SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
TOLL BROTHERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2416878
(State of incorporation or organization) (IRS Employer
Identification No.)
3103 Philmont Avenue, Huntingdon Valley, PA 19006
(Address of principal executive offices) (Zip Code)
If this form relates to the
registration of a class of debt
securities and is effective upon
filing pursuant to General
Instruction A(c)(1) please check
the following box.______
If this form relates to the registration of
a class of debt securities and is to
become effective simultaneously with
the effectiveness of a concurrent
registration statement under the
Securities Act of 1933 pursuant to
General Instruction A(c)(2) please
check the following box.______
<PAGE>
<PAGE>
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be so Registered
Preferred Stock Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)<PAGE>
Item 1. Description of Securities to be Registered.
On June 12, 1997, the Board of Directors of Toll Brothers, Inc. (the
"Company") adopted a Shareholder Rights Plan, providing for a distribution
of one preferred stock purchase right (a "Right") for each share of Common
Stock, par value $0.01 per share, of the Company (the "Common Stock").
Each Right entitles the registered holder to purchase from the Company a unit
(a "Unit") consisting of one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $0.01 per share (the "Preferred
Stock"), at a Purchase Price of $100.00 per Unit (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set
forth in the Rights Agreement (the "Rights Agreement"), dated as of
June 12, 1997, between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Stock and a Distribution Date will occur upon the earlier of (i) ten
(10) days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding shares of Common Stock (the "Stock Acquisition Date")
or (ii) ten (10) business days following the commencement of a tender offer
or exchange offer that would result in a person or group beneficially owning
15% or more of the outstanding shares of Common Stock. The definition of
Acquiring Person excludes any Exempted Person (as defined below). Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates 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.
Any person who, together with all affiliates and associates of such
person, is the beneficial owner of Common Stock, options and/or warrants
exercisable for shares of Common Stock representing 15% or more of the shares of
Common Stock outstanding on June 12, 1997, will be an "Exempted Person." In
addition, any person who, together with all affiliates and associates of
such person, becomes the beneficial owner of Common Stock, options and/or
warrants exercisable for shares of Common Stock representing 15% or more of
the shares of Common Stock then outstanding as a result of a purchase by
the Company or any of its subsidiaries of shares of Common Stock will also
be an "Exempted Person." However, any such person will no longer be deemed
to be an Exempted Person and will be deemed to be an Acquiring Person if
such person, together with all affiliates and associates of such person,
becomes the beneficial owner, at any time after the date such person became
the beneficial owner of 15% or more of the then outstanding shares of
Common Stock, of additional securities representing 1,000 or more shares of
Common Stock, except if such additional securities are acquired (x)
pursuant to the exercise of options or warrants to purchase Common Stock
outstanding and beneficially owned by such person as of the date such person
became the beneficial owner of 15% or more of the then outstanding shares of
Common Stock or as a result of an adjustment to the number of shares of Common
Stock for which such options or warrants are exercisable pursuant to the terms
thereof, or (y) as a result of a stock split, stock dividend or the like.
A purchaser, assignee or transferee of the shares of Common Stock (or
options or warrants exercisable for Common Stock) from an Exempted Person
will not thereby become an Exempted Person, except that a transferee from
the estate of an Exempted Person who receives Common Stock as a bequest or
inheritance from an Exempted Person shall be an Exempted Person so long as
such transferee continues to be the beneficial owner of 15% or more of the
then outstanding shares of Common Stock.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on July 11, 2007 unless earlier redeemed by the
Company as described below. At no time will the Rights have any voting power.
As soon as practicable after the Distribution Date, 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, the separate
Rights Certificates alone will represent the Rights. 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 an Acquiring Person becomes the beneficial owner of
15% or more of the then outstanding shares of Common Stock (unless such
acquisition is made pursuant to a tender or exchange offer for all
outstanding shares of the Company, at a price determined by a majority of
the independent directors of the Company who are Continuing Directors (as
defined below) to be fair and otherwise in the best interest of the Company
and its shareholders after receiving advice from one or more investment
banking firms (a "Qualifying Offer"), each holder of a Right will thereafter
have the right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company), having a
value equal to two times the Exercise Price of the Right. The Exercise Price
is the Purchase Price times the number of Units associated with each Right
(initially, one). Notwithstanding any of the foregoing, following the
occurrence of an Acquiring Person becoming such (the "Flip-In Event"), all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void. However, Rights are not exercisable following the occurrence of a
Flip-In Event until such time as the Rights are no longer redeemable by the
Company as set forth below.
In the event that following the Stock Acquisition Date, (i) the
Company engages in a merger or business combination transaction in which the
Company is not the surviving corporation (other than a merger consummated
pursuant to a Qualifying Offer); (ii) the Company engages in a merger or
business combination transaction in which the Company is the surviving
corporation and the Common Stock is changed or exchanged; or (iii) 50% or
more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which have previously been voided as set
forth above) shall thereafter have the right to receive, upon exercise of
the Right, common stock of the acquiring company having a value equal to two
times the Exercise Price of the Right.
The Purchase Price payable, and the number of Units of Preferred
Stock or other securities or property issuable upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred
Stock are granted certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the current market
price of the Preferred Stock, or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
At any time after the Stock Acquisition Date, the Board of Directors
of the Company may exchange the Rights (other than Rights owned by an Acquiring
Person), in whole or in part, at an exchange ratio equal to (i) a number of
shares of Common Stock per Right with a value equal to the spread between
the value of the number of shares of Common Stock for which the Rights may
then be exercised and the Purchase Price or (ii) if prior to the acquisition
by the Acquiring Person of 50% or more of the then outstanding shares of
Common Stock, one share of Common Stock per Right (subject to adjustment).
