SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
LEVEL 3 COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 47-0210602
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
3555 Farnam Street
Omaha, Nebraska 68131
(Address of principal (Zip Code)
executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
If this Form relates to the registration of a class of securities
pursuant to Section 12(b) of the Exchange Act and is effective
pursuant to General Instruction A.(c), please check the following
box. [ ]
If this Form relates to the registration of a class of securities
pursuant to Section 12(g) of the Exchange Act and is effective
pursuant to General Instruction A.(d), please check the following
box. [x]
Securities to be registered pursuant to Section 12(g) of the Act:
Rights to Purchase
Series A Junior Participating Preferred Stock,
par value $.01 per share
(Title of class)
Item 1. Description of Registrant's Securities to be Registered.
On May 28, 1998, the Board of Directors of Level 3
Communications, Inc. (the "Company") declared a dividend
distribution of one Right for each outstanding share of common
stock, par value $.01 per share (the "Common Stock"), of the
Company. The dividend is payable to stockholders of record at
the close of business on June 10, 1998 (the "Record Date") and
with respect to the Common Stock issued thereafter until the
Distribution Date (defined below) and, in certain circumstances,
with respect to the Common Stock issued after the Distribution
Date. Except as set forth below, each Right, when it becomes
exercisable, entitles the registered holder to purchase from the
Company a unit consisting initially of one one-thousandth of a
share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the
Company, at a Purchase Price of $490 per Unit, subject to
adjustment (the "Purchase Price"). The description and terms of
the Rights are set forth in a Rights Agreement (the "Rights
Agreement"), dated as of May 29, 1998, between the Company and
Norwest Bank Minnesota, N.A., as Rights Agent.
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no
separate certificates evidencing the Rights ("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 (or such later date as the Board of
Directors shall determine) following public disclosure that a
person or group of affiliated or associated persons has become an
"Acquiring Person" (as defined below), or (ii) ten (10) business
days (or such later date as the Board shall determine) following
the commencement of a tender offer or exchange offer that would
result in a person or group becoming an "Acquiring Person".
Except as set forth below, an "Acquiring Person" is a person or
group of affiliated or associated persons who has acquired
beneficial ownership of 15% or more of the outstanding shares of
Common Stock. The term "Acquiring Person" excludes (i) the
Company, (ii) any subsidiary of the Company, (iii) any employee
benefit plan of the Company or any subsidiary of the Company, and
(iv) any person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan.
Until the occurrence of 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 issued after the
Record Date 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. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the
occurrence of a Triggering Event (as defined below) that, upon
any exercise of Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock will be issued.
As soon as practicable after the occurrence of 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 in certain
circumstances specified in the Rights Agreement or as otherwise
determined by the Board of Directors, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
The Rights are not exercisable until the occurrence of the
Distribution Date and until the Rights no longer are redeemable.
The Rights will expire at the close of business on June 10, 2008,
unless extended or earlier redeemed by the Company as described
below.
In the event that, at any time following the Distribution
Date, a person becomes the beneficial owner of more than 15% of
the then outstanding shares of Common Stock (except pursuant to
an offer for all outstanding shares of Common Stock at a price
and on terms determined to be fair to, and in the best interests
of, the stockholders by at least a majority of the Continuing
Directors (as defined below)), becomes an Acquiring Person, each
holder of a Right will thereafter have the right to receive, upon
exercise of the Right, 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. A "Continuing Director" is a member of the Board of
Directors who is not an Acquiring Person, an affiliate or
associate of an Acquiring Person or a representative or nominee
of an Acquiring Person. Notwithstanding any of the foregoing,
following the occurrence of the event set forth in this
paragraph, 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 and nontransferable
and any holder of any such right (including any purported
transferee or subsequent holder) will be unable to exercise or
transfer any such right. For example, at an exercise price of
$490 per Right, each Right not owned by an Acquiring Person (or
by certain related parties) following an event set forth in the
preceding paragraph would entitle its holder to purchase $980
worth of Common Stock (or other consideration, as noted above)
for $490. Assuming that the Common Stock had a per share value
of $70 at such time, the holder of each valid Right would be
entitled to purchase fourteen (14) shares of Common Stock for
$490.
