<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
LEASING SOLUTIONS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
CALIFORNIA 77-0116801
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(State of Incorporation or Organization) (I.R.S. Employer
Identification no.)
10 Almaden Blvd. Ste. 1500 San Jose, CA 95113
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(Address of Principal Executive Offices) (Zip Code)
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[X]
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
Preferred Stock New York Stock Exchange
Rights with respect to
Common Stock
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Page 1 of 4 Pages
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ITEM 1. Description of Registrant's
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Securities to be Registered
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Preferred Stock Purchase Rights
-------------------------------
On September 18, 1997, the Board of Directors (the "Board") of Leasing
Solutions, Inc. (the "Company") declared a dividend, payable to shareholders of
record at the close of business on October 3, 1997 (the "Record Date"), of one
preferred stock purchase right (a "Right") for each outstanding share of common
stock of the Company ("Common Stock"). In addition, the Company has authorized
the issuance of one Right with respect to each share of Common Stock that
becomes outstanding between the Record Date and the earlier of the Distribution
Date or Expiration Date (as such terms are defined below) or the date, if any,
on which the Rights may be redeemed. Each Right, when exercisable, entitles the
holder to purchase from the Company one one-hundredth of a share of Series A
Junior Participating Preferred Stock of the Company (the :Preferred Shares") at
a price of $95,00 (the "Purchase Price"), subject to adjustment . The
description and terms of the Rights are set forth in a Right Agreement (the
"Rights Agreement") between the Company and BankBoston,. N.A., as Rights Agent,
a copy of which has been filed as an exhibit to this Registration Statement.
Initially, the Rights will not be exercisable and will be evidenced only by
the Common Stock certificates representing the shares of Common Stock then
outstanding. The Rights will become exercisable and will become transferable
apart from the Common Stock on a date (the "Distribution Date") that is the
earlier of the close of business on the tenth business day following (i) a
public announcement that a person or group of affiliated or associated person
(an "Acquiring Person") has acquired or obtained the right to acquire, in a
transaction or series of transactions not approved by the Board, beneficial
ownership of 20% or more of then outstanding shares of Common Stock (the "Shares
Acquisition Date"), or (ii) the commencement of a tender or exchange offer by
any person for 20% or more of the outstanding shares of Common Stock.
Until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the Rights will be transferred only with the Common Stock
certificates to which the Rights relate. As soon as parcticable following the
Distribution Date, separate certificates evidencing the Rights (the "Rights
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and thereafter, the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on September 17, 2007 (the "Final Expiration Date"), unless the Rights
are earlier redeemed or exchange by the Company, in each case, as described
below.
The Purchase Price payable, and the number of shares of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution. The number of outstanding Rights and the number of one
one-hundredths of a
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Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split, a stock dividend or subdivision,
consolidation, or combination of the shares of Common Stock occurring, in any
such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to an aggregate dividend of
100 times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to a minimum
preferential liquidation payment of $100.00 per share but will be entitled to an
aggregate payment of 100 times the payment made per share of Common Stock. Each
Preferred Share will have 100 votes, voting together with the Common Stock.
Finally, in the event of any merger, consolidation or other transaction in which
Common Stock are exchanged, each Preferred Share will be entitled to receive 100
times the amount received per share of Common Stock. These rights are protected
by customary antidilution provisions.
In the event that a person becomes an Acquiring Person (except pursuant to
an offer for outstanding shares of Common Stock which the Continuing Directors
(as defined in the Rights Agreement) determine to be fair to and otherwise
in the best interest of the Company and its shareholders), each holder of a
Right (other than Rights beneficially owned by the Acquiring Person) will
thereafter have the right to receive upon exercise of the Right, at the then
current Purchase Price of the Right, that number of shares of Common Stock
having a market value of two times the Purchase Price of the Right. The Rights
are, however, not exercisable until such time as the Rights are no longer
redeemable by the Company.
In the event that, after the Rights become exercisable, (i) the Company is
acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation, or (ii) 50% or more of the Company's
assets or earning power is sold 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 thereof and payment of the then current
Purchase Price, the number of shares of Common Stock of the acquiring company
having a market value equal to two times the Purchase of the Right.
At any time after a person or group of affiliated or associated person
becomes an Acquiring Person, and until the beneficial ownership level of such
Acquiring person, together with all affiliates and associates of such Acquiring
Person, reaches 50%, the Board may exchange the Rights (other than the Rights
held by the Acquiring Person, affiliates or associates of the Acquiring Person
and certain other persons whose Rights can be traced to an Acquiring Person), in
whole or in part, at an exchange ratio of one share of Common Stock per Right.
The exchange must also be approved by a majority of the Continuing Directors.
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At any time prior to the close of business on the tenth business day
following the Shares Acquisition Date, the Company may redeem the Rights, in
whole but not in part, at a redemption price of $0.01 per Right (the "Redemption
Price").
Until the Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
At any time prior to the Distribution Date, the Board may amend any
provision of the Rights Agreement in any manner, including to change the
Purchase Price, without the approval of the holders of the Common Stock.
Thereafter, subject to certain limitations, the Board (with the concurrence of
the Continuing Directors) may amend the Rights Agreement without the approval of
the holders of the Common Stock in order to cure any ambiguity, to make changes
which do not adversely affect the interest of holders of Rights (excluding the
interest of any acquiring person), or to shorten or lengthen any time period
under the Rights Agreement.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board. The Rights should not interfere with any
merger or other business combination approved by the Board since the Board may,
at its option, at any time prior to the close of business on the tenth business
day after the Shares Acquisition Date, redeem all but not less than all of the
then outstanding Rights at the Redemption Price.
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.
Item 2. EXHIBITS
--------
4.1 Rights Agreement dated as of September 18, 1997, between the
Registrant and BankBoston, N.A., which includes the Form of
Certificate of Determination of Rights, Preferences, Privileges
and Restrictions of Series A Junior Participating Preferred
Stock, the Form of Rights Certificate (including the Form of
Assignment and the Form of Election to Purchase) as Exhibit B,
and the Summary of Rights to Purchase Preferred Stock as Exhibit
C.
SIGNATURES
----------
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
By: /s/ Hal J Krauter
-----------------------------------
Hal J Krauter
President and Chief Executive Officer
Dated: October 30, 1997
4
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EXHIBIT 4.1
RIGHTS AGREEMENT DATED 9/18/97
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
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<S> <C>
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 5
Section 3. Issuance of Rights Certificates 6
Section 4. Form of Rights Certificates 7
Section 5. Countersignature and Registration 8
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates 9
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 10
Section 8. Cancellation and Destruction of Rights
Certificates 11
Section 9. Reservation and Availability of Capital Stock 12
Section 10. Preferred Shares Record Date 13
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights 13
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares 21
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 21
Section 14. Fractional Rights and Fractional Shares 25
Section 15. Rights of Action 25
Section 16. Agreement of Rights Holders 26
Section 17. Rights Certificate Holder Not Deemed a
Shareholder 26
Section 18. Concerning the Rights Agent 27
Section 19. Merger or Consolidation or Change of Name of
Right Agent 27
Section 20. Duties of Rights Agent 28
Section 21. Change of Rights Agent 30
Section 22. Issuance of New Rights Certificates 30
Section 23. Redemption 31
Section 24. Exchange 32
Section 25. Notice of Certain Events 34
Section 26. Notices 35
Section 27. Supplements and Amendments 35
Section 28. Successors 36
Section 29. Determinations and Actions by the Board of
Directors, etc. 36
Section 30. Benefits of this Agreement 37
</TABLE>
i
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<TABLE>
<S> <C>
Section 31. Severability 37
Section 32. Governing Law 37
Section 33. Counterparts 37
Section 34. Descriptive Headings 37
Exhibit A Form of Certificate of Determination of Rights,
Preferences, Privileges and Restrictions of Series
A Junior Participating Preferred Stock A1
Exhibit B Form of Rights Certificate B1
Exhibit C Summary of Rights to Purchase Common Stock C1
</TABLE>
ii
<PAGE>
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of September 18, 1997 between Leasing
Solutions, Inc., a California corporation (the "Company"), and BankBoston, N.A.
