Preferred Stock may
be exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting
of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be
exercised unless the holders of ten percent (10%) in number of
shares of Preferred Stock outstanding shall be present in person
or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred
Stock of such voting right. At any meeting at which the holders
of Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right,
voting as a class, to elect directors to fill such vacancies, if
any, in the Board of Directors as may then exist up to two (2)
directors or, if such right is exercised at an annual meeting, to
elect two (2) directors. If the number which may be so elected at
any special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make such
increase in the number of directors as shall be necessary to
permit the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their right
to elect directors in any default period and during the
continuance of such period, the number of directors shall not be
increased or decreased except by vote of the holders of Preferred
Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series C
Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect directors, the Board of Directors may order,
or any stockholder or stockholders owning in the aggregate not
less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request,
the calling of special meeting of the holders of Preferred Stock,
which meeting shall thereupon be called by the President, a
Vice-President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant to this Paragraph
(C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him or her at his or
her last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier
than 20 days and not later than 60 days after such order or
request or in default of the calling of such meeting within 60
days after such order or request, such meeting may be called on
similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding. Notwithstanding the
provisions of this Paragraph (C)(iii), no such special meeting
shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of directors until the holders of Preferred Stock shall
have exercised their right to elect two (2) directors voting as a
class, after the exercise of which right (x) the directors so
elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in
Paragraph (C)(ii) of this Section 3) be filled by vote of a
majority of the remaining directors theretofore elected by the
holders of the class of stock which elected the director whose
office shall have become vacant. References in this Paragraph (C)
to directors elected by the holders of a particular class of
stock shall include directors elected by such directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a
class to elect directors shall cease, (y) the term of any
directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of directors shall be such
number as may be provided for in the certificate of incorporation
or by-laws irrespective of any increase made pursuant to the
provisions of Paragraph (C)(ii) of this Section 3 (such number
being subject, however, to change thereafter in any manner
provided by law or in the certificate of incorporation or
by-laws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may
be filled by a majority of the remaining directors.
(D) Except as set forth herein, holders of Series C Junior
Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series C Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared,
on shares of Series C Junior Participating Preferred Stock outstanding
shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series C Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series C Junior Participating Preferred Stock, except
dividends paid ratably on the Series C Junior Participating
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up)
with the Series C Junior Participating Preferred Stock, provided
that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (either as
to dividends or upon dissolution, liquidation or winding up) to
the Series C Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consider-
ation any shares of Series C Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series
C Junior Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under Paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares. Any shares of Series C
Junior Participating Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A)
Upon any liquidation (voluntary or otherwise), dissolution or winding up
of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Series C Junior Participating Preferred Stock shall have
received an amount equal to 1,000 times the Purchase Price, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series C
Liquidation Preference"). Following the payment of the full amount of the
Series C Liquidation Preference, no additional distributions shall be
made to the holders of shares of Series C Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal
to the quotient obtained by dividing (i) the Series C Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the payment of
the full amount of the Series C Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series C Junior
Participating Preferred Stock and Common Stock, respectively, holders
of Series C Junior Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number
to 1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series C Liquidation
Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Series C Junior
Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to
their respective liquidation preferences. In the event, however, that
there are not sufficient assets available to permit payment in full of
the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series C Junior
Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 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 Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares
of Series C Junior Participating 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 C Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be further amended in any
manner which would materially alter or change the powers, preferences or
special rights of the Series C Junior Participating Preferred Stock so as
to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series C Junior
Participating Preferred Stock, voting separately as a class.
Section 10. Fractional Shares. Series C Junior
Participating Preferred Stock may be issued in fractions of a share which
shall entitle the holder, in proportion to such holders fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series C Junior Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of
perjury this __ day of November, 1997.
COMDISCO, INC.
Name:
Title:
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER NOVEMBER 17, 2007 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR
ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF
SUCH AGREEMENT.]1
Rights Certificate
COMDISCO, INC.