In the event that, at any time following the date on which
there has been public disclosure that, or of facts indicating
that, a person has become an Acquiring Person (the "Stock
Acquisition Date"), (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation (other than a merger which follows
an offer described in the preceding paragraph), or (ii) 50% or
more of the Company's assets or earning power is sold, mortgaged
or transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise
price of the Right. There is an exception for a merger that is
approved by the Continuing Directors at a price which is fair to,
and otherwise in the best interests of, the stockholders and in
which all stockholders of the Company receive equal
consideration. The events set forth in this paragraph and in the
preceding paragraph are referred to as the "Triggering Events."
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 adjustment 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.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-
thousandth interest in a share of Preferred Stock purchasable
upon exercise of each Right should approximate the value of one
share of Common Stock. Shares of Preferred Stock purchasable
upon exercise of the Rights will not be redeemable. Each share
of Preferred Stock will be entitled to a quarterly dividend
payment of 1000 times the dividend declared per share of Common
Stock. In the event of liquidation, each share of Preferred
Stock will be entitled to an aggregate payment of 1000 times the
aggregate payment made per share of Common Stock. Each share of
Preferred Stock will have 1000 votes, voting together with the
shares of Common Stock. These rights are protected by customary
antidilution provisions.
At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in
part, at a price (the "Redemption Price") of $.01 per Right
(payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors) by resolution of the Board
of Directors (provided that following a Stock Acquisition Date
such resolution is approved by a majority of the Continuing
Directors and only if the Continuing Directors constitute a
majority of the directors then in office). The redemption of the
Rights may be made effective at such time on such basis with such
conditions as the Board of Directors in its sole discretion may
establish. Immediately upon such 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 Redemption Price.
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 or for common stock of the
acquiring company as set forth above.
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 resolution of the Company's Board of
Directors (provided that following a Stock Acquisition Date such
resolution is approved by a majority of the Continuing Directors
and only if the Continuing Directors constitute a majority of the
directors then in office) prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may
be amended by resolution of the Company's Board of Directors
(provided that following a Stock Acquisition Date such resolution
is approved by a majority of the Continuing Directors and only if
the Continuing Directors constitute a majority of the directors
then in office) 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 its
affiliates or associates), 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.
The Rights Agreement, which includes as Exhibit B the form
of Rights Certificate, is filed as an Exhibit hereto. This
summary description of the Rights is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein
by reference.
Item 2. Exhibits.
1. Rights Agreement, dated as of May 29, 1998,
between Level 3 Communications, Inc. and Norwest Bank
Minnesota, N.A., as Rights Agent, which includes the Form of
Certificate of Designation, Preferences and Rights of Series
A Junior Participating Preferred Stock of Level 3
Communications, Inc., as Exhibit A, the Form of Rights
Certificate, as Exhibit B and the Summary of Rights to
Purchase Preferred Stock, as Exhibit C.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
LEVEL 3 COMMUNICATIONS, INC.
Dated: June 9, 1998 By: /s/ Neil J. Eckstein
Name: Neil J. Eckstein
Title: Vice President
Exhibit Index
1. Rights Agreement, dated as of May 29, 1998, between
Level 3 Communications, Inc. and Norwest Bank
Minnesota, N.A., as Rights Agent, which includes the
Form of Certificate of Designation, Preferences and
Rights of Series A Junior Participating Preferred Stock
of Level 3 Communications, Inc., as Exhibit A, the Form
of Rights Certificate, as Exhibit B and the Summary of
Rights to Purchase Preferred Stock, as Exhibit C.
Exhibit 1
Rights Agreement
Level 3 Communications, Inc.