(the "Rights Agent").
Subject to the execution of this Agreement (as hereinafter defined) and to
certain other conditions, on September 18, 1997 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company (the "Board")
authorized and declared a dividend distribution of one preferred stock purchase
right (a "Right") for each Common Share (as hereinafter defined) of the Company
outstanding as of the Close of Business (as hereinafter defined) on October 3,
1997 (the "Record Date"), and further authorized and directed the issuance of
one Right (as such number may be adjusted pursuant to the provisions of this
Agreement) for each Common Share that becomes outstanding between the Record
Date and the earlier of the Distribution Date or the Expiration Date (as such
terms are hereinafter defined), and in certain circumstances after the
Distribution Date. Each Right initially represents the right to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock of
the Company having the rights, preferences, privileges and restrictions set
forth in the form of Certificate of Determination of Rights, Preferences,
Privileges and Restrictions attached hereto as Exhibit A (as such number may be
adjusted pursuant to the provisions of this Agreement), upon the terms and
subject to the conditions hereinafter set forth.
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 the purposes of this Rights 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, without the prior approval of a
majority of the Continuing Directors, shall be the Beneficial Owner of 20% or
more of the Common Shares then outstanding. Notwithstanding the foregoing, (x)
the term Acquiring Person shall not include the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting in
such capacity; and (y) no Person shall become an Acquiring Person as the result
of an acquisition of Common Stock by the Company which, by reducing the number
of shares outstanding, proportionately increases the percentage of shares
beneficially owned by such Person (alone or together with all of such Person's
Affiliates and Associates) to 20% or more of the Common Shares then outstanding;
provided, however, that if a Person (together with such Person's Affiliates and
- -------- -------
Associates) becomes the Beneficial Owner of 20% or more of the Common Shares
then outstanding as a result of share purchases by the Company, and such Person
(or an Affiliate or Associate of such Person) subsequently becomes the
Beneficial Owner of any additional
<PAGE>
Common Shares, such Person shall then be an Acquiring Person. Notwithstanding
the foregoing, if a majority of 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 Shares so that such Person would no longer be an
Acquiring Person, then such Person shall not be deemed an Acquiring Person for
purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(c) "Agreement" shall mean this Rights Agreement as originally executed or
as it may from time to time be supplemented or amended pursuant to the
applicable provisions herein.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is considered to beneficially own, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3 of the Rules
and Regulations (or any comparable or successor law or regulation);
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time or
upon the satisfaction of condition) pursuant to any agreement, arrangement
or understanding (whether or not in writing) (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the exercise
of conversion rights, exchange rights, rights (other than the Rights at any
time prior to the occurrence of a Section 11(a)(ii Event), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed
-------- -------
pursuant to this Section 1(d)(ii)(A) the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote 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 Section 1(d)(ii)(B) if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response
to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable Rules and Regulations, and (2) 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
2
<PAGE>
Affiliates or Associates has any agreement, arrangement or understanding
(whether or not in writing) (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(d)(ii)(B)) or disposing of any securities of the Company; provided,
--------
however, that in no case shall an officer or director of the Company be
-------
deemed (x) the Beneficial Owner of any securities beneficially owned by
another officer or director of the Company solely by reason of actions
undertaken by such persons in their capacity as officers or directors of
the Company or (y) the Beneficial Owner of securities held of record by the
trustee of any employee benefit plan of the Company or any Subsidiary of
the Company for the benefit of any employee of the Company or any
Subsidiary of the Company, other than the officer or director, by reason of
any influence that such officer or director may have over the voting of the
securities held in such plan.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding" when used with reference to a person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such person would be
deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday, a Sunday, or
a day on which banking institutions in the State of California are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given day shall mean 2:00 p.m., California
time, on such date; provided, however, that if such date is not a Business Day,
-------- -------
it shall mean 2:00 p.m., California time, on the next succeeding Business Day.
(g) "Common Shares," when used with reference to the Company, shall mean
the shares of Common Stock.
(h) "Common Stock" shall mean the common stock of the Company. "Common
Stock," when used with reference to any Person other than the Company, shall
mean the capital stock (or equity interest) with the greatest voting power of
such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
(i) "Common Stock Equivalence" shall have the meaning set forth in Section
11 hereof.
(j) "Continuing Director" shall mean any Person who is a member of the
Board who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a nominee or representative of an Acquiring Person or of an
Acquiring Person's Affiliate or Associate, and who (i) was a member of the Board
prior to the date of this Agreement, or (ii) becomes a member of the Board after
the date of this Agreement if such Person's nomination for election to the Board
is recommended or approved by a majority of the then Continuing Directors.
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(k) "Current Per Share Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(l) "Current Value" shall have the respective meanings set forth in
Section 11(a)(iv) hereof and Section 24(d) hereof.
(m) "Distribution Date" shall mean the earlier of (i) the Close of
Business on the tenth day (or such later date as may be determined by action of
a majority of Continuing Directors then in office) after the Shares Acquisition
Date (or, if the tenth day after the Shares Acquisition Date occurs before the
Record Date, the Close of Business on the Record Date) or (ii) the Close of
Business on the tenth day (or such later date as may be determined by action of
a majority of Continuing Directors then in office) after the date that a tender
or exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the Rules and Regulations,
if, assuming the successful consummation thereof, such Person would be the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding.
(n) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11 hereof.
(o) "Expiration Date" shall mean the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the Redemption Date, (iii) the time at which
the Board of Directors orders the exchange of the Rights as provided in Section
24 hereof or (iv) the consummation of a transaction contemplated by Section
13(d) hereof.
(p) "Final Expiration Date" shall mean September 17, 2007.
(q) "Permitted Offer" shall mean a tender offer or exchange offer for all
outstanding Common Shares made in the manner prescribed by Section 14(d) of the
Exchange Act and the Rules and Regulations; provided, however, that such tender
-------- -------
offer occurs at a time when Continuing Directors are in office and a majority of
the Continuing Directors then in office has determined that the offer is both
adequate and otherwise in the best interests of the Company and its stockholders
(taking into account all factors that such Continuing Directors deem relevant,
including without limitation prices that could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value).
(r) "Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity and shall
include any successor (by merger or otherwise) of such entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange
Act.
(s) "Preferred Shares" shall mean shares of the Series A Junior
Participating Preferred Stock of the Company having the rights and preferences
set forth in the Certificate
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of Determination of Rights, Preferences, Privileges and Restrictions of Series A
Junior Participating Preferred Stock (the "Preferred Stock") attached hereto as
Exhibit A.
(t) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(u) "Redemption Date" shall mean the time at which the Board of Directors
of the Company orders redemption of the Rights as provided in Section 23 hereof.
(v) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(w) "Rights Certificate" shall have the meaning set forth in Section 3
hereof.
(x) "Rules and Regulations" shall mean the general rules and regulations
promulgated under the Exchange Act, as in effect on the date hereof.
(y) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(z) "Section 13 Event" shall mean any event described in clause (i), (ii)
or (iii) of Section 13(a) hereof.
(aa) "Shares Acquisition Date" shall mean the first date of public
announcement (which shall include a report filed pursuant to Section 13(d) of
the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such; provided that, if such Person is determined not to have become
an Acquiring Person pursuant to Section 1(a)(y) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
(bb) "Spread" shall have the meaning set forth in Section 11(a)(iv)
hereof.
(cc) "Subsidiary" means, as 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.
(dd) "Total Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
(ee) "Trading Day" shall have the meaning set forth in section 11(d)
hereof.