Any such exchange shall require the concurrence of a majority of the
Continuing Directors.
At any time until ten (10) days following the Stock Acquisition Date,
the Company may redeem the Rights in whole, but not in part, at a price of
$0.001 per Right. Under certain circumstances, the decision to redeem shall
require the concurrence of a majority of the Continuing Directors.
Immediately upon the action of the Board of Directors ordering redemption
of the Rights, the Rights will terminate and the only right of the holders
of Rights will be to receive the $0.001 redemption price.
The term "Continuing Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the adoption of
the Rights Plan and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors, but
shall not include an Acquiring Person, or an affiliate or associate of an
Acquiring Person, or any representative of the foregoing entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the
Rights will not be taxable to shareholders or to the Company, shareholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration)
of the Company as set forth above or in the event the Rights are redeemed.
Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board (in certain circumstances, with the concurrence of the
Continuing Directors) in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time
period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at such time as
the Rights are not redeemable.
This Summary of Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
<PAGE>
Item 2. Exhibits.
Number Exhibit
1 Rights Agreement (the "Rights Agreement") dated as of June
12, 1997, by and between the Company and the Rights Agent.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
TOLL BROTHERS, INC.
(Registrant)
Date: June 20, 1997 By: /s/ Joseph R. Sicree
_____________________________
Name:Joseph R. Sicree
Title:Vice President
<PAGE>
INDEX OF EXHIBITS
Number Exhibit Page
1 Rights Agreement (the "Rights Agreement") dated as of
June 12, 1997, by and between the Company and
the Rights Agent.
<PAGE>
Exhibit 1
TOLL BROTHERS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as
Rights Agent
Rights Agreement
Dated as of June 12, 1997
<PAGE>
Table of Contents
Page
Certain Definitions. . . . . . . . . . . . . . . . . . .1
Appointment of Rights Agent. . . . . . . . . . . . . . .6
Issue of Rights Certificates . . . . . . . . . . . . . .6
Form of Rights Certificates. . . . . . . . . . . . . . .8
Countersignature and Registration. . . . . . . . . . . .9
Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates . . . . . . . . . . . . . . . 10
Exercise of Rights; Purchase Price; Expiration Date of
Rights. . . . . . . . . . . . . . . . . . . . . . 11
Cancellation and Destruction of Rights Certificates. . 13
Reservation and Availability of Capital Stock. . . . . 14
Preferred Stock Record Date. . . . . . . . . . . . . . 16
Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights . . . . . . . . . . . . . . . 16
Certificate of Adjusted Purchase Price or Number of
Shares. . . . . . . . . . . . . . . . . . . . . . 27
Consolidation, Merger or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . 27
Fractional Rights and Fractional Shares. . . . . . . . 30
Rights of Action . . . . . . . . . . . . . . . . . . . 31
Agreement of Rights Holders. . . . . . . . . . . . . . 32
Rights Certificate Holder Not Deemed a Stockholder . . 33
Concerning the Rights Agent. . . . . . . . . . . . . . 33
Merger or Consolidation or Change of Name of Rights Agent34
Duties of Rights Agent . . . . . . . . . . . . . . . . 35
Change of Rights Agent . . . . . . . . . . . . . . . . 37
Issuance of New Rights Certificates. . . . . . . . . . 38
Redemption and Termination . . . . . . . . . . . . . . 39
Notice of Certain Events . . . . . . . . . . . . . . . 40
Notices. . . . . . . . . . . . . . . . . . . . . . . . 41
Supplements and Amendments . . . . . . . . . . . . . . 42
Exchange . . . . . . . . . . . . . . . . . . . . . . . 43
Successors . . . . . . . . . . . . . . . . . . . . . . 45
Determinations and Actions by the Board of Directors,
etc.. . . . . . . . . . . . . . . . . . . . . . . 45
Benefits of this Agreement . . . . . . . . . . . . . . 46
Severability . . . . . . . . . . . . . . . . . . . . . 46
Governing Law. . . . . . . . . . . . . . . . . . . . . 47
Counterparts . . . . . . . . . . . . . . . . . . . . . 47
Descriptive Headings . . . . . . . . . . . . . . . . . 47
Exhibit A -- Form of Certificate of Designation,
Preferences
and Rights of Series A Junior Participating
Preferred Stock
Exhibit B -- Form of Rights Certificate
Exhibit C -- Summary of Rights to Purchase Series A
Junior Participating Preferred Stock
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of June 12, 1997 (the
"Agreement"), between Toll Brothers, Inc., a Delaware
corporation (the "Company"), 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 June 12, 1997 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one
Right for each share of common stock, par value $0.01 per
share, of the Company (the "Common Stock") outstanding at
the close of business on July 11, 1997 (the "Record
Date"), and has authorized the issuance of one Right (as
such number may hereinafter be adjusted pursuant to the
provisions of Section 11(p) hereof) for each share of
Common Stock issued between the Record Date (whether
originally issued or delivered from the Company's
treasury) and the Distribution Date (as defined in
Section 3 hereof), each Right initially representing the
right to purchase one one-thousandth of a share (a
"Unit") of Series A Junior Participating Preferred Stock
(the "Preferred Stock") of the Company having the rights,
powers and preferences set forth in the form of
Certificate of Designation, Preferences and Rights
attached hereto as Exhibit A, 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) "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 (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company, (iv) any
Person organized, appointed or established by the Company
for or pursuant to the terms of any such plan, or (v) any
Exempted Person.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended and in effect on the
date of this Agreement (the "Exchange Act").