and
Norwest Bank Minnesota, N.A.,
Rights Agent
Dated as of May 29, 1998
Table of Contents
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Rights Certificates 7
Section 4. Form of Rights Certificates 9
Section 5. Countersignature and Registration 10
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates 11
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 12
Section 8. Cancellation and Destruction of Rights
Certificates. 14
Section 9. Reservation and Availability of Capital Stock 15
Section 10. Preferred Stock Record Date 16
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights 17
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares 27
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 28
Section 14. Fractional Rights and Fractional Shares 31
Section 15. Rights of Action 32
Section 16. Agreement of Rights Holders 33
Section 17. Rights Certificate Holder Not Deemed a
Stockholder 34
Section 18. Concerning the Rights Agent 34
Section 19. Merger or Consolidation or Change of Name of
Rights Agent 35
Section 20. Duties of Rights Agent 35
Section 21. Change of Rights Agent 38
Section 22. Issuance of New Rights Certificates. 39
Section 23. Redemption and Termination 39
Section 24. Notice of Certain Events 40
Section 25. Notices 41
Section 26. Supplements and Amendments 42
Section 27. Successors 43
Section 28. Determinations and Actions by the Board of
Directors, etc. 43
Section 29. Benefits of this Agreement 43
Section 30. Severability 44
Section 31. Governing Law 44
Section 32. Counterparts 44
Section 33. Descriptive Headings 44
Exhibit A - Form of Certificate of Designation, Preferences and
Rights
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 29, 1998 between Level 3
Communications, Inc., a Delaware corporation (the "Company"), and
Norwest Bank Minnesota, N.A., a Delaware corporation (the "Rights
Agent").
W I T N E S S E T H
WHEREAS, on May 28, 1998 (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 of the Company outstanding at the close of business
on June 10, 1998 (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 of the Company issued between the Record
Date (whether originally issued or delivered from the Company's
treasury) and the Distribution Date, each Right initially
representing the right to purchase one unit (a "Unit") with each
such unit consisting initially of one one-thousandth of a share
of Series A Junior Participating 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 ("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, or (iv)
any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan (each of
(i) through (iv), an "Exempted Person"). Notwithstanding the
foregoing, (i) no Person shall become an "Acquiring Person" as a
result of an acquisition of Common Stock by the Company which, by
reducing the number of such shares then outstanding, increases
the proportionate number of shares beneficially owned by such
Person to 15% or more of the outstanding Common Stock, except
that if such Person, after such share purchases by the Company,
becomes the Beneficial Owner of any additional shares of Common
Stock, such Person shall be deemed to be an "Acquiring Person;"
and (ii) if the Board of Directors of the Company determines in
good faith that a Person who would otherwise be an "Acquiring
Person" has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Stock so
that such Person would no longer be an Acquiring Person then such
Person shall not be deemed to be an "Acquiring Person." The term
"outstanding," when used with reference to a Person's Beneficial
Ownership of securities of the Company, shall mean the number of
such securities then issued and outstanding together with the
number of such securities not then issued and outstanding which
such Person would be deemed to beneficially own hereunder.
(b) "Act" shall mean the Securities Act of 1933, as
amended.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) of this Agreement.
(d) "Affiliate" shall have the meaning set forth in Rule
12b-2 of the General Rules and Regulations under the Exchange
Act.
(e) "Associate" shall have the meaning set forth in Rule
12b-2 of the General Rules and Regulations under the Exchange
Act.
(f) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has
the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options,
or otherwise; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to
a tender or exchange offer made by such Person or any
of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange, or (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon
exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to Section
3(a) or Section 22 hereof ("Original Rights") or
pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of
the General Rules and Regulations under the Exchange
Act), including pursuant to any agreement, arrangement
or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such
security if such agreement, arrangement or
understanding: (A) arises solely from a revocable
proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not also
then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of
such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not
in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this
paragraph (f)) or disposing of any voting securities of
the Company;
provided, however, that nothing in this paragraph (f) 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 days after the date of such acquisition. Notwithstanding
anything in this definition of Beneficial Owner to the contrary,
a Person who is a Continuing Director or officer of the Company
or who is an Affiliate or Associate of a Continuing Director or
officer of the Company (each, an "Excluded Person") shall not be
deemed to "beneficially own" shares of Common Stock held by
another Excluded Person solely by reason of any agreement,
arrangement or understanding, written or otherwise, entered into
in opposition to a transaction that, at the time such agreement,
arrangement or understanding was entered into, has not been
approved or recommended by the Board of Directors to the
stockholders of the Company (which approval or recommendation, if
adopted following a Stock Acquisition Date, includes the
concurrence of a majority of the Continuing Directors and only if
the Continuing Directors constitute a majority of the number of
directors then in office).
(g) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the
State of New York or the state in which the principal office of
the Rights Agent is located are authorized or obligated by law or
executive order to close.
(h) "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.
