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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
AMERICA ONLINE, INC.
(Exact name of registrant as specified in its charter)
Delaware 54-1322110
(State of incorporation or organization) (IRS Employer Identification No.)
22000 AOL Way, Dulles, Virginia 20166
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Preferred Share Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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Item 1. Description of Securities To Be Registered.
On April 23, 1993, the Board of Directors of America Online,
Inc. (the "Company") declared a dividend of one preferred share purchase right
(a "Right") for each outstanding share of Common Stock, $.01 par value (the
"Common Shares"), of the Company. The dividend is payable to stockholders of
record on May 3, 1993 (the "Record Date"). Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Series A
Junior Participating Preferred Stock, $.01 par value (the "Preferred Shares"),
of the Company, at a price of $150 per one one-hundredth of a Preferred Share
(the "Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement dated as of April 23, 1993 (the
"Rights Agreement") between the Company and Security Trust Company, N.A., as
Rights Agent. The Rights Agent was later changed to Chemical Bank, N.A. (the
"Rights Agent"). Capitalized terms not otherwise defined herein have the
meanings assigned to such terms in the Rights Agreement.
Until the earliest to occur of (the earliest of such dates
being called the "Distribution Date"): (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15%, or such higher
percentage as was beneficially owned by any person, together with all affiliates
and associates of such person, at 9:00 A.M. (Boston local time) on April 23,
1993 (15%, or such higher percentage, as applicable, being the "Threshold
Amount"), or more of the outstanding Common Shares, (ii) 10 business days (or
such specified or unspecified later date as may be determined by action of the
Board of Directors, with the concurrence of a majority of the Continuing
Directors prior to such time as any person becomes an Acquiring Person) after
the date that a tender or exchange offer by any person is first published, sent
or given within the meaning of Rule 14d-2(a) under the Securities Exchange Act
of 1934, as amended, if, upon consummation thereof, such person, together with
all affiliates and associates of such person, would be the beneficial owners of
the Threshold Amount or more of such outstanding Common Shares (irrespective of
whether or not any Common Shares are actually purchased pursuant to such offer),
or (iii) 10 business days after the Board of Directors of the Company determines
that a person is an "Adverse Person" as described below, the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a copy of the Summary
of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Shares. Until
the Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date, upon transfer or new
issuance of Common Shares, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of the Summary of Rights being attached thereto, will also constitute the
transfer of the Rights
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associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on May 3, 2003 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed by
the Company, in each case, as described below. The Purchase Price payable, and
the number of Preferred Shares or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, split,
reverse split, combination or reclassification of, the Preferred Shares, (ii)
upon the grant to holders of the Preferred Shares of certain rights or warrants
to subscribe for or purchase Preferred Shares at a price, or securities
convertible into Preferred Shares with a conversion price, less than the then
current market price of the Preferred Shares or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends paid out of earnings or retained
earnings or dividends payable in Preferred Shares) or of subscription rights or
warrants (other than those referred to above). The number of outstanding Rights
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 Common Shares or a stock dividend on the Common Shares payable in Common
Shares or subdivisions, consolidations or combinations of the Common Shares
occurring, in any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be entitled
to a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions. Because of the nature of the
Preferred Shares' dividend, voting and liquidation rights, the value of the one
one-hundredth interest in a Preferred Share purchasable upon exercise of each
Right should approximate the value of one Common Share.
In the event that (i) any person becomes an Acquiring Person
(unless the event causing such person to become an Acquiring Person is a
Section 13 Event (as hereinafter defined) or an acquisition of the Company's
voting stock pursuant to a tender or exchange offer approved by the Board with
the concurrence of a majority of the Continuing Directors)
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or (ii) the Company's Board of Directors determines that a person who is the
beneficial owner of at least 10% of the Common Shares is an "Adverse Person"
(because such person intends to cause the repurchase of such Common Shares or is
causing other adverse impacts on the Company), proper provision shall be made so
that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person or Adverse Person or certain affiliates or associates of such
person or certain transferees of any of the foregoing (which will thereafter be
void), will, after the Rights are no longer redeemable, have the right to
receive upon exercise that number of Common Shares having a market value of two
times the exercise price of the Rights. In the event that the Company does not
have sufficient Common Shares available for all Rights to be exercised, the
Company will make adequate provision for such shortfall by substituting cash,
assets or other securities for that portion of the Common Shares that would
otherwise have been received upon exercise of the Rights. In lieu of Common
Shares the Company may also, in its discretion, substitute cash, assets or other
securities (including Preferred Shares), reduce the purchase Price thereof, or
any combination of the foregoing, for any such Common Shares.