(ff) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions of this Agreement, and the
Rights Agent hereby accepts such appointment. The Company may from time to time
appoint co-Rights Agents as it may deem necessary or desirable and shall provide
the Rights Agent with 10 days' advance written notice of
5
<PAGE>
any such appointment. The Rights Agent shall have no duty to supervise, and
shall in no event be liable for the acts or omissions of any such co-Rights
Agent.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Sections 3(b) and 3(c) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Rights Certificates whether or not such
certificates bear the legend set forth in this Section 3) and not by separate
Rights Certificates and (ii) the right to receive Rights Certificates will be
transferable only in connection with the transfer of Common Shares. Until the
earlier of the Distribution Date or the Expiration Date, the surrender for
transfer of such certificates for Common Shares shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, at the request
and expense of the Company, send) by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on the Distribution
Date, at the address of such holder shown on the records of the Company, a
Rights Certificate, in substantially the form of Exhibit B hereto (a "Rights
Certificate"), evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. In the event that an adjustment in the number of
Rights per Common Share has been made pursuant to Section 11(a)(i) or Section
11(i) hereof, then at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates and may be transferred by the transfer of the
Rights Certificates as permitted hereby, separately and apart from any transfer
of the Common Shares, and the holders of such Rights Certificates as listed in
the records of the Company or any transfer agent or registrar for the Rights
shall be the record holders thereof.
(b) As soon as practicable after the Record Date, the Company will send a
copy of the Summary of Rights in substantially the form of Exhibit C hereto (the
"Summary Of Rights"), by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company.
(c) Unless the Board of Directors by resolution adopted at or before the
time of the issuance (including pursuant to the exercise of rights under the
Company's benefit plans) of any Common Shares specifies to the contrary, Rights
shall be issued in respect of all Common Shares that are issued after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date
or, in certain circumstances provided in Section 22 hereof, after the
Distribution Date. Certificates representing such Common Shares 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 a Rights Agreement between Leasing
Solutions, Inc. and
6
<PAGE>
BankBoston, N.A. (the "Rights Agent") dated as of September 18, 1997, as it
may from time to time be amended (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of Leasing Solutions, Inc.. 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. Leasing Solutions, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement, as in effect on the date
of mailing, without charge 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. The Rights
shall not be exercisable by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder of the Rights or the
exercise by such holder of the Rights in such jurisdiction, shall not have
been obtained or obtainable.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the Form of Election to Purchase
Preferred Shares and the Form of Assignment to be printed on the reverse
thereof) shall be substantially in the form of 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 (or in the case of
Rights issued with respect to Common Shares issued by the Company after the
Record Date, as of the date of issuance of such Common Shares), shall show the
date of countersignature, and on their face shall entitle the holders thereof to
purchase such number of one one-hundredths of a Preferred Share as shall be set
forth therein at the price set forth therein (such exercise price per one one-
hundredth of a Preferred Share being hereinafter referred to as the "Purchase
Price" and the aggregate exercise price with respect to the total number of one
one-hundredths of a Preferred Share as to which such surrendered Rights are then
exercisable, being hereinafter referred to as the
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"Total Purchase Price"), but the number and type of securities purchasable upon
the exercise of each Right and the Purchase Price shall be subject to adjustment
as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding that 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 the Rights Agreement.
In the event that the Rights become exercisable, the Rights Agent and the
Company will agree upon a procedure for determining which Rights will be so
legended.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its President or any
Executive Vice President or Vice President, either manually or by facsimile
signature, and by the Secretary of the Company or any Assistant Secretary,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal (if any) or a facsimile thereof. The Rights Certificates shall be
manually countersigned by an authorized signatory of the Rights Agent and shall
not be valid for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
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(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office designated for such purposes, 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 Sections 7(e), 14 and 24 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
the number of one one-hundredths of a Preferred Share (or Common Shares, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered entitle such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Sections 7(e), 14 and 24 hereof,
countersign and deliver to the person entitled thereto a Rights Certificate or
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's or the Rights
Agent's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company will make
and deliver a new Rights Certificate of like tenor to the Rights Agent for
delivery to the registered holder 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 Sections 7(e), 23(b) and 24(b), hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein), 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 on the reverse side thereof duly executed, to the Rights
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Agent at the office of the Rights Agent designated for such purpose, together
with payment of the Total Purchase Price, at or prior to the Expiration Date.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
issuable pursuant to the exercise of a Right shall initially be $95.00 and shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the Form of Election to Purchase duly executed, accompanied by payment of
the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iv))
for each one one-hundredth of a Preferred Share (or Common Shares or other
securities or property, as the case may be) and an amount equal to any
applicable transfer tax required to be paid by the holder of such Rights
Certificate in accordance with Section 9(d) hereof in cash, or by certified
check or cashier's check payable to the order of the Company, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i)(A) requisition
from any transfer agent of the Preferred Stock (or make available, if the Rights
Agent is the transfer agent for the Preferred Stock) a certificate or
certificates for the total number of one one-hundredths of a Preferred Share 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 depository agent, requisition from the depository
agent depository receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the depository agent), and the Company hereby directs the depository
agent to comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 hereof, (iii) after receipt of such certificates
or depository 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) when appropriate, after
receipt thereof, deliver such cash 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 (including to zero) pursuant to Section 11(a)(iv) hereof) may be
made in cash or by certified check or cashier's check payable to the order of
the Company. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(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 to the registered holder of such Rights Certificate or to his or
her duly authorized assigns, 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 or Section 13 Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an
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Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such (a "Post Transferee"), (iii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e) (a "Prior
Transferee") or (iv) any subsequent transferee receiving transferred Rights from
a Post Transferee or a Prior Transferee, either directly or through one or more
intermediate transferees, 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 to any other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or any of such Acquiring Person's 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 to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof, except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company and consistent with the internal policies of the Rights
Agent, destroy such canceled Rights Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
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(a) The Company (i) shall use its reasonable efforts to cause to be
reserved and kept available out of, and to the extent 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 Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of a Section 11(a)(ii) Event in which the
consideration to be delivered by the Company upon exercise of the Rights has
been determined in accordance with Section 11(a)(iv) hereof, or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the Expiration Date. The Company may temporarily suspend, for a period not
to exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(b), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension, the Company shall issue a public announcement stating,
and notify the Rights Agent, that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement and notification to the
Rights Agent at such time as the suspension is no longer in effect. 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. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction, unless the requisite qualification in such jurisdiction shall have
been obtained, or an exemption therefrom shall be available, and until a
registration statement has been declared effective. The Company will notify the
Rights Agent in writing of the jurisdictions in which Rights shall not be
exercisable pursuant to the preceding sentence. So long as Preferred Shares
(and, following a Triggering Event, Common Shares and/or other securities)
issuable upon the exercise of Rights are 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 or other securities reserved
for issuance upon exercise of Rights to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) The Company shall take such action as may be necessary to ensure that
all Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares 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), shall be duly and validly authorized and issued and
fully paid and nonassessable.
(d) The Company shall pay when due and payable any and all Federal and
state transfer taxes and charges which may be payable in respect of the original
issuance or delivery of the
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Rights Certificates or of any Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a person other
than, or the issuance or delivery of certificates or depository receipts for the
Preferred Shares (or Common Shares and/or other securities, as the case may be)
in a name other than that of, the registered holder of the Rights Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depository receipts for Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date.
Each person in whose name any certificate for Preferred Shares (or Common
Shares 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 the Preferred Shares 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 Total Purchase Price with respect to which
the Rights have been exercised (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date
- -------- --------
upon which the Preferred Shares (or Common Shares 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 on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Shares
(or Common Shares 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 of Shares or Number of
Rights.