(i) "Common Stock" shall mean the common stock, par value
$.01 per share, of the Company, except that "Common Stock" when
used with reference to any Person other than the Company shall
mean the capital stock of such Person with the greatest voting
power, or the equity securities or other equity interest having
power to control or direct the management, of such Person.
(j) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) of this Agreement.
(k) "Company" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(l) "Continuing Director" shall mean a member of the Board
of Directors who is not an Acquiring Person, an Affiliate or
Associate of an Acquiring Person or a representative or nominee
of an Acquiring Person.
(m) "Current Market Price" shall have the meaning set forth
in Section 11(d)(i).
(n) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) of this Agreement.
(o) "Distribution Date" shall have the meaning set forth in
Section 3(a) of this Agreement.
(p) "Equivalent preferred stock" shall have the meaning set
forth in Section 11(b) of this Agreement.
(q) "Exchange Act" shall mean the Securities Exchange Act
of 1934.
(r) "Excluded Person" shall have the meaning set forth in
Section 1(f) of this Agreement.
(s) "Exempted Person" shall have meaning set forth in
Section 1(a) of this Agreement.
(t) "Expiration Date" shall have the meaning set forth in
Section 7(a) of this Agreement.
(u) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) of this Agreement.
(v) "Original Rights" shall have the meaning set forth in
Section 1(f)(i) of this Agreement.
(w) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(x) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.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 $.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.
(y) "Principal Party" shall have the meaning set forth in
Section 13(b) of this Agreement.
(z) "Purchase Price" shall have the meaning set forth in
Section 4(a) of this Agreement.
(aa) "Record Date" shall have the meaning set forth in the
"Whereas" clause of this Agreement.
(bb) "Redemption Price" shall have the meaning set forth in
Section 23 of this Agreement.
(cc) "Rights" shall have the meaning set forth in the
"Whereas" clause of this Agreement.
(dd) "Rights Agent" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(ee) "Rights Certificates" shall have the meaning set forth
in Section 3(a) of this Agreement.
(ff) "Rights Dividend Declaration Date" shall have the
meaning set forth in the "Whereas" clause of this Agreement.
(gg) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) of this Agreement.
(hh) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii) of this Agreement.
(ii) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) of this Agreement.
(jj) "Spread" shall have the meaning set forth in Section
11(a)(iii) of this Agreement.
(kk) "Stock Acquisition Date" shall mean the earlier of the
date of (i) the 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
or (ii) the public disclosure of facts by the Company or an
Acquiring Person indicating that an Acquiring Person has become
an Acquiring Person.
(ll) "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.
(mm) "Substitution Period" shall have the meaning set forth
in Section 11(a)(iii) of this Agreement.
(nn) "Summary of Rights" shall have the meaning set forth
in Section 3(b) of this Agreement.
(oo) "Trading Day" shall have the meaning set forth in
Section 11(d)(i) of this Agreement.
(pp) "Transaction" shall mean any merger, consolidation or
sale of assets or earning power described in Section 13(a) hereof
or any acquisition of Common Stock of the Company which, without
regard to any required approval of the Company, would result in a
Person becoming an Acquiring Person.
(qq) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
(rr) "Unit" shall have the meaning set forth in the
"Whereas" clause of this Agreement.
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), (ii) the close of
business on the tenth Business Day (or such later date as the
Board shall determine) after the date that a tender or exchange
offer by any Person 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 become an Acquiring Person or (iii) the Expiration Date
(the earlier of (i) and (ii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced 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). The Board of
Directors of the Company may defer the date set forth in clause
(ii) of the preceding sentence to a specified later date or to an
unspecified later date, each to be determined, (with the
concurrence of a majority of the Continuing Directors following a
Stock Acquisition Date and only if the Continuing Directors
constitute a majority of the number of directors then in office)
by action of the Board of Directors of the Company. As soon as
practicable after the Distribution Date, the Rights Agent will,
at the Company's expense, 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, 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.