(c) 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 or the occurrance of an event) pursuant to any
agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event, (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) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect to any
Original Rights, or (D) securities issued or issuable
pursuant to any employee benefit plan of the Company or
any Subsidiary of the Company or any employment
agreement, arrangement or other understanding between the
Company or any Subsidiary of the Company and any Person
or any of such Person's Affiliates or Associates; or
(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 (A)
an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding:
(1) 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 (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any
comparable or successor report), or (B) securities issued
or issuable pursuant to any employee benefit plan of the
Company or any Subsidiary of the Company or any
employment agreement, arrangement or other understanding
between the Company or any Subsidiary of the Company and
any Person or any of such Person's Affiliates or
Associates; 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
(c)) or disposing of any voting securities of the
Company;
provided, however, that nothing in this paragraph (c)
shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a
firm commitment underwriting until the expiration of
forty (40) days after the date of such acquisition; and
provided, further, however, that any stockholder of the
Company, with Affiliates, Associates or other Person(s)
who may be deemed representatives of it serving as
director(s) or officer(s) of the Company, shall not be
deemed to beneficially own securities held by other
Persons as a result of (i) Persons affiliated or
otherwise associated with such stockholder serving as
director(s) or officer(s) or taking any action in
connection therewith, (ii) discussing the status of its
shares with the Company or other stockholders of the
Company similarly situated or (iii) voting or acting in a
manner similar to other stockholder(s) similarly
situated, absent a specific finding by the Board of
Directors of an express agreement among such stockholders
to act in concert with one another as stockholders so as
to cause, in the good faith judgment of the Board of
Directors, each such stockholder to be the Beneficial
Owner of the shares held by the other stockholder(s).
(d) "Business Day" shall mean any day other
than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or
obligated by law or executive order to close.
(e) "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.
(f) "Common Stock" shall have the meaning set
forth in the recital to this Agreement, 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.
(g) "Continuing Director" shall mean (i) any
member of the Board of Directors of the Company, while
such Person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an
Acquiring Person or of any such Affiliate or Associate,
and was a member of the Board prior to the date of this
Agreement, or (ii) any Person who subsequently becomes a
member of the Board, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative or
nominee of an Acquiring Person or of any such Affiliate
or Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a
majority of the Continuing Directors.
(h) "Exempted Person" shall mean any Person
who, together with all Affiliates and Associates of such
Person, (i) is the Beneficial Owner of securities (as
disclosed in public filings with the Securities and
Exchange Commission on the Rights Dividend Declaration
Date), representing 15% or more of the shares of Common
Stock outstanding on the Rights Dividend Declaration Date
or (ii) becomes the Beneficial Owner of securities
representing 15% or more of the shares of Common Stock
then outstanding because of a reduction in the number of
outstanding shares of Common Stock then outstanding as a
result of the purchase by the Company or a Subsidiary of
the Company of shares of Common Stock; provided, however,
that any such Person described in clause (ii) shall no
longer be deemed to be an Exempted Person and shall be
deemed an Acquiring Person if such Person, together with
all Affiliates and Associates of such Person, becomes the
Beneficial Owner, at any time after the date such Person
became the Beneficial Owner of (and so long as such
Person continues to be the Beneficial Owner of) 15% or
more of the then outstanding shares of Common Stock, of
additional securities representing 1,000 or more shares
of Common Stock, except (x) pursuant to the exercise of
options or warrants to purchase Common Stock outstanding
and beneficially owned by such Person as of the date such
Person became the Beneficial Owner of 15% or more of the
then outstanding shares of Common Stock or as a result of
an adjustment to the number of shares of Common Stock for
which such options or warrants are exercisable pursuant
to the terms thereof, or (y) as a result of a stock
split, stock dividend or the like. A purchaser, assignee
or transferee of the shares of Common Stock (or warrants
or options exercisable for Common Stock) from an Exempted
Person shall not thereby become an Exempted Person,
except that a transferee from the estate of an Exempted
Person who receives Common Stock as a bequest or
inheritance from an Exempted Person shall be an Exempted
Person so long as such Person continues to be the
Beneficial Owner of 15% or more of the then outstanding
shares of Common Stock.
(i) "Person" shall mean any individual, firm,
corporation, limited liability company, partnership or
other entity.
(j) "Preferred Stock" shall mean shares of
Series A Junior Participating Preferred Stock, par value
$0.01 per share, of the Company, and, to the extent that
there are not a sufficient number of shares of Series A
Junior Participating Preferred Stock authorized to permit
the full exercise of the Rights, any other series of
Preferred Stock, par value $0.01 per share, of the
Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior
Participating Preferred Stock.
(k) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii) hereof.
(l) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a)
hereof.
(m) "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.
(n) "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.
(o) "Triggering Event" shall mean any Section
11(a)(ii) 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 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 earlier of (i) the close of
business on the tenth day after the Stock Acquisition
Date (or, if the tenth day after the Stock Acquisition
Date occurs before the Record Date, the close of business
on the Record Date), or (ii) the close of business on the
tenth business day (or such later date as the Board of
Directors of the Company shall determine) after the date
that a tender or exchange offer by any Person (other than
any Exempted Person, 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 (the earlier of (i) and (ii) 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 rights
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(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) As promptly as practicable following the
Record Date, the Company will send a copy of a Summary of
Rights, in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Record Date, at
the address of such holder shown on the records of the
Company. With respect to certificates for the Common
Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of
the Distribution Date or the Expiration Date (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 from the Company's treasury) after
the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates
representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and shall bear the
following legend: "This certificate also evidences and
entitles the holder hereof to certain Rights as set forth
in the Rights Agreement between Toll Brothers, Inc. (the
"Company") and ChaseMellon Shareholder Services, L.L.C.