The Purchase Price, the number and kind of shares or other property 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 (by reverse stock split or
otherwise) into a smaller number of shares of Preferred Stock, 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), then, in each such event, except as otherwise provided in
this Section 11(a) and Section 7(e) hereof, the Purchase Price in
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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, as the case may be,
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; provided, however, that in
-------- -------
no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. 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) Subject to Section 24 of this Agreement, in the event any
Person (other than the Company, any subsidiary of the Company, any employee
benefit plan of the Company or of any subsidiary of the Company or any
person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan), either alone or together with its
Affiliates and Associates, becomes an Acquiring Person, unless the event
causing the 20% threshold to be crossed is pursuant to a Permitted Offer,
then, promptly following such event, proper provision shall be made so that
each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive for each Right, upon exercise thereof
in accordance with the terms of this Agreement and payment of the then-
current Purchase Price, in lieu of Preferred Shares, 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-
hundredths of a Preferred Share for which a Right was exercisable (or would
have been exercisable if the Distribution Date had occurred) immediately
prior to the first occurrence of a Section 11(a)(ii) Event, and (y)
dividing that product by 50% of the Current Per Share Market Price
(determined pursuant to Section 11(d) hereof) for Common Shares on the date
of such first occurrence (such number of shares being hereinafter referred
to as the "Adjustment Shares").
(iii) The right to buy Common Shares of the Company pursuant to
Section 11(a)(ii) hereof shall not arise as a result of any Person becoming
an Acquiring Person through an acquisition of Common Shares pursuant to a
Permitted Offer.
(iv) In the event that the number of shares of Common Stock which
are authorized by the Company's Articles of Incorporation but are not
outstanding and are not reserved for issuance other than upon exercise of
the Rights is not sufficient to permit the exercise in full of the Rights
in accordance with Section 11(a)(ii), to the extent permitted by applicable
law, the Company, by a vote of the majority of the Board, shall:
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(A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess being the "Spread"); and
(B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) other
equity securities of the Company (including, without limitation, shares, or
units of shares, of any series of preferred stock, Common Stock and/or
other securities which the Board of Directors of the Company, upon approval
by majority of the Continuing Directors, has deemed to have the same value
as Common Shares (such shares or units of shares 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, where such aggregate value has been determined
by the Board, upon approval by a majority of the Continuing Directors,
after receiving advice from a nationally recognized investment banking
firm; provided, however, 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, Common Shares (to the
extent available), except to the extent that the Company has not obtained
any necessary stockholder or regulatory approval for such issuance, and
then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If the Board of Directors of the Company, upon
approval by a majority of the Continuing Directors, shall determine in good
faith that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights or that any
necessary regulatory approval for such issuance will be obtained, the
thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for
the authorization of such additional shares or take action to obtain such
regulatory approval (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action need
be taken pursuant to the first and/or second sentences of this Section
11(a)(iv), the Company (x) shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding Rights and (y)
may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional
shares, to take any action to obtain any required regulatory approval
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,
and shall notify the Rights Agent, that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement, and
notification to
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the Right Agent, at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iv), the value of the
Common Shares shall be the Current Per Share Market Price (as
determined pursuant to Section 11(d) hereof) of the Common Shares on
the Section 11(a)(ii) Trigger Date and the value of any "Common Stock
Equivalent" shall be deemed to have the same value as the Common
Shares on such date.
(b) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the issuance of rights, options or warrants to
all holders of Preferred Shares entitling such holders (for a period expiring
within forty-five (45) calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("Equivalent Preferred Shares")) or
securities convertible into Preferred Shares or Equivalent Preferred Shares at a
price per Preferred or Equivalent Preferred Share (or having a conversion price
per share, if a security convertible into Preferred Shares or Equivalent
Preferred Shares) less than the then Current Per Share Market Price of the
Preferred Shares (as defined in Section 11(d)) on such record date, then, in
each such case, the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date, plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or Equivalent Preferred Shares, as the case may be, so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price, and the denominator
of which shall be the number of Preferred Shares outstanding on such record
date, plus the number of additional Preferred Shares and/or Equivalent Preferred
Shares, as the case may be, 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 in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of 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. Preferred
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the making of a distribution to all holders of
the Preferred Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend, if any, or a dividend payable in Preferred Shares) or
subscription rights, options or warrants (excluding those referred to in Section
11(b)), then, in each such case, 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 Per Share Market Price (as determined pursuant to Section
11(d) hereof) of Preferred Shares or on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company upon
the approval by a majority of the Continuing Directors, 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 Preferred Share, and the
denominator of which shall be such Current Per Share Market Price (as determined
pursuant to Section 11(d)
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hereof) of Preferred Shares on such record date. 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, the "Current
Per Share Market Price" of any security (a "Security" for the purpose of this
Section 11(d)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the Current Per Share Market
-------- -------
Price of the Security is determined during a period following the announcement
by the issuer of such Security of (i) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of the requisite thirty (30) Trading Day
period, after the ex dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the Current Per Share Market Price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
Security. The "closing price" for each day shall be, if the shares of Common
Stock (or other securities) are listed and admitted to trading on a national
securities exchange, as reported in the principal consolidated transaction
reporting system for securities listed on the principal national securities
exchange on which such shares are listed or admitted to trading or, if such
shares of Common Stock (or other securities) are not listed or admitted to
trading on any national securities exchange, the last quoted sales price, or, if
not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported on The Nasdaq Stock Market's National Market (the
"Nasdaq National Market") or such other system then in use, or, if on any such
date such shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the shares of Common Stock (or other securities) selected by a
majority of the Board. The term "Trading Day" shall mean a Business Day or, if
such shares are listed or admitted to trading on any national securities
exchange or the Nasdaq National Market, a day on which the principal national
securities exchange on which such shares are listed or admitted to trading or
the Nasdaq National Market is open for the transaction of business.
(ii) For the purpose of any computation hereunder, the "Current Per Share
Market Price" of the Preferred Shares shall be determined in accordance with the
method set forth in Section 11(d)(i). If the Preferred Shares are not publicly
traded, the "Current Per Share Market Price" of the Preferred Shares shall be
conclusively deemed to be the Current Per Share Market Price of the Common
Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted
17
<PAGE>
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by one thousand. If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded "Current Per
Share Market Price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, upon approval by a majority of
the Continuing Directors, whose determination shall be described in a statement
filed with the Rights Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
- -------- -------
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which requires such adjustment or
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
13(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock other than Preferred Shares, thereafter
the number of such other shares so receivable upon exercise of any Right and if
required, 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 Shares contained in this Section 11,
and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number one one-hundredths of a
Preferred Share that may be purchased 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 Section 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 -hundredths of a
Preferred Share (calculated to the nearest one ten-thousandths of a share)
obtained by (i) multiplying (x) the number of one one-hundredths of a Preferred
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 substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of
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<PAGE>
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest 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, and shall notify the Rights Agent, 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-hundredths of a Preferred Share issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one-hundredth of a Preferred
Share and the number of one one-hundredths of a Preferred 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 par or stated value, if any, of the number of one -
hundredths of a Preferred Share 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 as
fully paid and nonassessable shares such number of one one-hundredths of a
Preferred Share at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the
number of one one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-hundredths 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) upon the occurrence of the event
requiring such adjustment.
19
<PAGE>
(m) Anything in this Section 11 to the contrary notwithstanding, prior to
the Distribution Date, the Company shall be entitled to make such reductions in
the Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any (i) consolidation or subdivision of the
Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock
at less than the current market price, (iii) issuance wholly for cash of shares
of Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance
of rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) The Company 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 22(o) hereof),
if (x) at the time or immediately after such consolidation, merger or sale there
are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company shall not, after the Distribution Date, except as
permitted by Sections 23, 24 or 27 hereof, take (or permit to be taken) any
action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator which
shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately following the
occurrence of such event.