If, after the public announcement that there is an Acquiring
Person or after the declaration that there is an Adverse Person, the Company is
acquired in a merger or other business combination transaction or 50% or more of
its consolidated assets or earning power is sold (a "Section 13 Event"), proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Rights, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Rights.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Preferred Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of the Threshold Amount
or more of the outstanding Common Shares or the determination by the Board of
Directors that a person is an Adverse Person, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"). The Rights may also be redeemed during the
10-day period (which period may be extended in certain circumstances) following
the public announcement of such acquisition or following such determination by
the Board of Directors by approval of two-thirds of the Continuing Directors,
and in some instances only if the Continuing Directors constitute a majority of
the directors then in office. The redemption of the Rights may be made effective
at such time, on such basis and with such conditions as the Board of Directors
or the Continuing
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Directors, as the case may be, may establish. Immediately upon any redemption of
the Rights, the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended as authorized and
directed by the Board of Directors of the Company without the consent of the
holders of the Rights. However, from and after such time as any person becomes
an Acquiring Person or is determined to be an Adverse Person no such amendment
may adversely affect the interests of the holders of the Rights (other than an
Acquiring Person, Adverse Person or certain affiliates or associates of such
person), except that the Continuing Directors may extend the period during which
the Rights may be redeemed, but in some instances only if the Continuing
Directors constitute a majority of the directors then in office. Prior to such
time as any person becomes an Acquiring Person, the Board of Directors may lower
the threshold for exercisability of the Rights from the Threshold Amount to not
less than the greater of (i) any percentage greater than the largest percentage
of the outstanding Common Shares then known to the Company to be beneficially
owned by any person or group of affiliated or associated persons and (ii) 10%.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
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 Company's Board of Directors. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since the Rights may be redeemed by the Board at the
Redemption Price prior to the time that a person or group has acquired
beneficial ownership of the Threshold Amount or more of the Common Shares or has
been determined to be an Adverse Person or during the 10-day period (which
period may be extended in certain circumstances) following the public
announcement of such acquisition or following such determination by the Board of
Directors.
The Rights Agreement, specifying the terms of the Rights and
including the form of the Certificate of Designation setting forth the terms of
the Preferred Shares is attached hereto as an exhibit and is incorporated herein
by reference. That certain Amendment to Rights Agreement dated as of January 31,
1995, between the Company and the Rights Agent pursuant to which the Threshold
Amount was decreased from 25% to 15% is attached hereto as an exhibit and is
incorporated herein by reference. The foregoing description of the Rights is
qualified in its entirety by reference to such exhibits.
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Item 2. Exhibits.
1. Rights Agreement, dated as of April 23, 1993 between America
Online, Inc. and Security Trust Company, N.A., which includes
the form of Certificate of Designation setting forth the terms
of the Series A Junior Participating Preferred Stock, $.01 par
value, as Exhibit A, the form of Right Certificate as Exhibit
B and the Summary of Rights to Purchase Series A Junior
Participating Preferred Shares as Exhibit C (the "Rights
Agreement"). Pursuant to the Rights Agreement, printed Right
Certificates will not be mailed until as soon as practicable
after the earliest of the tenth day after public announcement
that a person or group has acquired beneficial ownership of
the Threshold Amount (as defined in the Rights Agreement) or
more of the Common Shares, the tenth business day (or such
later date as may be determined by action of the Board of
Directors) after a person commences, or announces its
intention to commence, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership
by a person or group of the Threshold Amount or more of the
Common Shares or the tenth business day after the Board of
Directors of the Company determines that a person is an
Adverse Person.
2. Amendment to Rights Agreement, dated as of January 31, 1995,
between America Online, Inc. and Chemical Bank, N.A., pursuant
to which the Company reduced the Threshold Amount from 25% to
15% (the "Amendment").
3. All exhibits required by Instruction II to Item 2 will be
supplied to the New York Stock Exchange.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: September 9, 1996
AMERICA ONLINE, INC.
By: /s/ Lennert J. Leader
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Lennert J. Leader
Chief Financial Officer
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Exhibit Index
Rights Agreement, dated as of April 23, 1993 between America
Online, Inc. and Security Trust Company, N.A., which includes
the form of Certificate of Designation setting forth the terms
of the Series A Junior Participating Preferred Stock, $.01 par
value, as Exhibit A, the form of Right Certificate as Exhibit
B and the Summary of Rights to Purchase Series A Junior
Participating Preferred Shares as Exhibit C (the "Rights
Agreement"). Pursuant to the Rights Agreement, printed Right
Certificates will not be mailed until as soon as practicable
after the earliest of the tenth day after public announcement
that a person or group has acquired beneficial ownership of
the Threshold Amount (as defined in the Rights Agreement) or
more of the Common Shares, the tenth business day (or such
later date as may be determined by action of the Board of
Directors) after a person commences, or announces its
intention to commence, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership
by a person or group of the Threshold Amount or more of the
Common Shares or the tenth business day after the Board of
Directors of the Company determines that a person is an
Adverse Person.
Amendment to Rights Agreement, dated as of January 31, 1995,
between America Online, Inc. and Chemical Bank, N.A., pursuant
to which the Company reduced the Threshold Amount from 25% to
15% (the "Amendment").