(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 Level 3 Communications, Inc. (the
"Company") and Norwest Bank Minnesota, N.A. (the
"Rights Agent") dated as of May 29, 1998 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at
the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate
a copy of the Rights Agreement, as in effect on the
date of mailing, without charge, promptly after receipt
of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or
becomes an Acquiring Person or 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 the Distribution Date or the
Expiration Date, 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 the 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 Affiliate or Associate
of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Affiliate or Associate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Affiliate or Associate) 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 a majority of the
Continuing Directors 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 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 manually
countersigned by an authorized signatory of the Rights Agent 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 an authorized signatory of 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
will keep or cause to be kept, at its 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 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 by the holder of a
Rights Certificate 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 office or offices of the
Rights Agent designated for such purpose, along with a signature
guarantee and such other and further documentation as the Rights
Agent may reasonably request, together with payment of the
aggregate Purchase Price with respect to the total number of one
one-thousandths of a share (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 June 10, 2008 (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 $490, 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 securities,
cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax,
the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of
the shares of Preferred Stock (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the
total number of one one-thousandths of a share of Preferred Stock
to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares
of Preferred Stock issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-
thousandths of a share of Preferred Stock as are to be purchased
(in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu
of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified 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 Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Affiliate or Associate) 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 a majority of the
Continuing Directors 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 ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or
its Affiliates, Associates or transferees hereunder.
(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 cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement.
The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire,
any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company.
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 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, or (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, and shall give
simultaneous written notice to the Rights Agent 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 (subject to
payment of the Purchase Price), be duly and validly authorized
and issued, and fully paid and non-assessable.
(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 the 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,
he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring Person, 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 Continuing
Directors, 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, then, promptly following the occurrence of any
event described in Section 11(a)(ii) hereof, proper provision
shall be promptly 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)(i) hereof) per share of Common Stock on the date of such
first occurrence (such number of shares being referred to as the
"Adjustment Shares").
(iii) In the event that the number of shares of Common Stock
which are authorized by the Company's Restated 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, acting by resolution of its Board of
Directors (which resolution shall be effective only with the
concurrence of a majority of the Continuing Directors), 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 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 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 (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek shareholder approval for the authorization of
such additional shares (such thirty (30) day period, as it may be
extended, is herein called the "Substitution Period"). To the
extent that 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 shareholder 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 (as determined pursuant to
Section 11(d)(i) hereof) 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 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)(i) 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 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 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. 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.
(i)
(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 1000 (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, 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 1000.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest hundred-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 non-assessable 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 thereof, (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 shareholders 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 of which shall be
the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of
such event.
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, the adjusted
Purchase Price 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, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, mortgage
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
tradable shares of Common Stock of the Principal Party, 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 (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, "Principal Party" shall refer to
such other Person; and (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market
value.
(c) The Company shall not consummate any 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) 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 tender offer or
exchange offer for all outstanding shares of Common Stock which
complies with the provisions of Section 11(a)(ii) hereof
regarding the determination of the Continuing Directors, (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 share of Common Stock shall be the closing
price of one 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 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, excepting
the rights of action given to the Rights Agent, are vested in the
respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common
Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise
act in respect of, his right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement
and shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to
this Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the 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 obligations; 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 such
compensation as shall be agreed to in writing between the Company
and the Rights Agent 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, without limitation,
the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur
no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Rights Certificate or certificate
for Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed and executed, and where necessary,
verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20
hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
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
expressly imposed by this Agreement, and no implied duties or
obligations shall be read into this Agreement against the Rights
Agent, upon the following terms and conditions, by all of which
the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of
its selection (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person and the determination of
"Current Market Price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the
Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Rights Certificates or be required to
verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 7(e) hereof); 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 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 or for any delay in acting while
waiting for those instructions.
(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 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 or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company. The
Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of thirty (30) days after giving notice of such removal
or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice,
submit his Rights Certificate for inspection by the Company),
then the Company shall become the Rights Agent until a successor
Rights Agent has been appointed, and any registered holder of any
Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business
under the laws of the United States or of the State of New York
(or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution
in the State of New York), in good standing, having a principal
office in the State of New York which is authorized under such
laws to exercise corporate trust or shareholder services 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.
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,
subject to Section 4 hereof, 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.
Section 23. Redemption and Termination.
(a) The Company may, by a resolution of its Board of
Directors (which resolution shall, if adopted following the Stock
Acquisition Date, be effective only with the concurrence of a
majority of the Continuing Directors and only if the Continuing
Directors constitute a majority of the number of directors then
in office), 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
tenth 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 $.01 per Right, as
such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to
as the "Redemption Price"). Notwithstanding 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 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 and to the Rights Agent, 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 the event that a Section 11(a)(ii) Event shall
occur, then (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:
Level 3 Communications, Inc.