(the "Rights Agent"), dated as of June 12, 1997 (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 Rights Agent.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Rights Agent will mail to the holder of
this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly
after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null
and void." With respect to 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 or any
Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee
of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person
has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a
transfer 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
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 or an Affiliate or
Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this
Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in
Section 7(e) of such Agreement."
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed
on behalf of the Company by its Chairman of the Board,
its Vice Chairman, its Chief Executive Officer, its
President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature.
The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature,
and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall
cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same
force and effect as though the person who signed such
Rights Certificates had not ceased to be such officer of
the Company; and any Rights Certificates 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 shall 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 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 until the
registered holder shall have completed and signed the
certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall,
subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection
with any transfer, split up, combination or exchange of
Rights Certificates.
(b) 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 earlier of (i) the close
of business on July 11, 2007, (the "Final Expiration
Date"), or (ii) the time at which the Rights are redeemed
as provided in Section 23 hereof (the earlier of (i) and
(ii) 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
$100.00, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of
election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-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 shall 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 contrary, from and after the first occurrence of a
Section 11(a)(ii) Event, any Rights beneficially owned by
(i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the
Acquiring 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 its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement
to the contrary, neither the Rights Agent nor the Company
shall be obligated to undertake any action with respect
to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless
such registered holder shall have (i) completed and
signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for
the purpose of exercise, transfer, split up, combination
or exchange shall, if surrendered to the Company or any
of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to
the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent
shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon
the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at
the written request of the Company, destroy such canceled
Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital
Stock.
(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 its authorized and issued
shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a
Triggering Event, Common 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, following the occurrence of a Triggering Event,
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, 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(a)(ii)
Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined
in accordance with Section 11(a)(iii) hereof, a
registration statement under the Securities Act of 1933
(the "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
Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and
(B) the date of the expiration of the Rights. The
Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with
the exercisability of the Rights. The Company may
temporarily suspend, for a period 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, 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, Common Stock and/or other securities) delivered
upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (or Units) (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 Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that
no such tax is due.
Section 10. Preferred Stock Record Date. Each
Person in whose name any certificate for a number of 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, such holder
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 any Person (other than
an Exempted Person, 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), alone or together with
its Affiliates and Associates, shall, at any time after
the Rights Dividend Declaration Date, become the
Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, unless the event causing the 15%
threshold to be crossed 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 an exchange
offer for all outstanding shares of Common Stock at a
price and on terms determined by at least a majority of
the members of the Board of Directors of the Company who
are Continuing Directors and who are not officers of the
Company, 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 (hereinafter a "Qualifying Offer"), then,
promptly following the occurrence of such event, proper
provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof)
shall thereafter have 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 of the Company 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(a)(ii) 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 value of the
Adjustment Shares issuable upon the exercise of a Right
(the "Current Value"), 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 of
preferred stock being referred to as "Common Stock
Equivalents")), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value
(less the amount of any reduction in the Purchase Price),
where such aggregate value has been determined by the
Board based upon the advice of a nationally recognized
investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the
first occurrence of a Section 11(a)(ii) Event and (y) the
date on which the Company's right of redemption pursuant
to Section 23(a) expires (the later of (x) and (y) being
referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without
requiring payment of the 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. For purposes of the preceding
sentence, the term "Spread" shall mean the excess of (i)
the Current Value over (ii) the Purchase Price. If the
Board of Directors of the Company determines 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-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-day period, as it may be
extended, is herein called the "Substitution Period").
To the extent that action is to be taken pursuant to the
first and/or third sentences of this Section 11(a)(iii),
the Company (1) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all
outstanding Rights, and (2) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek such 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 equal 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, 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 Preferred Stock or equivalent preferred
stock at a price per share of Preferred Stock or per
share of equivalent preferred stock (or having a
conversion price per share, if a security convertible
into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to
Section 11(d) hereof) 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 (as determined pursuant to Section 11(d)
hereof) 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) 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 (as determined
pursuant to Section 11(d) hereof) 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 the Common Stock is
determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of
such Common Stock or securities convertible into shares
of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such
Common Stock, and the ex-dividend date for such dividend
or distribution, or the record date for such subdivision,
combination or reclassification shall not have occurred
prior to the commencement of the requisite thirty (30)
Trading Day 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 organization, the average of the closing bid
and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by the
Board of Directors of the Company. If on any such date
no market maker is making a market in the Common Stock,
the fair value of such shares on such date as determined
in good faith by the Board 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, 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. For all purposes of this Agreement, the
Current Market Price of a Unit shall be equal to the
Current Market Price of one share of Preferred Stock
divided by 1,000.
(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 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-ten 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 provisions 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-ten 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-thousandth 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 adjustment 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 notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith
judgment the Board of Directors of the Company shall
determine to be advisable in order that any (i)
consolidation or subdivision of the 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 26 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.