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[CONFORMED COPY]
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AMERICA ONLINE, INC.
and
SECURITY TRUST COMPANY, N.A.,
Rights Agent
Rights Agreement
Dated as of April 23, 1993
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions.............................................................. 1
Section 2. Appointment of Rights Agent...................................................... 5
Section 3. Issue of Right Certificates...................................................... 5
Section 4. Form of Right Certificates....................................................... 8
Section 5. Countersignature and Registration................................................ 9
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.......................... 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.................... 11
Section 8. Cancellation and Destruction of Right Certificates............................... 12
Section 9. Availability of Preferred Shares................................................. 13
Section 10. Preferred Shares Record Date..................................................... 14
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights............... 14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares....................... 26
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............. 27
Section 14. Fractional Rights and Fractional Shares.......................................... 32
Section 15. Rights of Action................................................................. 33
Section 16. Agreement of Right Holders....................................................... 34
Section 17. Right Certificate Holder Not Deemed a Stockholder................................ 34
</TABLE>
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<TABLE>
<S> <C> <C>
Section 18. Concerning the Rights Agent...................................................... 34
Section 19. Merger or Consolidation or Change of Name of Rights Agent........................ 35
Section 20. Duties of Rights Agent........................................................... 36
Section 21. Change of Rights Agent........................................................... 38
Section 22. Issuance of New Right Certificates............................................... 39
Section 23. Redemption....................................................................... 40
Section 24. Notice of Certain Events......................................................... 42
Section 25. Notices.......................................................................... 42
Section 26. Supplements and Amendments....................................................... 43
Section 27. Successors....................................................................... 45
Section 28. Benefits of this Agreement....................................................... 45
Section 29. Severability..................................................................... 45
Section 30. Governing Law.................................................................... 45
Section 31. Counterparts..................................................................... 45
Section 32. Descriptive Headings............................................................. 45
</TABLE>
Exhibit A - Form of Certificate of Designation, Preferences and Rights
of Series A Junior Participating Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
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RIGHTS AGREEMENT
Agreement, dated as of April 23, 1993, between AMERICA ONLINE, INC., a
Delaware corporation (the "Company"), and SECURITY TRUST COMPANY, N.A., a
national banking association (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding at the close of business on
May 3, 1993 (the "Record Date"), each Right representing the right to purchase
one one-hundredth of a Preferred Share (as hereinafter defined), upon the terms
and subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share of the
Company that shall become outstanding between the Record Date and the earliest
of the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 25%, or such higher percentage as
was beneficially owned by any Person, together with all Affiliates and
Associates of such Person, at 9:00 A.M. (Boston local time) on April 23, 1993
(25%, or such higher percentage, as applicable, being the "Threshold Amount"),
or more of the Common Shares of the Company then outstanding, but shall not
include the Company, any Subsidiary (as such term is hereinafter defined) of the
Company, any employee benefit plan of the Company or any Subsidiary of the
Company or any entity holding Common Shares of the Company for or pursuant to
the terms of any such plan. Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" as the result of an acquisition of the Company's
Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person to the Threshold Amount or more of the Common Shares of the Company
then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of the Threshold Amount or more of the Common Shares of the
Company then outstanding by reason of
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share purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of the
Company, then such Person shall be deemed to be an "Acquiring Person".
(b) "Adverse Person" shall mean any Person declared to be an
Adverse Person by the Board upon determination that the criteria set forth in
Section 11(a)(ii)(B) apply to such Person.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "1934
Act"), as in effect on the date of this Agreement.
(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 beneficially owns, directly or indirectly;
(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) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between Persons
engaged in business as underwriters with respect to securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition), or upon the exercise of conversion rights, exchange
rights, rights (other than securities issuable upon the exercise of
Rights (y) at any time prior to the occurrence of any Section 11(a)(ii)
Event or any Section 13 Event or (z) from and after the occurrence of
any Section 11(a)(ii) Event or any Section 13 Event which Rights were
acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a)
or Section 22 hereof or pursuant to Section 11(i) hereof in connection
with any adjustment made with respect thereto), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed 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,
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arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the 1934 Act and (2) is not also then
reportable on Schedule 13D under the 1934 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 of such
other Person) with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between Persons engaged in business
as underwriters with respect to securities acquired through such
Person's participation in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition)
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.
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) "Board" shall mean the Board of Directors of the Company.
(f) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of Virginia are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00
P.M., Vienna, Virginia time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Vienna, Virginia time, on the
next succeeding Business Day.
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(h) "Common Shares" when used with reference to the Company
shall mean the shares of Common Stock, $.01 par value, of the Company. "Common
Shares" when used with reference to any Person which shall be organized in
corporate form, other than the Company, shall mean the capital stock or other
equity security with the greatest voting power, or the equity securities or
other equity interest having power to control or direct the management, of such
Person or, if such Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person and which has
issued any such outstanding capital stock, equity securities or equity interest.
"Common Shares" when used with reference to any Person which shall not be
organized in corporate form shall mean units of beneficial interest which (i)
shall represent the right to participate generally in the profits and losses of
such Person (including, without limitation, any flow-through tax benefits
resulting from an ownership interest in such Person) and which (ii) shall be
entitled to exercise the greatest voting power of such Person or, in the case of
a limited partnership, shall have the power to remove the general partner or
partners.