This certifies that _________________, or registered
assigns, is the registered holder 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 November
__, 1997 (the "Rights Agreement"), between COMDISCO, INC., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company (the "Rights Agent"), to
purchase from the Company at any time prior to 5:00 PM (New York City
time) on November 17, 2007, at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully-paid, nonassessable share of Series C Junior
Participating Preferred Stock (the "Preferred Stock") of the Company, at
a purchase price of $150 per one one-thousandth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase set forth on the reverse hereof and the
Certificate contained therein duly executed. The Purchase Price shall be
paid in cash. The number of Rights evidenced by this Rights Certificate
(and the number of shares which may be purchased upon exercise thereof)
set forth above, and the Purchase Price per share set forth above, are
the number of Rights, number and Purchase Price as of November 17, 1997,
based on the Preferred Stock as constituted at such date, and are subject
to adjustment upon the happening of certain events as provided in the
Rights Agreement. The Company reserves the right to require prior to the
occurrence of a Triggering Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only whole shares
of Preferred Stock will be issued.
Upon the occurrence of a Section 11 Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or Adverse
Person or an Affiliate or Associate of any such Acquiring Person or
Adverse Person (as such terms are defined in the Rights Agreement), (ii)
a transferee of any such Acquiring Person, Adverse Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person, Adverse Person or an Affiliate or
Associate of an Acquiring Person or Adverse Person, such Rights shall
become null and void and no holder hereof shall have any rights
whatsoever with respect to such Rights from and after the occurrence of
such Section 11 Event.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Company and the
holders of the Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such Rights under the
specific circumstances set forth in the Rights Agreement. Copies of the
Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available upon written request to the Rights Agent.
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1 The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the
Rights Agent designated for such purpose, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate
number of one one-thousandths of a share of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate
shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Certificates representing
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the Company at
its option at a redemption price of $0.01 per Right at any time prior to
the earlier of the close of business on (i) the fifteenth day following
the Stock Acquisition Date (as such time period may be extended or
shortened pursuant to the Rights Agreement) or (ii) the Final Expiration
Date. In addition, the Rights may be exchanged, in whole or in part, for
shares of Common Stock, or shares of preferred stock of the Company
having essentially the same value or economic rights as such shares.
Immediately upon the action of the Board of Directors of the Company
authorizing any such exchange, and without any further action or any
notice, the Rights (other than Rights which are not subject to such
exchange) will terminate and the Rights will only enable holders to
receive the shares issuable upon such exchange.
No fractional shares of Preferred Stock will be issued
upon the exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-thousandth of a share
of Preferred Stock, 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, as such, of this Rights Certificate shall be
entitled to vote or receive dividends or be deemed for any purpose the
holder of the shares of Preferred Stock 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 Rights Certificate shall have been exercised as provided in the
Rights Agreement.
This Rights Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of _____________, 19__
ATTEST: COMDISCO, INC.
________________________ By________________________
Secretary Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate.)
Please print social security or other
identifying number of the transferor:________________________
FOR VALUE RECEIVED, _______________________ hereby sells, assigns and
transfers unto:
---------------------------------------------------
(Please print name and address of transferee)
---------------------------------------------------
(Please print social security or other
identifying number of the transferee)
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_____________________ Attorney, to transfer the within Rights Certificate
on the books of the within-named Company, with full power of
substitution.
Dated: __________________, 19__
---------------------------
Signature
Signature Guaranteed:__________________________
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person, Adverse Person or an Affiliate or Associate of any such
Acquiring Person or Adverse Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person, Adverse Person or an Affiliate or Associate of any such
Acquiring Person or Adverse Person.
Dated:_________________, 19__ _________________________
Signature
Signature Guaranteed:________________________
NOTICE
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to
exercise Rights represented by the Rights Certificate.)
To: COMDISCO, INC.
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of the Rights (or
such other securities of the Company or of any other person which may be
issuable upon the exercise of the Rights) and requests that certificates
for such shares be issued in the name of and delivered to:
---------------------------------------------------
(Please print name and address)
---------------------------------------------------
(Please print social security or other
identifying number)
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate for the
balance of such Rights shall be registered in the name of and delivered
to:
---------------------------------------------------
(Please print name and address)
---------------------------------------------------
(Please print social security or other
identifying number)
Dated:_______________, 19__
-----------------------
Signature
Signature Guaranteed:__________________________
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who is or was
an Acquiring Person, Adverse Person or an Affiliate or Associate of any
such Acquiring Person or Adverse Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person, Adverse Person or an Affiliate or Associate of any such
Acquiring Person or Adverse.
Dated:_________________, 19__ _________________________
Signature
Signature Guaranteed:________________________
NOTICE
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