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 25 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
more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o) 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 is exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section
11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number
of such one one-thousandths of a share for which a Right
was exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) 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
(determined pursuant to Section 11(d)(i) hereof) per
share of the Common Stock of such Principal Party on the
date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following
the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary
to 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 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-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 such
consolidation, merger, sale or transfer unless the
Principal Party shall have a sufficient number of
authorized shares of its Common Stock, which have not
been issued or reserved for issuance, to permit the
exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section
13 and further providing that, as soon as practicable
after the date of any consolidation, merger or sale of
assets mentioned in paragraph (a) of this Section 13, the
Principal Party will:
(i) prepare and file a registration
statement under the Act, with respect to the Rights and
the securities purchasable upon exercise of the Rights on
an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) 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 occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the
manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement
to the contrary, Section 13 shall not be applicable to a
transaction described in subparagraphs (x) and (y) of
Section 13(a) if (i) such transaction is consummated with
a Person or Persons who acquired shares of Common Stock
pursuant to a Qualifying Offer (or a wholly owned
Subsidiary of any such Person or Persons), (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 tender offer or exchange 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 tender offer or exchange 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 organization, the average of the
closing bid and asked prices as furnished by a
professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in
the Rights the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue
fractions of shares of Preferred Stock (other than
fractions 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 Company may pay to the registered
holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one
one-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 (1)
share of Common Stock shall be the closing price of one
(1) share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for 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 or her right to receive
any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section
14.
Section 15. Rights of Action. All rights of action
in respect of this Agreement 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
such holder's own behalf and for such holder's own
benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's
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 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 contrary, neither the Company nor the Rights Agent
shall have any liability to any holder of a Right or
other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts
to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of
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 24 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 reasonable compensation for all services rendered
by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees
and disbursements and other 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. In no
case shall the Rights Agent be liable for special,
indirect, incidental or consequential loss or damage.
(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 advice 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 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 Vice Chairman,
the Chief Executive Officer, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; 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 or Section 13 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, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of
the Board, the Vice Chairman, the Chief Executive
Officer, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with
its duties, and it shall not be liable 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 Rights Certificate
surrendered to the Rights Agent for exercise or transfer,
the certificate attached to the form of assignment or
form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such
requested exercise of transfer without first consulting
with the Company.
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, in its sole discretion, 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 the holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered
holder of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be
either (a) a corporation organized and doing business
under the laws of the United States or of any state of
the United States, in good standing, which is authorized
under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or state
authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least
$100,000,000 or (b) an Affiliate of such a corporation.
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 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 option, at any time prior to the earlier of (i)
the close of business on the tenth 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 twentieth 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 $0.001 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"); provided,
however, if the Board of Directors of the Company
authorizes redemption of the Rights in either of the
circumstances set forth in clauses (i) and (ii) below,
then there must be Continuing Directors then in office
and such authorization shall require the concurrence of a
majority of such Continuing Directors: (i) such
authorization occurs on or after the time a Person
becomes an Acquiring Person, or (ii) such authorization
occurs on or after the date of a change (resulting from a
proxy or consent solicitation or an action by written
consent of stockholders, whether or not made pursuant to,
and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act) in
a majority of the directors in office at the commencement
of such solicitation, or prior to such written consent,
if any Person who is a participant in such solicitation,
or who signed such consent, has stated (or, if upon the
commencement of such solicitation, a majority of the
Board of Directors of the Company has determined in good
faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any
action which would result in such Person becoming an
Acquiring Person or which would cause the occurrence of a
Triggering Event unless, concurrent with such
solicitation, such Person (or one or more of its
Affiliates or Associates) is making a cash tender offer
pursuant to a Schedule 14D-1 (or any successor form)
filed with the Securities and Exchange Commission for all
outstanding shares of Common Stock not beneficially owned
by such Person (or by its Affiliates or Associates).
Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable after
the first occurrence of a Section 11(a)(ii) Event until
such time as the Company's right of redemption hereunder
has expired. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based
on the "Current Market Price", as defined in Section
11(d)(i) hereof, 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. 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 25 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 of the events set forth in
Section 11(a)(ii) hereof shall occur, then, in any such
case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate,
to the extent feasible and in accordance with Section 25
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, if appropriate, other securities.
Section 25. 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:
Toll Brothers, Inc.
3103 Philmont Avenue
Huntingdon Valley, Pennsylvania 19006
Attention: Chief Executive Officer
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.
Commerce Court
Four Station Square
Pittsburgh, Pennsylvania 15219
Attention: Administration 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 26. Supplements and Amendments. Prior to
the Distribution Date and subject to the penultimate
sentence of this Section 26, the Company and the Rights
Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the
approval of any holders of certificates representing
shares of Common Stock. From and after the Distribution
Date and subject to the penultimate sentence of this
Section 26, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein
which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time
period hereunder (which lengthening or shortening,
following the first occurrence of an event set forth in
clauses (i) and (ii) of the first proviso to Section
23(a) hereof, shall be effective only if there are not
less than two Continuing Directors and shall require the
concurrence of a majority of such Continuing Directors),
or (iv) to 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 or an Affiliate or Associate of
an Acquiring Person); provided, however, 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. 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
26, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number
of one one-thousandths of a share of Preferred Stock for
which a Right is exercisable. 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 27. Exchange.
(a) (i) The Company may, at its option, at
any time after the Stock Acquisition Date, upon
resolution by the Board of Directors of the Company,
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 Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement
(such exchange ratio being hereinafter referred to as the
"Section 27(a)(i) Exchange Ratio"). Notwithstanding the
foregoing, the Company may not effect such exchange at
any time after any Acquiring Person becomes the
Beneficial Owner of 50% or more of the shares of Common
Stock then outstanding.