(i) "Continuing Director" shall mean any director of the
Company (while such Person is a member of the Board) who (i) is not an Acquiring
Person, an Adverse Person or an Affiliate or Associate of such Acquiring Person
or Adverse Person or a representative or nominee of any such Acquiring Person,
Adverse Person or of any such Affiliate or Associate and (ii) either (A) was a
member of the Board on the date hereof or (B) was nominated for election or
whose election to the Board was approved or recommended by a majority of the
Continuing Directors then on the Board.
(j) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(k) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(l) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(m) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value, of the Company having the rights
and preferences set forth in the Form of Certificate of Designation, Preferences
and Rights attached to this Agreement as Exhibit A.
(n) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
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(o) "Section 11 (a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii) hereof.
(p) "Section 13 Event" shall have the meaning set forth in
Section 13(a) hereof.
(q) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(r) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is beneficially owned or otherwise controlled,
directly or indirectly, by such Person.
(s) "Threshold Amount" shall have the meaning set forth in
Section 1(a) hereof.
(t) "Voting Shares" shall have the meaning set forth in
Section 11(a)(ii)(A) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Company's Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable, and any actions that may be taken by the Rights Agent
pursuant to the provisions of this Agreement may be taken by any such co-Rights
Agent.
Section 3. Issue of Right Certificates. (a) Until the earliest of (i)
the tenth day after the Shares Acquisition Date, (ii) the tenth Business Day, or
such specified or unspecified later date as may be determined by action of the
Board (with the concurrence of a majority of the Continuing Directors) prior to
such time as any Person becomes an Acquiring Person), 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 entity holding Common Shares of the Company for or pursuant
to the terms of any such plan) is first published, sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the 1934
Act, if, upon consummation thereof, such Person, together with such Person's
Affiliates and Associates, would be the Beneficial Owner of Common Shares of the
Company aggregating the Threshold Amount or more of the then
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outstanding Common Shares of the Company (irrespective of whether any such
Common Shares are actually purchased pursuant to such offer), or (iii) the tenth
Business Day after the Board determines, pursuant to the criteria set forth in
Section 11(a)(ii)(B) hereof, that a Person is an Adverse Person (or if any such
date is before the Record Date, the Record Date; the earliest of such dates
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced by the certificates for the Company's Common Shares registered in the
names of the holders thereof either with the Summary of Rights (as hereinafter
defined) attached as set forth is Section 3(b) hereof or bearing the legend
referred to in Section 3(c) hereof (which certificates shall also be deemed to
be Right Certificates) and not by separate Right Certificates, and (y) the right
to receive Right Certificates will be transferable only in connection with the
transfer of the underlying Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, insured, postage-prepaid mail, to each
record holder of the Company's 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 Right Certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right for each Common Share so held,
subject to adjustment and to the provisions of Section 14(a) hereof. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Series A Junior
Participating Preferred Shares, in substantially the form of Exhibit C hereto
(the "Summary of Rights"), by first-class, postage-prepaid mail, to each record
holder of the Company's 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. With
respect to certificates for the Company's Common Shares outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with a copy
of the Summary of Rights attached thereto. Until the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
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<PAGE> 10
(c) Rights shall be issued in respect of all Common Shares of
the Company which shall become outstanding after the Record Date but prior to
the earliest of the Close of Business on the Distribution Date, the Redemption
Date or the Final Expiration Date and, to the extent provided hereby, in respect
of any Common Shares of the Company issued after the Distribution Date and prior
to the Redemption Date or the Final Expiration Date. Certificates for Common
Shares of the Company which become outstanding (including,without limitation,
reacquired Common Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
America Online, Inc. and Security Trust Company, N.A., dated
as of April 23, 1993, as the same shall be amended, modified
or supplemented from time to time (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 America Online, 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. America Online, Inc. will mail
to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. As described in the Rights Agreement, any Rights
that are or were acquired or beneficially owned by any
Acquiring Person or Adverse Person, or any Associate or
Affiliate of such Acquiring Person or Adverse Person (as such
terms are defined in the Rights Agreement), or any transferee
of any of the foregoing, shall be void. The Rights shall not
be exercisable, and shall be void so long as held, by a holder
in any jurisdiction where the requisite qualification to the
issuance to such holder or the exercise by such holder, of the
Rights in such jurisdiction shall not have been obtained or be
obtainable.
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With respect to such certificates containing the foregoing legend, until the
earliest to occur of the Distribution Date, the Redemption Date or the Final
Expiration Date, the Rights associated with the Company's 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 of the Company's Common
Shares after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed cancelled and retired so that
the Company shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. (a) The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as 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 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein, as the same may be adjusted from time to time
as provided herein (the "Purchase Price").