20
<PAGE>
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the 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 in accordance with
Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to make such certification or give such notice shall not affect the
validity of such adjustment or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Shares Acquisition Date,
directly or indirectly:
(i) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction
the principal purpose of which is to change the state of incorporation of
the Company or that complies with Section 11(o) hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation
or merger;
(ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof) shall consolidate with
the Company, or merge with and 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 of the Company shall be changed into or
exchanged for stock or other securities of any other Person or cash or any
other property; or
(iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or one or more of its
wholly owned Subsidiaries in one or more transactions, each of which
complies with Section 11(o) hereof), then, and in each such case, proper
provision shall be made so that
(A) each holder of a Right (except as provided in Section
7(e) or otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof in accordance with the terms of
this Agreement at the then current Purchase Price, such number of
validly authorized and issued, fully paid and nonassessable shares of
Common Stock of the Principal Party (as hereinafter defined), free of
any liens, encumbrances, rights of first refusal or other adverse
21
<PAGE>
claims, as shall be equal to the result obtained by (1) multiplying
the then current Purchase Price by the number of one one-hundredths of
a Preferred Share for which a Right was exercisable immediately prior
to the 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-hundredths of
a Preferred 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 (2)
dividing that product by 50% of the Current Per Share Market Price
(determined pursuant to Section 11(d) hereof) of a share of Common
Stock of such Principal Party on the date of consummation of such
Section 13 Event; provided that the Purchase Price and the number of
--------
shares of Common Stock of such Principal Party issuable upon exercise
of each Right shall be further adjusted as provided in this Agreement
to reflect any events occurring after the date of the first occurrence
of a Section 13 event;
(B) 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;
(C) 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; and
(D) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its shares
of 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.
(b) "Principal Party" shall mean,
(i) in the case of any transaction described in clause (i) or (ii) 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 (iii) 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,
-------- -------
(w) if the Common Stock of such Person is not at such time and has not
been continuously over the preceding 12-month
22
<PAGE>
period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect subsidiary of another corporation the
Common Stock of which is and has been so registered, "Principal Party"
shall refer to such other corporation, (x) if the Common Stock of such
Person is not and has not been so registered and such Person is not a
direct or indirect subsidiary of another corporation the Common Stock
of which is and has been so registered, "Principal Party" shall refer
to the corporation which ultimately controls such Person, (y) in case
such Person is a subsidiary, directly or indirectly, of more than one
corporation, the Common Stocks of all of which are and have been so
registered, "Principal Party" shall refer to whichever of such
corporations is the issuer of the Common Stock having the greatest
market value of shares held by the public, and (z) in case such Person
is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (w) - (y) above shall apply to each of
the chains of ownership having an interest in such joint venture as if
such party were a subsidiary of both or all of such joint venturers
and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such
interests.
(c) If, for any reason, the Rights cannot be exercised for shares of
Common Stock of such Principal Party as provided in Section 13(a), then each
holder of Rights shall have the right to exchange its Rights for cash from such
Principal Party in an amount equal to the number of Common Shares that it would
otherwise be entitled to purchase, as determined pursuant to Section 13(a),
times the Current Per Share Market Price, as determined pursuant to Section
11(d) hereof, of such shares of Common Stock of such Principal Party. If, for
any reason, the foregoing formulation cannot be applied to determine the cash
amount into which the Rights are exchangeable, then the Board of Directors, upon
the approval of a majority of the Continuing Directors, based upon the advice of
one or more nationally recognized investment banking firms, shall determine such
amount reasonably and with good faith to the holders of Rights. Any such
determination shall be final and binding on the Rights Agent.
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in clauses (i) and (ii) of
Section 13(a) if: (i) such transaction is consummated with a Person or Persons
(or a wholly-owned Subsidiary of any such Person or Persons) who acquired Common
Shares pursuant to a Permitted Offer; (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of Common Stock
paid to all holders of Common Shares whose shares were purchased pursuant to
such Permitted Offer; and (iii) the form of consideration being offered to the
remaining holders of Common Shares pursuant to such transaction is the same form
as the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
(e) 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 that have not been issued or reserved for
issuance to permit the exercise in full of
23
<PAGE>
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 confirming that such Principal Party shall, upon
consummation of such consolidation, merger, sale or transfer, assume this
Agreement in accordance with Sections 13(a) and (b) hereof, that all rights of
first refusal or preemptive rights in respect of the issuance of shares of
Common Stock of such Principal Party upon exercise of outstanding Rights have
been waived, that there are no rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights and that such transaction shall
not result in a default by such Principal Party under this Agreement, and
further providing that, as soon as practicable after the date of such
consolidation, merger, sale or transfer, such Principal Party will:
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights, on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date,
and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on Nasdaq; and
(iii) deliver to holders of the Rights historical financial
statements for such Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
In the event that at any time after the occurrence of a Section 11(a)(ii)
Event, some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not theretofore
been exercised shall thereafter be exercisable in the manner described in
Section 13(a) (without taking into account any prior adjustment required by
Section 11(a)(ii)).
(f) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates that 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 the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior
24
<PAGE>
to the date on which such fractional Rights would have been otherwise issuable,
as determined pursuant to the second sentence of Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiplies of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock (other than fractions which
are integral multiplies of one one-hundredth of a Preferred Share). In lieu of
fractional Preferred Shares (that are not integral multiplies of one one-
hundredth of a Preferred Share), the Company shall 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 a
Common Share. For purposes of this Section 14(b), the current market value of a
Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
his or her right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, excepting the rights of
action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Shares), 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 Shares), may, in his or her own behalf and for his or her 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 or her 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 will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of 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 the Common Shares;
(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
25
<PAGE>
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 Sections 6(a) and 7(f) hereof, the Company and the Rights
Agent may deem and treat the person in whose name the Rights Certificate (or,
prior to the Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificate
or the associated Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation.
Section 17. Rights Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent 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 expenses 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 gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any
26
<PAGE>
claim of liability in the premises. The provisions of this Section 18(a) shall
survive the termination of this Agreement.
(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 the shares of Preferred Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
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 the 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
Rights Agent 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 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:
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(a) The Rights Agent may consult with legal counsel of its selection (who
may be legal counsel for the Company), and the opinion or advice of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion or advice.
(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 Per Share 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 any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Executive Vice President or Vice President, the
Chief Financial Officer, or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross 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 (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any 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 or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of
the existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of a certificate furnished pursuant to Section 12
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Preferred
Stock will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
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(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
the Executive Vice President or any Vice President, the Chief Financial Officer,
or the Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) 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.
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Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon thirty (30) days' notice in writing
mailed to the Company and to each transfer agent for the Preferred Stock or the
Common Stock by registered or certified mail. The Company may remove the Rights
Agent or any successor Rights Agent upon thirty (30) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent for the Preferred Stock or the Common Stock by registered or
certified 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 or her Rights Certificate for inspection by the
Company), then the Rights Agent or the 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 any state of the United States, in
good standing, which is authorized under such laws to exercise corporate trust
or stockholder 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 $50 million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent for the Preferred Stock and the
Common Stock, and mail a notice thereof in writing to the registered holders of
the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to Common Shares so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement or upon
the exercise, conversion or
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exchange of the convertible subordinated debentures of the Company outstanding
at the date hereof or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company and (b) may, in anyother case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
-------- -------
shall be issued and this sentence shall be null and void ab initio if, and to
the extent that, such issuance or this sentence would create a significant risk
of or result in material adverse tax consequences to the Company or the Person
to whom such Rights Certificate would be issued or would create a significant
risk of or result in such options' or employee plans' or arrangements' failing
to qualify for otherwise available special tax treatment and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Company may, at its option, upon the approval of the Board of
Directors, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Shares Acquisition Date or such later date as may be
determined by action of a majority of the Continuing Directors then in office
and publicly announced by the Company or (ii) the Final Expiration Date, redeem
all but not less than all of the then outstanding Rights at a redemption price
of $0.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being herein referred to as the "Redemption Price"), and the Company may,
at its option, pay the Redemption Price either in Common Shares (based on the
Current Per Share Market Price thereof (as determined pursuant to Section 11(d)
hereof) at the time of redemption) or cash; provided, however, if the Board of
-------- -------
Directors of the Company authorizes redemption of the Rights in either of the
circumstances set forth in clauses (i) or (ii) below, then there must be
Continuing Directors then in office and such authorization shall require the
concurrence of a majority of such Continuing Directors: (i) such authorization
occurs on or after the time a Person becomes an Acquiring Person, or (ii) such
authorization occurs on or after the date of a change (resulting from a proxy or
consent solicitation) in a majority of the directors in office at the
commencement of such solicitation if any Person who is a participant in such
solicitation has stated (or, if upon the commencement of such solicitation, a
majority of the Board has determined in good faith) that such Person (or any of
its Affiliates or Associates) intends to take, or may consider taking, any
action which would result in such Person becoming an Acquiring Person or which
would cause the occurrence of a Triggering Event.