(ii) The Company may, at its option, at
any time after the Stock Acquisition Date, upon
resolution by the Board of Directors of the Company,
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 Common Stock at an exchange ratio
specified in the following sentence, as appropriately
adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date of this
Agreement. Subject to such adjustment, each Right may be
exchanged for that number of shares of Common Stock
obtained by dividing the Adjustment Spread (as defined
below) by the then current market price (determined
pursuant to Section 11(d) hereof) per share of Common
Stock on the earlier of (i) the date on which any Person
becomes an Acquiring Person or (ii) the date on which a
tender or exchange offer by any Person (other than an
Exempted Person, 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-4(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 (such exchange ratio being the
"Section 27(a)(ii) Exchange Ratio"). The "Adjustment
Spread" shall equal (x) the aggregate market price on the
date of such event of the number of Adjustment Shares
determined pursuant to Section 11(a)(ii) minus (y) the
Purchase Price.
(iii) Notwithstanding anything
contained in this Section 27(a) to the contrary, the
Company may not exchange any Rights pursuant to this
Section 27(a) unless (x) at the time of the action of the
Board of Directors of the Company approving the exchange,
there are then in office not less than two Continuing
Directors and (y) such exchange is approved by a majority
of the Continuing Directors then in office.
(b) Immediately upon the action of the Board
of Directors of the Company ordering the exchange of any
Rights pursuant to paragraph (a) of this Section 27 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 Section 27(a)(i) Exchange Ratio or Section
27(a)(ii) Exchange Ratio, as the case may be. 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 shares of Common Stock for
Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on
the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In the event that there shall not be
sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with
this Section 27, the Company shall make adequate
provision to substitute, to the extent that there are
insufficient shares of Common Stock available (1) cash,
(2) other equity securities of the Company, (3) debt
securities of the Company, (4) other assets or (5) any
combination of the foregoing, having an aggregate value
per Right equal to (x) in the case of an exchange
pursuant to Section 27(a)(i), the then current per share
market price (determined pursuant to Section 11(d)
hereof) of the Common Stock multiplied by the Section
27(a)(i) Exchange Ratio and (y) in the case of an
exchange pursuant to Section 27(a)(ii), the Adjustment
Spread, where such aggregate value has been determined by
a majority of the Continuing Directors, after receiving
advice from a nationally recognized investment banking
firm. To the extent that the Company determines that any
such substitution must be made, the Company shall
provide, subject to Section 7(e) hereof, that such
substitution shall apply uniformly to all outstanding
Rights.
(d) The Company shall not be required to issue
fractions of shares of Common Stock or to distribute
certificates which evidence fractional shares of Common
Stock. In lieu of such fractional shares of Common
Stock, the Company shall pay to the registered holders of
the Rights Certificates with regard to which such
fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of
the current market value of a whole share of Common
Stock. For the purposes of this paragraph (d), the
current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section
11(d) hereof) for the Trading Day immediately prior to
the date of the exchange pursuant to this Section 27.
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
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 (with, where specifically
provided for herein, the concurrence of the Continuing
Directors) shall have the exclusive power and authority
to administer this Agreement and to exercise all rights
and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of the
Continuing Directors) 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 (with, where specifically provided
for herein, the concurrence of the Continuing Directors)
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 or the Continuing Directors to any liability to the
holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date,
registered holders of the Common 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 twentieth day following the date of
such determination by the Board of Directors. Without
limiting the foregoing, if any provision requiring a
majority of the Board of Directors of the Company to be
Continuing Directors to act is held by any court of
competent jurisdiction or other authority to be invalid,
void or unenforceable, such determination shall then be
made by the Board of Directors of the Company in
accordance with applicable law and the Company's Amended
and Restated Certificate of Incorporation and By-Laws.
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 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: TOLL BROTHERS, INC.
By: By:
Name: Name:
Title: Title:
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: By:
Name: Name:
Title: Title:
<PAGE>
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
of
TOLL BROTHERS, INC.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware, the undersigned officers of
Toll Brothers, Inc., a corporation organized and existing
under the General Corporation Law of the State of
Delaware (the "Corporation"), in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the
Board of Directors by the Certificate of Incorporation of
the Corporation, the Board of Directors on June 12, 1997
adopted the following resolution creating a series of
60,000 shares of Preferred Stock designated as Series A
Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in
the Board of Directors of this Corporation in accordance
with the provisions of its Certificate of Incorporation,
a series of Preferred Stock of the Corporation be and it
hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the
shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of
such series shall be designated as "Series A Junior
Participating Preferred Stock" and the number of shares
constituting such series shall be 60,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Junior
Participating Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the 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 A Junior
Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a)
$0.01 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 $0.01 per share, of the Corporation (the
"Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the
Corporation shall at any time after June 12, 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 A 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 outstanding shares of Series A
Junior Participating Preferred Stock as provided in
Paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other than
a dividend payable in shares of Common Stock); 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 outstanding shares of Series A
Junior Participating Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such
shares of Series A Junior Participating Preferred Stock,
unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the
determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock
in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of
holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall
be no more than thirty (30) days prior to the date fixed
for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series A Junior Participating Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A 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 A 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 A 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 A Junior Participating Preferred Stock shall be in
arrears in an amount equal to six (6) quarterly dividends
thereon, the occurrence of such contingency shall mark
the beginning of a period (herein called a "default
period") 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 A 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 A 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 A Junior
Participating Preferred Stock may be exercised initially
at a special meeting called pursuant to subparagraph
(iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not
be exercised unless the holders of 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 A 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 a 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 such holder at
such holder's last address as the same appears on the
books of the Corporation. Such meeting shall be called
for a time not earlier than twenty (20) days and not
later than sixty (60) days after such order or request,
or in default of the calling of such meeting within sixty
(60) days after such order or request, such meeting may
be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of
this Paragraph (C)(iii), no such special meeting shall be
called during the period within sixty (60) days
immediately preceding the date fixed for the next annual
meeting of the stockholders.