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by (i) any Acquiring Person or
Adverse Person (or any Associate or Affiliate of such Acquiring Person or
Adverse Person), (ii) a transferee of an Acquiring Person or Adverse Person (or
any Associate or Affiliate of such Acquiring Person or Adverse Person) who
becomes a transferee after the Acquiring Person or Adverse Person becomes such,
or (iii) a transferee of any Acquiring Person or Adverse Person (or of any
Associate or Affiliate of such Acquiring Person or Adverse Person) who becomes a
transferee prior to or concurrently with the Acquiring Person or the Adverse
Person becoming such and who receives such Rights pursuant to either (1) a
transfer (whether or not for consideration) from the Acquiring Person or Adverse
Person to holders of equity interests in such Person or to any Person with whom
the Acquiring Person or Adverse Person has any continuing oral or written plan,
agreement, arrangement or understanding
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<PAGE> 12
regarding the transferred Rights or (2) a transfer which the Board (with the
concurrence of a majority of the Continuing Directors) has determined is part of
an oral or written plan, agreement, arrangement or understanding which has as a
primary purpose of effect the avoidance of the provisions of Section 11(a)(ii),
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 (modified to apply to an Acquiring Person or an Adverse
Person, as applicable):
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an
[Acquiring] [Adverse] Person or an Affiliate or Associate of
an [Acquiring] [Adverse] Person as such terms are defined in
the Rights Agreement. Accordingly, under certain circumstances
as provided in the Rights Agreement, this Right Certificate
and the Rights represented hereby may become null and void as
provided in Section 11(a)(ii) of the Rights Agreement.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman, its President or any
of its Executive Vice Presidents, either manually or by facsimile signature,
shall have affixed thereto the Company's seal or a facsimile thereof, and shall
be attested by the Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its office designated for such purposes,
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<PAGE> 13
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one-hundredths of a Preferred Share (or other securities, cash or assets, as the
case may be) as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent designated for such
purposes. Neither the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered Right
Certificate or Right Certificates until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate or Right Certificates and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliate or Associate thereof as the Company may
reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b),
Section 11(a)(ii) and Section 14 hereof, countersign and deliver to the person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a valid
Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all
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<PAGE> 14
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein including, without
limitation the restrictions on exercisability set forth in Section 9(c), Section
11(a)(ii) and Section 23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purposes, together
with payment of the Purchase Price for each one one-hundredth of a Preferred
Share as to which the Rights are exercised, at or prior to the earliest of (i)
the Close of Business on May 3, 2003 (such date, or such earlier date pursuant
to which the Rights may expire pursuant to Section 13(d) hereof, being the
"Final Expiration Date") or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date").
(b) The initial Purchase Price pursuant to the exercise of a
Right shall be $150, 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 Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares to
be purchased and the Company hereby irrevocably authorizes such transfer agent
to comply with all such requests, or (B) requisition from any depositary agent
depositary 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 such depositary agent) and the Company hereby directs such depositary
agent to comply with such
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<PAGE> 15
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 depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt, deliver such cash to or
upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this 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 Right 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.
(f) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding rights
in accordance with this Section 7.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right
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<PAGE> 16
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares. (a) The Company covenants
and agrees that it will take all such action as may be necessary to ensure that
all Preferred Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Preferred Shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
(b) The Company covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event or a Section 13 Event in which the consideration to be delivered
by the Company upon exercise of the Rights has been determined in accordance
with this Agreement, 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 "1933 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 1933 Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities or (B)
the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the
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<PAGE> 17
Rights. The Company may, acting by resolution of its Board (which resolution
shall be effective only with the concurrence of a majority of the Continuing
Directors), temporarily suspend, for a period of time not to exceed 90 days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the expense thereof shall not be
permitted under applicable law or a registration statement shall not have been
declared effective.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares 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 or pay a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide or split the outstanding Preferred
Shares into a
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<PAGE> 18
greater number of shares, (C) combine or consolidate the outstanding Preferred
Shares into a smaller number of Preferred Shares or effect a reverse split of
the outstanding Preferred Shares or (D) issue any shares of its capital stock in
a reclassification of the Preferred Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of Preferred Shares or shares of
capital stock issuable on such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate number and kind
of Preferred Shares or shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred Shares
transfer books of the Company were open, 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.