3555 Farnam Street
Omaha, Nebraska 68131
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
Norwest Bank Minnesota, N.A.
161 North Concord Exchange
South St. Paul, Minnesota 55075
Attention: Shareowner Services 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 may by
resolution of its Board of Directors (which resolution, if
adopted following the Stock Acquisition Date, shall be effective
only with the concurrence of a majority of the Continuing
Directors and only if the Continuing Directors constitute a
majority of the number of directors then in office) 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 may by
resolution of its Board of Directors (which resolution, if
adopted following the Stock Acquisition Date, shall be effective
only with the concurrence of a majority of the Continuing
Directors and only if the Continuing Directors constitute a
majority of the number of directors then in office) 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, or (iv) to
change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which, in the
case of this clause (iv), 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, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of
this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable,
or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights. 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. 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 28. 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 a majority of the Continuing Directors
and only if the Continuing Directors constitute a majority of the
number of directors then in office) shall have the exclusive
power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made
by the Board of Directors (with, where specifically provided for
herein, the concurrence of a majority of the Continuing Directors
and only if the Continuing Directors constitute a majority of the
number of directors then in office) 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 29. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the
registered holders of the 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 30. Severability.
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if
any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the
Board of Directors of the Company determines in its good faith
judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on
the tenth day following the date of such determination by the
Board of Directors.
Section 31. 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 32. Counterparts.
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 33. Descriptive Headings.
Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions
hereof.
[Balance of page intentionally blank]
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.
LEVEL 3 COMMUNICATIONS, INC.
By: ------------------------
Name:
Title:
NORWEST BANK MINNESOTA, N.A.,
as Rights Agent
By: -------------------------
Name:
Title:
Exhibit A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
LEVEL 3 COMMUNICATIONS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
I, ____________________, [office] of Level 3 Communications,
Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation, as amended, of
this Corporation, the Board of Directors on May 28, 1998, adopted
the following resolution creating a series of 500,000 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, as amended, 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 and 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 500,000.
Section 2. Dividends and Distributions.
(A) Subject to the superior rights of the holders of any
shares of any series of Preferred Stock ranking superior to the
shares of Series A Junior Participating Preferred Stock with
respect to dividends, 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 first day of January, April, July and October 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), subject to the
provision for adjustment hereinafter set forth, equal to 1000
times the aggregate per share amount of all cash dividends, and
1000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $.01 per
share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A
Junior Participating Preferred Stock. In the event the
Corporation shall at any time (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 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).
(C) Dividends on the Series A Junior Participating
Preferred Stock shall be noncumulative and no sums in later years
shall be paid to the holders of the Series A Junior Participating
Preferred Stock with respect to any prior years or years when
dividends were not paid. 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 1000 votes on all
matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time (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) 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. 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 cancelled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized
but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 5. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation the holders of the Series A Junior
Participating Preferred Stock, shall be entitled to receive an
aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1000 times the
aggregate amount to be distributed per share to holders of shares
of Common Stock. Following the payment of the foregoing, 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.
(B) In the event the Corporation shall at any time (i)
declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock (by
reclassification or otherwise), or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such
case the aggregate amount to which holders of shares of the
Series A Junior Participating Preferred Stock, were entitled
immediately prior to such event 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 6. 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 1000 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 (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock (by reclassification or otherwise), 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 7. No Redemption. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.
Section 8. Ranking. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of the
Corporation's Preferred Stock which may be hereafter issued and
on a parity with the Common Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such
series of the Corporation's Preferred Stock shall provide
otherwise.