(iv) In any default period, 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 of the
Corporation irrespective of any increase made pursuant to
the provisions of Paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter
in any manner provided by law or in the Certificate of
Incorporation or By-laws of the Corporation). Any
vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining
Directors.
(D) Except as set forth herein, holders of
Series A Junior Participating Preferred Stock shall have
no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior
Participating Preferred Stock as provided in Section 2
hereof are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not
declared, on shares of Series A Junior Participating
Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
(i) declare or pay dividends on, make
any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make
any other distributions on any shares of stock ranking on
a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid
ratably on the Series A Junior Participating Preferred
Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then
entitled;
(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 A 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 A Junior Participating
Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Junior Participating
Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of
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
A Junior Participating Preferred Stock purchased or
otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after
the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to 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 A
Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received an
amount equal to $100,000 per share of Series A Junior
Participating Preferred Stock, plus an amount equal to
accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the
payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to
the holders of shares of Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient
obtained by dividing (i) the Series A 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 A
Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Junior
Participating Preferred Stock and Common Stock,
respectively, holders of Series A 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 A Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if
any, which rank on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the
Series A Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their
respective liquidation preferences. In the event,
however, that there are not sufficient assets available
to permit payment in full of the Common Adjustment, then
such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) 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 A 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 A 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 A
Junior Participating Preferred Stock shall not be
redeemable.
Section 9. Amendment. The 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 A 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 A Junior Participating Preferred Stock, voting
separately as a class.
Section 10. Fractional Shares. Series A Junior
Participating Preferred Stock may be issued in fractions
of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions
and to have the benefit of all other rights of holders of
Series A 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 12th day of June
1997.
TOLL BROTHERS, INC.
By:
Name:
Title:
Attest:
Secretary
<PAGE>
Exhibit B
[Form of Rights Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER JULY 11, 2007 OR EARLIER IF
REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED
BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF SUCH AGREEMENT.]
Rights Certificate
TOLL BROTHERS, INC.
This certifies that [ ], or
registered assigns, is the registered owner of the number
of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of June 12,
1997 (the "Rights Agreement"), between Toll Brothers,
Inc., a Delaware corporation (the "Company"), and Chase
MellonShareholder 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 P.M. (New York City
time) on July 11, 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, non-assessable share of Series A Junior
Participating Preferred Stock (the "Preferred Stock") of
the Company, at a purchase price of $100.00 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 and related
Certificate duly executed. 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 and Purchase Price as of June 12,
1997 based on the Preferred Stock as constituted at such
date. The Company reserves the right to require prior to
the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement) that a number of Rights
be exercised so that only whole shares of Preferred Stock
will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as
such term is defined in the Rights Agreement), if the
Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any Acquiring Person (as such
terms are defined in the Rights Agreement), (ii) a
transferee of any Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified
in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase
Price and the number and kind of shares of Preferred
Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment
upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement,
which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such
Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on
file at the above-mentioned office of the Rights Agent
and are also available upon written request to the Rights
Agent.
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 Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Certificate may be redeemed
by the Company at its option at a redemption price of
$0.001 per Right at any time prior to the earlier of the
close of business on (i) the tenth day following the
Stock Acquisition Date (as such time period may be
extended pursuant to the Rights Agreement), and (ii) the
Final Expiration Date. In addition, the Rights may be
exchanged, in whole or in part, for shares of the 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. Under certain circumstances set forth in the
Rights Agreement, the decision to redeem the Rights shall
require the concurrence of a majority of the Continuing
Directors (as such term is defined in the Rights
Agreement).
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 of this Rights Certificate shall be
entitled to vote or receive dividends or be deemed for
any purpose the holder of shares of Preferred Stock or of
any other securities of the Company 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 , ____
ATTEST: TOLL BROTHERS, INC.
By: By:
Secretary Name:
Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By:
Authorized Signature
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED hereby
sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably
constitute and appoint Attorney, to
transfer the within Rights Certificate on the books of
the within-named Company, with full power of
substitution.
Dated: , ____
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not
being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate
or Associate of any Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of
the undersigned, it [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring
Person.
Dated: ,
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon
the face of this Rights Certificate in every particular,
without alteration or enlargement or any change
whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: TOLL BROTHERS, 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 insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights
Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: ,
Signature
Signature Guaranteed:
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 or an
Affiliate or Associate of any Acquiring Person (as such
terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of
the undersigned, it [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any
Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ,
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon
the face of this Rights Certificate in every particular,
without alteration or enlargement or any change
whatsoever.
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On June 12, 1997, the Board of Directors of Toll
Brothers, Inc. (the "Company") adopted a Shareholder
Rights Plan, providing that one right (a "Right") shall
be attached to each share of common stock, par value
$0.01 per share, of the Company (the "Common Stock").
Each Right entitles the registered holder to purchase
from the Company a unit (a "Unit") consisting of one
one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $0.01 per share
(the "Preferred Stock"), at a Purchase Price of $100.00
per Unit (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in
the Rights Agreement (the "Rights Agreement"), dated as
of June 12, 1997, between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the
"Rights Agent").
Initially, the Rights will be attached to all Common
Stock certificates representing shares then outstanding,
and no separate Rights Certificate will be distributed.
The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) ten
(10) days following a public announcement that a person
or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (the "Stock
Acquisition Date") or (ii) ten (10) business days
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. The definition of Acquiring Person excludes any
Exempted Person (as defined below). Until the
Distribution Date, (i) the Rights will be evidenced by
the Common Stock certificates and will be transferred
with and only with such Common Stock certificates, (ii)
new Common Stock certificates 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.