(b) Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable after the occurrence of an event described
in Section 11(a)(ii) until such time as the Company's right of redemption
-----------------
hereunder has expired.
(c) Immediately upon the action of the Board of Directors of the Company
properly ordering the redemption of the Rights pursuant to subsection (a) of
this Section 23, 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. Within ten (10) days 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
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notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common 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. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof, and other than in connection
with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) Subject to applicable laws, rules and regulations, and subject to
subsection (d) below, the Company may, at its option, by majority vote of the
Board of Directors and a majority vote of the Continuing Directors, at any time
after the occurrence of a Section 11 (a)(ii) Event, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for Common
Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Ratio of Exchange"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors properly
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Ratio of Exchange. The Company
shall give public notice of any such exchange; provided, however, that the
-------- -------
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or Equivalent Preferred Shares, as such
term is defined in Section 11(b) hereof) for Common Shares exchangeable for
Rights, at the initial rate of one one-hundredth of a Preferred Share (or
Equivalent Preferred Share) for each Common Share, as
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appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, so that the fraction of a
Preferred Share in lieu of each Common Share shall have the same voting rights
as one Common Share.
(d) In the event that there shall not be sufficient shares of Common Stock
or Preferred Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with Section 24(a),
the Company shall either take such action as may be necessary to authorize
additional shares of Preferred Stock or Common Stock for issuance upon exchange
of the Rights or alternatively, at the option of a majority of the Board of
Directors upon the approval of a majority of the Continuing Directors then in
office, with respect to each Right (i) pay cash in an amount equal to the
Current Value (as hereinafter defined), in lieu of issuing shares of Preferred
Stock or Common Stock in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the Current Value,
in lieu of issuing Common Shares in exchange for each such Right, where the
value of such securities shall be determined by a nationally recognized
investment banking firm selected by the Board of Directors by majority vote of
the Board of Directors and with the approval of a majority of the Continuing
Directors then in office, or (iii) deliver any combination of cash, property,
shares of Preferred Stock or Common Stock and/or other securities having a value
equal to the Current Value in exchange for each Right. For purposes of this
Section 24(d) only, the "Current Value" shall mean the product of the Current
Per Share Market Price of Common Shares (determined pursuant to Section 11(d) on
the date of the occurrence of the event described above in subparagraph (a))
multiplied by the number of shares of Common Stock for which the Right otherwise
would be exchangeable if there were sufficient shares available. To the extent
that the Company determines that some action need be taken pursuant to clauses
(i), (ii) or (iii) of this Section 24(d), the Board of Directors may temporarily
suspend the exercisability of the Rights for a period of up to sixty (60) days
following the date on which the event described in Section 24(a) shall have
occurred, in order to seek any authorization of additional shares of Common
Stock or Preferred Stock and/or to decide the appropriate form of distribution
to be made pursuant to the above provision and to determine the value thereof.
In the event of any such suspension, the Company shall issue a public
announcement, and shall send a written notice to the Rights Agent, stating that
the exercisability of the Rights has been temporarily suspended.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or Preferred Stock or to distribute certificates that evidence
fractional shares of Common Stock or Preferred Stock. In lieu of such
fractional shares of Common Stock or Preferred Stock, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock or Preferred Stock would otherwise be
issuable, an amount in cash equal to the same fraction of the Current Per Share
Market Value of a whole share of Common Stock or Preferred Stock (as determined
pursuant to the second sentence of Section 11(d) hereof).
(f) The Company may, at its option, by majority vote of the Board of
Directors, at any time before any Person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights of substantially
equivalent value, as determined reasonably and with
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<PAGE>
good faith by the Board of Directors, based upon the advice of one or more
nationally recognized investment banking firms.
(g) Immediately upon the action of the Board of Directors properly
ordering the exchange of any Rights pursuant to subsection (e) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of rights in exchange therefor as has
been determined by the Board of Directors in accordance with subsection (e)
above. The Company shall give public notice, and written notice to the Rights
Agent, of any such exchange; provided, however, that the failure to give, or any
-------- -------
defect in, such notice shall not affect the validity of such exchange. The
Company shall mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
transfer agent for the shares of Common Stock or Preferred Stock of the Company.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Rights will be effected.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Preferred Shares or to make any other distribution to the holders of Preferred
Shares (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 Shares
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Shares or shares of stock of any class or any other securities, rights
or options, or (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), or (iv) to effect any consolidation or merger into
or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions, of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purpose 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 Common 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 Common Stock for
purposes or 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 Preferred Shares, whichever
shall be the earlier.
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<PAGE>
(b) In case any Section 11(a)(ii) Event or Section 13 Event shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, and to the Rights Agent, in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Sections 11 (a)(ii) and 13 hereof.
Section 26. Notices.
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Leasing Solutions, Inc.
10 Almaden Boulevard, Suite 1500
San Jose, CA 95113
Attention: Hal J Krauter, Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any 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:
BankBoston, N.A.
c/o Boston EquiServe Limited Partnership
435 Tasso Street
Palo Alto, California 94301
Attention: Geoffrey Anderson
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on the holder of any Rights Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
Prior to the Distribution Date, the Company may supplement or amend this
Agreement in any respect without the approval of any holders of Rights, and the
Rights Agent shall, if the Company so directs, execute such supplement or
amendment. From and after the Distribution Date, the Company and the Rights
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Rights in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) shorten or lengthen any
time period hereunder (which lengthening or shortening, following the first
occurrence of an event set forth in clauses (i) and (ii) of the proviso to
Section 23(a) hereof, shall be effective only if there are Continuing Directors
then in
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<PAGE>
office and shall require the approval of a majority of such Continuing
Directors) or (iv) to change or supplement the provisions hereunder in any
manner that the Company may deem necessary or desirable and that shall not
adversely affect the interests of the holders of Rights (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person); provided, 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 that
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Shares.
Notwithstanding any other provision hereof, the Rights Agent's consent must be
obtained regarding any amendment or supplement pursuant to this Section 27 which
alters the Rights Agents rights or duties, which consent shall not be
unreasonably withheld.
Section 28. Successors.
All covenants and provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares 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 Rules and Regulations. The Board of Directors of the
Company (and, where specifically provided for herein, with the concurrence of
the Continuing Directors then in office) shall have the exclusive power and
authority to administer this Agreement and to exercise of a majority of rights
and powers specifically granted to the Board, or the Company (or, where
specifically provided for herein, with the concurrence of a majority of the
Continuing Directors then in office), 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 (or, where
specifically provided for herein, with the concurrence of a majority of the
Continuing 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 Certificates and all other parties and (y) not subject the Board or the
Continuing Directors to any liability to the holders of the Rights.
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Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares) any legal or equitable right, remedy or claim under this
Agreement; 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, the registered holders of the Common
Shares).
Section 31. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
-------- -------
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and a majority of the Continuing Directors then
in office 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, if
lapsed, shall be reinstated and shall not expire until the close of business on
the tenth day following the date of such determination by the Continuing
Directors.
Section 32. Governing Law.