(ii) In the event (a "Section 11(a)(ii) Event") that (A) any
Person shall become an Acquiring Person, unless the event causing such Person to
become an Acquiring Person is a Section 13 Event or is an acquisition of shares
of the Company's stock having general voting power ("Voting Shares") pursuant to
a tender or exchange offer for all outstanding Voting Shares at prices and on
terms determined by the Board (with the concurrence of a majority of the
Continuing Directors), after receiving advice from one or more investment
banking firms, to be (1) prices which are fair to stockholders (taking into
account all factors which the Board deems relevant, including, without
limitation, prices which could reasonably be achieved if the Company or its
assets were to be sold on an orderly basis designed to realize maximum value)
and (2) otherwise in the best interests of the Company and its stockholders, or
(B) the Board shall declare any Person to be an Adverse Person upon a
determination that such Person, alone or together with its Affiliates and
Associates is the Beneficial Owner of an amount of the Company's Common Shares
which the Board determines to be substantial (which amount shall in no event be
less than 10% of the Common Shares then outstanding) and a determination by at
least a majority of the members of the Board who are not officers of the
Company, after reasonable inquiry and investigation, which may include a review
of the public record
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<PAGE> 19
regarding such Person and any information the Board may request from such Person
and consultation with such persons as such directors shall deem appropriate,
that (1) such Beneficial Ownership by such Person is intended to cause the
Company to repurchase the Common Shares beneficially owned by such Person or to
cause pressure on the Company to take action or enter into a transaction or
series of transactions intended to provide such Person with short-term financial
gain under circumstances where such members of the Board determine that the best
long-term interests of the Company and its stockholders would not be served by
taking such action or entering into such transaction or series of transactions
at that time or (2) such Beneficial Ownership by such Person is causing or is
reasonably likely to cause a material adverse impact (including, but not limited
to, impairment of relationships with customers or impairment of the Company's
ability to maintain its competitive position) on the business or prospects of
the Company, then, upon the occurrence of the first Section 11(a)(ii) Event,
each holder of a Right (except as otherwise provided in the following paragraph
of this Section 11(a)(ii)) shall, after (x) the occurrence of the Distribution
Date and (y) the Rights are no longer redeemable in accordance with Section 23
hereof, have a right to receive, upon exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to the
occurrence of the first Section 11(a)(ii) Event, in accordance with the terms of
this Agreement and in lieu of Preferred Shares, such number of Common Shares of
the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to the occurrence of the
first Section 11(a)(ii) Event, and dividing the product obtained thereby (which,
following such first occurrence, shall thereafter be the "Purchase Price" for
each Right and for all purposes of this Agreement) by (y) 50% of the then
current per share market price of the Company's Common Shares (determined
pursuant to Section 11(d) hereof) on the date of the occurrence of the first
Section 11(a)(ii) Event. In the event that any Person shall become an Acquiring
Person or shall be determined by the Board to be an Adverse Person and the
Rights shall then be outstanding, the Company shall not take any action which
would eliminate or diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of a Section 11(a)(ii) Event,
any Rights beneficially owned by (i) any Acquiring Person or Adverse Person (or
any Associate or Affiliate of such Acquiring Person or Adverse Person), (ii) a
transferee of an Acquiring Person or Adverse Person (or any Associate or
Affiliate of such Acquiring Person or Adverse Person) who
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<PAGE> 20
becomes a transferee after the Acquiring Person or Adverse Person becomes such,
or (iii) a transferee of any Acquiring Person or Adverse Person (or of any
Associate or Affiliate of such Acquiring Person or Adverse Person) who becomes a
transferee prior to or concurrently with the Acquiring Person or the Adverse
Person becoming such and who receives such Rights pursuant to either (1) a
transfer (whether or not for consideration) from the Acquiring Person or Adverse
Person to holders of equity interests in such Person or to any Person with whom
the Acquiring Person or Adverse Person has any continuing oral or written plan,
agreement, arrangement or understanding regarding the transferred Rights or (2)
a transfer which the Board (with the concurrence of a majority of the Continuing
Directors) has determined is part of an oral or written plan, agreement,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 11(a)(ii), shall become null and void without any
further action and no holder of such Rights shall thereafter have any right to
exercise such Rights under any provision of this Agreement or otherwise;
provided that the Rights held by an Acquiring Person or Adverse Person (or any
Associate or Affiliate of such Acquiring Person or Adverse Person) or the
transferees of such Persons referred to above shall not be voided unless the
Acquiring Person or Adverse Person in question (or any Associate or Affiliate of
such Acquiring Person or Adverse Person) shall be involved in the transaction
giving rise to such Section 11(a)(ii) Event. The Company shall use all
reasonable efforts to insure that the provisions of Section 4(b) and this
Section 11(a)(ii) are complied with, but shall have no liability to any holder
of a Right Certificate or other Person as a result of its failure to make a
determination with respect to any Acquiring Person or Adverse Person (or any
Associate or Affiliate of such Acquiring Person or Adverse Person) or the
transferees of any such Persons. The Company shall give written notice to the
Rights Agent promptly after it becomes aware of the existence and identity of an
Acquiring Person or Adverse Person (or any Associate or Affiliate of such
Acquiring Person or Adverse Person), or a transferee of any of the foregoing,
and the Rights Agent shall be entitled to rely exclusively on such notice in
performing its duties hereunder. The Rights Agent shall be under no obligation
to ascertain the identity of any Acquiring Person or Adverse Person (or any
Associate or Affiliate of such Acquiring Person or Adverse Person), or any
transferee of any of the foregoing, but in performing its duties hereunder, the
Rights Agent shall examine the certificate contained in the form of assignment
on the reverse side of each Rights Certificate to determine whether or not, and
in what manner, any requested action is permitted or prohibited by the terms
hereof and, in the absence of bad faith on the part of the Rights Agent, the
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<PAGE> 21
Rights Agent may conclusively rely upon the information contained in such
certificate.