Any person who, together with all affiliates and
associates of such person, is the beneficial owner of
Common Stock, options and/or warrants exercisable for
shares of Common Stock representing 15% or more of the
shares of Common Stock outstanding on the date the Board
of Directors authorizes the rights dividend (the "Rights
Dividend Declaration Date"), will be an "Exempted
Person." In addition, any person who, together with all
affiliates and associates of such person, becomes the
beneficial owner of Common Stock, options and/or warrants
exercisable for shares of Common Stock representing 15%
or more of the shares of Common Stock then outstanding as
a result of a purchase by the Company or any of its
subsidiaries of shares of Common Stock will also be an
"Exempted Person." However, any such person will no
longer be deemed to be an Exempted Person and will be
deemed to be an Acquiring Person if such person, together
with all affiliates and associates of such person,
becomes the beneficial owner, at any time after the date
such person became the beneficial owner of 15% or more of
the then outstanding shares of Common Stock, of
additional securities representing 1,000 or more shares
of Common Stock, except if such additional securities are
acquired (x) pursuant to the exercise of options or
warrants to purchase Common Stock outstanding and
beneficially owned by such person as of the date such
person became the beneficial owner of 15% or more of the
then outstanding shares of Common Stock or as a result of
an adjustment to the number of shares of Common Stock for
which such options or warrants are exercisable pursuant
to the terms thereof, or (y) as a result of a stock
split, stock dividend or the like. A purchaser, assignee
or transferee of the shares of Common Stock (or options
or warrants exercisable for Common Stock) from an
Exempted Person will not thereby become an Exempted
Person, except that a transferee from the estate of an
Exempted Person who receives Common Stock as a bequest or
inheritance from an Exempted Person shall be an Exempted
Person so long as such transferee continues to be the
beneficial owner of 15% or more of the then outstanding
shares of Common Stock.
The Rights are not exercisable until the
Distribution Date and will expire at the close of
business on July 11, 2007 unless earlier redeemed by the
Company as described below. At no time will the Rights
have any voting power.
As soon as practicable after the Distribution Date,
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, the separate Rights
Certificates alone will represent the Rights. 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 an Acquiring Person becomes the
beneficial owner of 15% or more of the then outstanding
shares of Common Stock (unless such acquisition is made
pursuant to a tender or exchange offer for all
outstanding shares of the Company, at a price determined
by a majority of the independent directors of the Company
who are Continuing Directors (as defined below) to be
fair and otherwise in the best interest of the Company
and its stockholders) after receiving advice from one or
more investment banking firms (a "Qualifying Offer"),
each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of the
Company), having a value equal to two times the Exercise
Price of the Right. The Exercise Price is the Purchase
Price times the number of Units associated with each
Right (initially, one). Notwithstanding any of the
foregoing, following the occurrence of an Acquiring
Person becoming such ("Flip-In Event"), all Rights that
are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Rights
are not exercisable following the occurrence of a Flip-In
Event until such time as the Rights are no longer
redeemable by the Company as set forth below.
In the event that following the Stock Acquisition
Date, (i) the Company engages in a merger or business
combination transaction in which the Company is not the
surviving corporation (other than a merger consummated
pursuant to a Qualifying Offer); (ii) the Company engages
in a merger or business combination transaction in which
the Company is the surviving corporation and the Common
Stock is changed or exchanged; or (iii) 50% or more of
the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which
have previously been voided as set forth above) shall
thereafter have the right to receive, upon exercise of
the Right, common stock of the acquiring company having a
value equal to two times the Exercise Price of the Right.
The Purchase Price payable, and the number of Units
of Preferred Stock or other securities or property
issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock,
(ii) if holders of the Preferred Stock are granted
certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustments in the
Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price.
No fractional Units will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading date
prior to the date of exercise.
At any time after the Stock Acquisition Date, the
Board of Directors of the Company may exchange the Rights
(other than Rights owned by an Acquiring Person), in
whole or in part, at an exchange ratio equal to (i) a
number of shares of Common Stock per Right with a value
equal to the spread between the value of the number of
shares of Common Stock for which the Rights may then be
exercised and the Purchase Price or (ii) if prior to the
acquisition by the Acquiring Person of 50% or more of the
then outstanding shares of Common Stock, one share of
Common Stock per Right (subject to adjustment). Any such
exchange shall require the concurrence of a majority of
the Continuing Directors.
At any time until ten (10) days following the Stock
Acquisition Date, the Company may redeem the Rights in
whole, but not in part, at a price of $0.001 per Right.
Under certain circumstances, the decision to redeem shall
require the concurrence of a majority of the Continuing
Directors. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights
will terminate and the only right of the holders of
Rights will be to receive the $0.001 redemption price.
The term "Continuing Director" means any member of
the Board of Directors of the Company who was a member of
the Board prior to the adoption of the Rights Plan and
any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of
the Continuing Directors, but shall not include an
Acquiring Person, or an affiliate or associate of an
Acquiring Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the
Company, including, without limitation, the right to vote
or to receive dividends. While the distribution of the
Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other
consideration) of the Company as set forth above or in
the event the Rights are redeemed.
Other than those provisions relating to the
principal economic terms of the Rights, any of the
provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the
Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the
Board (in certain circumstances, with the concurrence of
the Continuing Directors) in order to cure any ambiguity,
to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period
governing redemption shall be made at such time as the
Rights are not redeemable.
A copy of the Rights Agreement is being filed with
the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A. A copy of the Rights
Agreement is available free of charge from the Company.
This Summary of Rights does not purport to be complete
and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by
reference.