This Agreement and each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of California
and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed entirely
within such State.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
37
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
LEASING SOLUTIONS, INC.
By: _____________________________________
Name: ___________________________________
Title: __________________________________
BANKBOSTON, N.A. (AS RIGHTS AGENT)
By: _____________________________________
Name: ___________________________________
Title: __________________________________
38
<PAGE>
EXHIBIT "A"
FORM
OF
CERTIFICATE OF DETERMINATION
OF
RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
LEASING SOLUTIONS, INC.
(PURSUANT TO SECTION 401 OF THE CALIFORNIA CORPORATIONS CODE)
The undersigned, Hal J Krauter and Glenda B. Allen, do hereby certify as
follows:
1. We are the duly elected and acting President and Secretary,
respectively, of Leasing Solutions, Inc., a California corporation (the
"Corporation").
2. The authorized number of shares of the Corporation's Preferred Stock
is 5,000,000 shares, and no shares of such Preferred Stock are issued and
outstanding.
3. Pursuant to the authority conferred upon the Board of Directors by the
Articles of Incorporation of the Corporation, the Board on September 18, 1997,
adopted the following resolutions creating a series of 1,000,000 shares of
Preferred Stock designated as Series A Junior Participating Preferred Stock:
"RESOLVED that, pursuant to the authority granted to and vested in this
Board in accordance with the provisions of the Corporation's Articles of
Incorporation, a series of Preferred Stock of the Corporation be and hereby is
created, and that the designation and amount thereof and the voting powers,
rights, preferences, privileges, and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof, are, to the extent not stated and expressed in the
Articles of Incorporation, fixed and stated as follows:
"Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be one million (1,000,000). Such number of shares may be increased
or decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the
-A1-
<PAGE>
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible into Series A
Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of
the common stock (the "Common Stock") of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for
the purpose, dividends payable in cash (each payment date determined
by the Board of Directors being referred to herein as a "Dividend
Payment Date"), commencing on the first Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount (rounded to the nearest cent) per share
(subject to the provision for adjustment hereinafter set forth) equal
to 100 times the aggregate per share amount of all cash dividends, and
100 times the aggregate per share amount (payable in kind) of all non-
cash dividends or other distributions, other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Dividend Payment Date or,
with respect to the first Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred
Stock. In the event the Corporation shall at any time after September
18, 1997 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under 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 Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Dividend
Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of
-A2-
<PAGE>
issue is a Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and before such Dividend
Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A 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
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
-------------
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holders thereof to
100 votes on all matters submitted to a vote of the shareholders of
the Corporation. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of
shares of Series A 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 Preferred Stock and the holders of shares of Common Stock
and any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
(C) Except as set forth herein holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of Common
-A3-
<PAGE>
Stock after the first issuance of a share or a fraction of a share of
Series A Preferred Stock unless concurrently therewith it shall
declare a dividend or distribution on the Series A Preferred Stock as
required by Section 2 hereof.
(B) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other distribution, on any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay dividends, or make any other distribution, on any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the respective
series or classes.
(C) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraphs (A) and
(B) of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
-A4-
<PAGE>
Section 5. Reacquired Shares. Any shares of Series A 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 of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise) dissolution or winding
up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, plus an amount equal to the greater of
(1) $100.00 per share, provided that in the event the Corporation does
not have sufficient assets, after payment of its liabilities and
distribution to holders of preferred stock ranking prior to the Series
A Preferred Stock, available to permit payment in full of the $100.00
per share amount, the amount required to be paid under this Section 6
shall, subject to Section 6(B) hereof, equal the value of the amount
of available assets divided by the number of outstanding shares of
Series A Preferred Stock, or (2) subject to the provisions for
adjustment hereinafter set forth, 100 times the aggregate per share
amount to be distributed to the holders of Common Stock (the greater
of (1) or (2), the "Series A Liquidation Preference"). In the event
the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso to clause (1) 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) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series A Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation
preferences.
-A5-
<PAGE>
Section 7. Consolidation, Merger, etc. In case the Corporation shall
--------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then, in any such case the shares of
Series A Preferred Stock shall, at the same time, be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
-------------
not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
----
the payment of dividends and the distribution of assets, junior to all other
series of the Corporation's Preferred Stock unless the terms of such series
shall provide otherwise.
Section 10. Amendment. The Articles of Incorporation of the Corporation
---------
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least a
majority of the outstanding shares of Series A Preferred Stock, voting
separately as a single class.
Section 11. Fractional Shares. Series A 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 Preferred Stock.
RESOLVED FURTHER that the officers of the Corporation be, and each of them
hereby is, authorized and directed to prepare and file a Certificate of
Determination of Rights, Preferences, Privileges and Restrictions in accordance
with the foregoing resolution and the provisions of California law and to take
all actions as they may deem necessary or appropriate to carry out the intent of
the foregoing resolutions."
-A6-
<PAGE>
We further declare under penalty of perjury that the matters set forth in
the foregoing Certificate of Determination are true and correct of our
knowledge.
Executed at San Jose, California on October 30, 1997.
____________________________
Hal J Krauter
President
Attest:
_____________________________
Glenda B. Allen
Secretary
-A7-
<PAGE>
EXHIBIT "B"
FORM OF RIGHTS CERTIFICATE
OF
LEASING SOLUTIONS, INC.
-B1-
<PAGE>
FORM OF RIGHTS CERTIFICATE
Certificate No. R- ________Rights
NOT EXERCISABLE AFTER SEPTEMBER 17, 2007, OR EARLIER IF TERMINATED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR 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 RIGHTS AGREEMENT.]*
RIGHTS CERTIFICATE
This certifies that _________________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of September 18, 1997 (the "Rights Agreement"), between
Leasing Solutions, Inc., a California corporation (the "Company"), and
BankBoston, N.A., as Rights Agent (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 2:00 p.m., California time, on September 17,
2007, at the office of the Rights Agent designated for such purpose, or at the
office of its successor as Rights Agent, a one one-hundredth of a share of
Series A Junior Participating Preferred Stock of the Company (the "Preferred
Shares"), at a purchase price initially of $95.00 (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of shares of Preferred
Stock which may be purchased upon exercise hereof) set forth above, are the
number and Purchase Price as of September 18, 1997, based on the Preferred
Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number and kind
of shares of Preferred Stock, Common 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.
-B2-
<PAGE>
*The portion of the legend in bracket shall be inserted only if applicable and
shall replace the preceding sentence.
-B3-
<PAGE>
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 principal executive offices of
the Company and the above-mentioned office of the Rights Agent.
Upon the occurrence of a Section 11(a)(ii) Event (as defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of any such Person
(as such terms are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee after
such Acquiring Person, Associate or Affiliate becomes such, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee prior to
or concurrently with such Acquiring Person becoming such, 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.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Rights Certificate (i) may be redeemed by the Company, at its option, at a
redemption price of $0.01 per Right or (ii) may be exchanged by the Company in
whole or in part for a one share of Common Stock per Right, substantially
equivalent rights or other consideration as determined by the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
amount of securities 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.
No fractional portion less than integral multiplies of one one-hundredth of a
Preferred Share will be issued upon the exercise of any Right or Rights evidence
hereby, but in lieu thereof, a cash payment will be made as provided in the
Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders
-B4-
<PAGE>
(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 an authorized signatory of the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal. Dated as of ___________________, 19_____.
LEASING SOLUTIONS, INC.
By: _____________________________________
Name: ___________________________________
Title: __________________________________
BANKBOSTON, N.A. (AS RIGHTS AGENT)
By: _____________________________________
Name: ___________________________________
Title: __________________________________
-B5-
<PAGE>
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate)
FOR VALUE RECEIVED___________________________________________ hereby sells,
assigns and transfers unto________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint___________________________
Attorney, to transfer the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated: _____________________, 19_____
____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
-B6-
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [_] is [_] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person,
or an Affiliate or Associate of any such 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 any such Person.