(iii) In lieu of issuing its Common Shares in accordance with
Section 11(a)(ii) hereof, the Company, acting by resolution of its Board (which
resolution shall be effective only with the concurrence of a majority of the
Continuing Directors), may, and, in the event that the number of Common Shares
that are authorized by the Company's Restated Certificate of Incorporation but
not outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof, the Company, acting by resolution of
its Board (which resolution shall be effective only with the concurrence of a
majority of the Continuing Directors), shall (A) determine the excess of (1) the
value of the Company's Common Shares issuable upon the exercise of a Right (the
"Current Value"), over (2) the Purchase Price attributable to each Right (such
excess being defined as the "Spread") and (B) with respect to each Right
(subject to Section 11(a)(ii) hereof), make adequate provision to substitute for
the Common 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 Preferred Shares), (4) debt securities of the Company, (5) other
assets of the Company or (6) any combination of the foregoing which, when added
to any Common Shares upon such exercise, have an aggregate value equal to the
Current Value, where such aggregate value has been determined by action of the
Board (with the concurrence of a majority of the Continuing Directors) based
upon the advice of a nationally recognized investment banking firm selected by
the Board; provided that if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within 30 days following the later
of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the first date
that the right to redeem the Rights pursuant to Section 23 hereof, as such date
may be amended pursuant to Section 26 hereof, shall expire (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, Preferred Shares and
Common Shares of the Company (to the extent available) and then, if necessary,
cash, which shares or cash have an aggregate value equal to the Spread. If,
after the first occurrence of a Section 11(a)(ii) Event, the number of Common
Shares that are authorized by the Company's Restated Certificate of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights is not sufficient to permit exercise in full of
the Rights in accordance with Section 11(a)(ii) hereof and the Company, acting
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<PAGE> 22
by resolution of its Board (which resolution shall be effective only with the
concurrence of a majority of the Continuing Directors), shall determine in good
faith that it is likely that sufficient additional Common Shares of the Company
could be authorized for issuance upon exercise in full of the Rights, the 30 day
period set forth above may be extended to the extent necessary, but not more
than 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 Common
Shares (such period as it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action is to be taken pursuant to
the terms of this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 11(a)(ii) 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 such stockholder
approval for the authorization of additional Common Shares or to decide the
appropriate form of distribution to be made pursuant to the first sentence of
this Section 11(a)(iii) and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of each one one-hundredth of a Preferred
Share shall be the current per share market price (as defined in Section 11(d))
of one one-hundredth of a Preferred Share on the date of the first occurrence of
the Section 11(a)(ii) Trigger Date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
current per share market price of the Preferred Shares on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
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 so to be offered (and/or the aggregate initial
conversion price of the
19
<PAGE> 23
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 to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board (with the concurrence of a majority of the
Continuing Directors), whose determination shall be described in a statement
filed with the Rights Agent and shall be final and binding on the Company, 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 fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value, as determined in good faith by the
Board (with the concurrence of a majority of the Continuing Directors), whose
determination shall be described in a statement filed with the Rights Agent and
shall be final and binding on the Company, the Rights Agent and the holders of
the Rights, of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
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<PAGE> 24
aggregate par value of the shares of capital stock of the Company to be issued
upon exercise of one Right. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder (other
than the computations made pursuant to Section 11(a)(iii) hereof), the "current
per share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date, and for
the purposes of computations made pursuant to Section 11(a)(iii) hereof, the
"current per share market price" of any Security on any date shall be deemed to
be the average of the daily closing prices per share of such Security for the 10
consecutive Trading Days immediately prior to such date; provided 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 (A)
a dividend or distribution on such Security payable in shares of such Security
or securities convertible into such shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of 30 Trading Days or 10 Trading Days, as set forth above, 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
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is not quoted by any
such
21
<PAGE> 25
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
(with the concurrence of a majority of the Continuing Directors). The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, 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 of the Company as determined pursuant to Section
11(d)(i) (appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by one hundred.
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 (with the concurrence of a
majority of the Continuing Directors), whose determination shall be described in
a statement filed with the Rights Agent and shall be final and binding on the
Company, the Rights Agent and the holders of the Rights.
(e) Except as hereinafter provided, no adjustment in the
Purchase Price shall be required unless such adjustments would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-millionth of a Preferred Share or one
ten-thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the Final Expiration Date or the Redemption Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the Purchase Price and the number of
such other shares so receivable upon exercise of any Right shall be subject
22
<PAGE> 26
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares contained in
Sections 11(a), (c), (e), (g), (h), (i), (j), (k), (n) and (q), 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; provided that the Company
shall not be liable for its inability to reserve and keep available for issuance
upon exercise of the Rights pursuant to Section 11(a)(ii) a number of Common
Shares greater than the number then authorized by the Company's Restated
Certificate of Incorporation but not outstanding or reserved for any other
purpose.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the Right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-hundredths of a share covered by a Right immediately prior to 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
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a
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<PAGE> 27
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall use its best efforts to take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Preferred Shares at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or
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<PAGE> 28
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, in the event of any reclassification of stock of the Company,
any recapitalization, reorganization or partial liquidation of the company, any
consolidation or subdivision of the Preferred Shares, issuance wholly for cash
of any Preferred Shares at less than the current market price, issuance wholly
for cash of Preferred Shares or securities which by their terms are convertible
into or exchangeable for Preferred Shares, dividends on Preferred Shares payable
in Preferred Shares or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), 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 the Company in its sole
discretion shall determine to be necessary or appropriate in order for the
holders of the Rights in such event to be treated equitably and in accordance
with the purpose and intent of this Agreement or, subject to the preceding
provisions of this Section 11(m), in order that any such event shall not, in the
opinion of counsel for the Company, result in the stockholders of the Company
being subject to any United States federal income tax liability by reason
thereof.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in an action which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in an action 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 or any
of its Subsidiaries in one or more actions each of which complied with Section
11(o) hereof) if (x) at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of the Person who constitutes, or would constitute, the
Principal Party for purposes of
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<PAGE> 29
Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as otherwise provided herein or permitted
by Section 23 or Section 26 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (ii) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected. If an event occurs which would require an adjustment under Section
11(a)(ii) and this Section 11(p), the adjustments provided for in this Section
11(p) shall be in addition to and prior to any adjustment required pursuant to
Section 11(a)(ii).