Section 9. Amendment. The Certificate of Incorporation as
amended, of the Corporation shall not be further amended in any
manner which would materially alter or change the powers,
preferences or special rights o 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, the undersigned has executed and
subscribed this Certificate and does affirm the foregoing as true
under the penalties of perjury this ____ day of
_________________, 1998.
--------------------------
Exhibit B
FORM OF RIGHTS CERTIFICATE
Certificate No. R-
Rights
NOT EXERCISABLE AFTER JUNE 10, 2008 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, 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
LEVEL 3 COMMUNICATIONS, 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 May 29, 1998 (the "Rights Agreement"), between Level
3 Communications, Inc., a Delaware corporation (the "Company"),
and Norwest Bank Minnesota, N.A., a Delaware corporation (the
"Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights
Agreement) and at any time prior to 5:00 P.M. (New York City
time) on June 10, 2008 at the office or offices of the Rights
Agent designated for such purpose, or its successors as Rights
Agent, one one-thousandth of a fully paid, nonassessable share of
Series A Junior Participating Preferred Stock (the "Preferred
Stock") of the Company, at a purchase price of $490 per one one-
thousandth of a share (the "Purchase Price"), upon presentation
- ----------------------
* The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certification duly executed.
The number of Rights evidenced by this Rights Certificate (and
the number of one one-thousandths of a share of Preferred Stock
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 10, 1998, based on the Preferred
Stock as constituted at such date. 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.
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 such
Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person,
Affiliate or Associate, 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.
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 $.01 per Right.
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 officer of the
Company and its corporate seal.
Dated as of _________, 1998
LEVEL 3 COMMUNICATIONS, INC.
By: ------------------------
Name:
Title:
Countersigned:
NORWEST BANK MINNESOTA, N.A.,
as Rights Agent
By---------------------------
Authorized Representative
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:
Signature must be guaranteed by a commercial bank or trust
company, broker, dealer, or other eligible institution which is a
member in good standing of a medallion guaranty program approved
by the Securities Transfer Association, Inc.
Form of Reverse Side of Rights Certificate (continued)
Certification
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person who
is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ---------------- -----------------------------
Signature
Signature Guaranteed:
Signature must be guaranteed by a commercial bank or trust
company, broker, dealer, or other eligible institution which is a
member in good standing of a medallion guaranty program approved
by the Securities Transfer Association, Inc.
NOTICE
The signature to the foregoing Assignment and Certification
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.
In the event the certification set forth above is not
completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Certificate) and such
Assignment will not be honored.
Form of Reverse Side of Rights Certificate (continued)
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: Level 3 Communications, 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:
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:
Signature must be guaranteed by a commercial bank or trust
company, broker, dealer, or other eligible institution which is a
member in good standing of a medallion guaranty program approved
by the Securities Transfer Association, Inc.
Form of Reverse Side of Rights Certificate (continued)
Certification
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 such
Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person who
is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:---------- -----------------------------------
Signature
Signature Guaranteed:
Signature must be guaranteed by a commercial bank or trust
company, broker, dealer, or other eligible institution which is a
member in good standing of a medallion guaranty program approved
by the Securities Transfer Association, Inc.
NOTICE
The signature to the foregoing Election to Purchase and
Certification 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.
In the event the certification set forth above is not
completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Certificate) and such
Election to Purchase will not be honored.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On May 28, 1998, the Board of Directors of Level 3
Communications, Inc. (the "Company") declared a dividend
distribution of one Right for each outstanding share of common
stock, par value $.01 per share (the "Common Stock"), of the
Company. The dividend is payable to stockholders of record at
the close of business on June 10, 1998 (the "Record Date") and
with respect to the Common Stock issued thereafter until the
Distribution Date (defined below) and, in certain circumstances,
with respect to the Common Stock issued after the Distribution
Date. Except as set forth below, each Right, when it becomes
exercisable, entitles the registered holder to purchase from the
Company a unit consisting initially of one one-thousandth of a
share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the
Company, at a Purchase Price of $490 per Unit, subject to
adjustment (the "Purchase Price"). The description and terms of
the Rights are set forth in a Rights Agreement (the "Rights
Agreement"), dated as of May 29, 1998, between the Company and
Norwest Bank Minnesota, N.A., as Rights Agent.
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no
separate certificates evidencing the Rights ("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 (or such later date as the Board of
Directors shall determine) following public disclosure that a
person or group of affiliated or associated persons has become an
"Acquiring Person" (as defined below), or (ii) ten (10) business
days (or such later date as the Board shall determine) following
the commencement of a tender offer or exchange offer that would
result in a person or group becoming an "Acquiring Person".