Dated: ___________________, 19___
____________________________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and Certificate must conform to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
In the event the certification set forth above is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
-B7-
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights
represented by the Rights Certificate)
To: Leasing Solutions, Inc.
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the number of one one-
hundredths of a share of Preferred Stock issuable upon the exercise of such
Rights and requests that certificates for such Preferred Stock (or other shares,
securities or property, as the case may be) 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 shall be registered in the
name of and delivered to:
______________________________________________________________________________
______________________________________________________________________________
(Please insert social security or other identifying number)___________________
______________________________________________________________________________
______________________________________________________________________________
(Please print name and address)
-------------------------------
Dated:________________, 19__
____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust
-B8-
<PAGE>
company having an office or correspondent in the United States or any other
member of a medallion signature guarantee program approved by the Securities
Transfer Association.
-B9-
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate are [_] are not [_]
being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such 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 any such Person.
Dated:__________________, 19__
____________________________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Purchase and Certificate must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
In the event the certification set forth above is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
-B10-
<PAGE>
EXHIBIT "C"
LEASING SOLUTIONS, INC.
SUMMARY OF RIGHTS TO
PURCHASE PREFERRED STOCK
-C1-
<PAGE>
EXHIBIT "C"
LEASING SOLUTIONS, INC.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On September 18, 1997, the Board of Directors of Leasing Solutions, Inc.
(the "Company") declared a dividend, payable to shareholders of record at the
close of business on October 3, 1997 (the "Record Date"), of one preferred stock
purchase right (a "Right") for each outstanding share of common stock of the
Company ("Common Stock"). In addition, the Company has authorized the issuance
of one Right with respect to each share of Common Stock that becomes outstanding
between the Record Date and the earlier of the Distribution Date or Expiration
Date (as such terms are defined below) or the date, if any, on which the Rights
may be redeemed. Each Right, when exercisable, entitles the holder to purchase
from the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock of the Company (the "Preferred Shares") at a price of $95.00 per
one one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and BankBoston, N.A., as
Rights Agent.
Initially, the Rights will not be exercisable and will be evidenced only by
the Common Stock certificates representing the shares of Common Stock then
outstanding. The Rights will become exercisable and will become transferrable
apart from the Common Stock on a date (the "Distribution Date") that is the
earlier of the close of business on the tenth business day following (i) a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired or obtained the right to acquire, in a
transaction or series of transactions not approved by the Board of Directors of
the Company (the "Board"), beneficial ownership of 20% or more of then
outstanding shares of Common Stock (the "Shares Acquisition Date"), or (ii) the
commencement of a tender or exchange offer by any person (other than the Company
or an employee benefit plan of the Company or any of its subsidiaries) for 20%
or more of the outstanding shares of Common Stock.
Until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the Rights will be transferred only with the Common Stock
certificates to which the Rights relate. New Common Stock certificates issued
after the Record Date, upon transfer or new issuance of Common Stock will,
contain a notation incorporating the Rights Agreement by reference, and the
surrender for transfer of any certificates for Common Stock outstanding on or
after the Record Date, with or without such notation, will also constitute the
transfer of the Rights related to the shares of Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone will
evidence the Rights.
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<PAGE>
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 17, 2007 (the "Final Expiration Date"), unless the
Rights are earlier redeemed or exchanged by the Company, in each case, as
described below.
The Purchase Price payable, and the number of shares of Preferred Stock (or
the number and kind of other securities or property, as the case may be)
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) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities convertible
into Preferred Stock, with a conversion price, 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 paid out of earns or retained earnings or dividends
payable in Preferred Stock) or of subscription rights or warrants (other than
those referred to above). The number of outstanding Rights and the number of
one one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the shares of Common
Stock or a stock dividend on the shares of Common Stock payable in shares of
Common Stock or subdivisions, consolidations, or combinations of the shares of
Common Stock occurring, in any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to an aggregate dividend of
100 times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to a minimum
preferential liquidation payment of $100.00 per share but will be entitled to an
aggregate payment of 100 times the payment made per share of Common Stock. Each
Preferred Share will have 100 votes, voting together with the Common Stock.
Finally, in the event of any merger, consolidation or other transaction in which
Common Stock are exchanged, each Preferred Share will be entitled to receive 100
times the amount received per share of Common Stock. These rights are protected
by customary antidilution provisions.
In the event that a person becomes an Acquiring Person (except pursuant to
an offer for outstanding shares of Common Stock which the Continuing Directors
(as defined below) determine to be fair to and otherwise in the best interest of
the Company and its stockholders), each holder of a Right (other than Rights
beneficially owned by the Acquiring Person) will thereafter have the right to
receive upon exercise of the Right at the then current Purchase Price of the
Right, that number of shares of Common Stock (or in certain circumstances, cash
or other securities or property) having a market value of two times the Purchase
Price of the Right. Notwithstanding the foregoing, all Rights that are or,
under certain circumstances specified in the Rights Agreement, were beneficially
owned by an Acquiring Person (or any of its affiliates or associates, as
defined) will be null and void. The Rights are, however, not exercisable until
such time as the Rights are no longer redeemable by the Company.
For example, at a Purchase Price of $95.00 per Right, each Right not owned
by an Acquiring Person (or certain related parties) following an event described
in the preceding
-C3-
<PAGE>
paragraph would entitle its holder to purchase $190.00 worth of Common Stock (or
other consideration) as noted above, for $95.00. Assuming that the Common Stock
had a per share market value of $19.00 at such time, the holder of each valid
Right would be entitled to purchase 10 shares of Common Stock for $95.00.
In the event that, after the Rights become exercisable, (i) the Company is
acquired in a merger or other business combination transaction in which the
Company is not the surviving Corporation, or (ii) 50 percent or more of the
Company's assets or earning power is sold 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 thereof and payment of the
then current Purchase Price, the number of shares of Common Stock of the
acquiring company having a market value equal to two times the Purchase Price of
the Right.
At any time after a person or group of affiliated or associated person
becomes an Acquiring Person, and until the beneficial ownership level of such
Acquiring Person, together with all affiliates and associates of such Acquiring
Person, reaches 50 percent, the Board of Directors may exchange the Rights
(other than the Rights held by the Acquiring Person, affiliates or associates of
the Acquiring Person and certain other persons whose Rights can be traced to an
Acquiring Person), in whole or in part, at an exchange ratio of one share of the
Common Stock per Right. The exchange must also be approved by a majority of the
Continuing Directors.
At any time prior to the close of business on the tenth (10th) business day
following the Shares Acquisition Date, the Company may redeem the Rights, in
whole but not in part at a redemption price of $0.01 per Right. Under certain
circumstances, the redemption must also be approved by a majority of the
Continuing Directors. Immediately upon the action of the Board of Directors
electing to redeem the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the redemption price. With certain
exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments amount to at least one (1) percent of the Purchase Price.
No fractional shares will be issued, (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share) and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred Stock
or Common Stock on the last trading day prior to the date of exercise.
The term "Continuing Directors" means any member of the Board of Directors
of the Company who was a member of the Board prior to the date of the Rights
Agreement, and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors, but
shall not include an Acquiring Person or an affiliate or associate of an
Acquiring Person or any representative of the foregoing entities.
Until the Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
-C4-
<PAGE>
At any time prior to the Distribution Date, the Board of Directors may
amend any provision of the Rights Agreement in any manner, including to change
the Purchase Price, without the approval of the holders of the Common Stock.
Thereafter, subject to certain limitations, the Board of Directors (with the
concurrence of the Continuing Directors) may amend the Rights Agreement without
the approval of the holders of the Common Stock in order to cure any ambiguity,
to make changes which do not adversely affect the interest of holders of Rights
(excluding the interest of any acquiring person), or to shorten or lengthen any
time period under the Rights Agreement.
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
October 30, 1997. 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 hereby incorporated herein by reference.
-C5-