Except as set forth below, an "Acquiring Person" is a person or
group of affiliated or associated persons who has acquired
beneficial ownership of 15% or more of the outstanding shares of
Common Stock. The term "Acquiring Person" excludes (i) the
Company, (ii) any subsidiary of the Company, (iii) any employee
benefit plan of the Company or any subsidiary of the Company, and
(iv) any person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan.
Until the occurrence of 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 issued after the
Record Date 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. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the
occurrence of a Triggering Event (as defined below) that, upon
any exercise of Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock will be issued.
As soon as practicable after the occurrence of 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 in certain
circumstances specified in the Rights Agreement or as otherwise
determined by the Board of Directors, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
The Rights are not exercisable until the occurrence of the
Distribution Date and until the Rights no longer are redeemable.
The Rights will expire at the close of business on June 10, 2008,
unless extended or earlier redeemed by the Company as described
below.
In the event that, at any time following the Distribution
Date, a person becomes the beneficial owner of more than 15% of
the then outstanding shares of Common Stock (except pursuant to
an offer for all outstanding shares of Common Stock at a price
and on terms determined to be fair to, and in the best interests
of, the stockholders by at least a majority of the Continuing
Directors (as defined below)), becomes an Acquiring Person, each
holder of a Right will thereafter have the right to receive, upon
exercise of the Right, 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. A "Continuing Director" is a member of the Board of
Directors who is not an Acquiring Person, an affiliate or
associate of an Acquiring Person or a representative or nominee
of an Acquiring Person. Notwithstanding any of the foregoing,
following the occurrence of the event set forth in this
paragraph, 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 and nontransferable
and any holder of any such right (including any purported
transferee or subsequent holder) will be unable to exercise or
transfer any such right. For example, at an exercise price of
$490 per Right, each Right not owned by an Acquiring Person (or
by certain related parties) following an event set forth in the
preceding paragraph would entitle its holder to purchase $980
worth of Common Stock (or other consideration, as noted above)
for $490. Assuming that the Common Stock had a per share value
of $70 at such time, the holder of each valid Right would be
entitled to purchase fourteen (14) shares of Common Stock for
$490.
In the event that, at any time following the date on which
there has been public disclosure that, or of facts indicating
that, a person has become an Acquiring Person (the "Stock
Acquisition Date"), (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation (other than a merger which follows
an offer described in the preceding paragraph), or (ii) 50% or
more of the Company's assets or earning power is sold, mortgaged
or transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise
price of the Right. There is an exception for a merger that is
approved by the Continuing Directors at a price which is fair to,
and otherwise in the best interests of, the stockholders and in
which all stockholders of the Company receive equal
consideration. The events set forth in this paragraph and in the
preceding paragraph are referred to as the "Triggering Events."
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 adjustment 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.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-
thousandth interest in a share of Preferred Stock purchasable
upon exercise of each Right should approximate the value of one
share of Common Stock. Shares of Preferred Stock purchasable
upon exercise of the Rights will not be redeemable. Each share
of Preferred Stock will be entitled to a quarterly dividend
payment of 1000 times the dividend declared per share of Common
Stock. In the event of liquidation, each share of Preferred
Stock will be entitled to an aggregate payment of 1000 times the
aggregate payment made per share of Common Stock. Each share of
Preferred Stock will have 1000 votes, voting together with the
shares of Common Stock. These rights are protected by customary
antidilution provisions.
At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in
part, at a price (the "Redemption Price") of $.01 per Right
(payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors) by resolution of the Board
of Directors (provided that following a Stock Acquisition Date
such resolution is approved by a majority of the Continuing
Directors and only if the Continuing Directors constitute a
majority of the directors then in office). The redemption of the
Rights may be made effective at such time on such basis with such
conditions as the Board of Directors in its sole discretion may
establish. Immediately upon such 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 Redemption Price.
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 or for common stock of the
acquiring company as set forth above.
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 resolution of the Company's Board of
Directors (provided that following a Stock Acquisition Date such
resolution is approved by a majority of the Continuing Directors
and only if the Continuing Directors constitute a majority of the
directors then in office) prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may
be amended by resolution of the Company's Board of Directors
(provided that following a Stock Acquisition Date such resolution
is approved by a majority of the Continuing Directors and only if
the Continuing Directors constitute a majority of the directors
then in office) 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 its
affiliates or associates), 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 has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated ____________, 1998. A
copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by reference.