(q) The failure by the Board to declare a Person to be an
Adverse Person at any time while such Person is the Beneficial Owner in the
aggregate of 10% or more of the Company's Common Shares shall not imply that
such Person is not an Adverse Person or restrict in any way the Board's right at
any time in the future to declare such Person to be an Adverse Person.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare
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<PAGE> 30
a certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent and with each
transfer agent for the Common Shares or the Preferred Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate (or, if prior to the Distribution Date, each holder of a Common
Share of the Company) in accordance with Section 24 hereof. Notwithstanding the
foregoing sentence, the failure of the Company to prepare such certificate or
statement or make such filings or mailings shall not affect the validity of, or
the force or effect of, the requirement for such adjustment. The Rights Agent
may rely on such certificate and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event (a "Section 13 Event") that, directly or
indirectly, at any time on or after the Distribution Date:
(x) the Company shall consolidate or otherwise combine with,
or merge with or into, any other Person or Persons (other than a
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) and the Company shall not be the surviving or continuing
corporation of such consolidation, combination or merger;
(y) any Person or Persons (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof)
shall consolidate or otherwise combine with, or merge with or into, the
Company and the Company shall be the continuing or surviving
corporation of such consolidation, combination or merger and, in
connection therewith all or part of the Company's Common Shares shall
be changed into or exchanged for stock or other securities of any other
Person or of the Company or cash or any other property; or
(z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole and calculated on the
basis of the Company's most recent regularly prepared financial
statements) to any other Person or Persons (other than the Company or
any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o)
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<PAGE> 31
hereof); provided that this clause (z) shall not apply to the pro rata
distribution by the Company of assets (including securities) of the
Company or any of its Subsidiaries to all holders of the Company's
Common Shares;
then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right (except as provided in
Section 11(a)(ii) hereof) shall, on or after the later of (A)
the date of the first occurrence of any such Section 13 Event
or (B) the date of the expiration of the period within which
the Rights may be redeemed pursuant to Section 23 hereof (as
the same may be amended as provided in Section 26 hereof),
have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of
this Agreement, such number of validly authorized and issued,
fully paid, nonassessable and freely tradable shares of Common
Shares of the Principal Party (as defined in Section 13(b)
hereof), not subject to any liens, encumbrances, rights of
call, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event shall have
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 (which following
the first occurrence of a Section 13 Event, shall be referred
to as the "Purchase Price" for each Right and for all purposes
of this Agreement) by 50% of the current per share market
price of the Common Shares of such Principal Party on the date
of consummation of such Section 13 Event;
(ii) the Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this
Agreement;
(iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being
28
<PAGE> 32
specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first
occurrence of a Section 13 Event;
(iv) the Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of its Common Shares) in connection with
such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section
13 Event;
provided that, upon the subsequent occurrence of any merger, consolidation, sale
of all or substantially all assets, recapitalization, reclassification of
shares, reorganization or other extraordinary transaction analogous to any of
the events described in Section 11 hereof in respect of such Principal Party,
each holder of a Right shall thereupon be entitled to receive, upon exercise of
a Right and payment of the Purchase Price, such cash, shares, rights, warrants
and other property which such holder would have been entitled to receive had
such holder, at the time of such transaction, owned the number of Common Shares
of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of a number of its Common Shares) as may be necessary (in a manner
analogous to the applicable adjustments provided for in Section 11 hereof) to
permit the subsequent exercise of the Rights in accordance with the terms hereof
for such cash, shares, rights warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
clause (y) of the first sentence of Section 13(a) hereof, (A) the
Person that is the issuer of the securities into which the Company's
Common Shares are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer the Common Shares of
which have the greatest aggregate market value or (B) if no securities
are so issued, the Person that is the other party to the consolidation
or is the other party to the merger and survives said merger (or, if
there is more than one such Person, the Person whose Common Shares have
the
29
<PAGE> 33
greatest aggregate market value) or, if the Person that is the other
party to the merger does not survive the merger, the Person that does
survive the merger (including the Company if it survives); and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power so transferred or if the
Person receiving the greatest portion of the assets or earning power
cannot be determined, whichever of such Persons as is the issuer of
Common Shares having the greatest aggregate market value.
provided that in any such case, (1) if the Common Shares of such Person are not
at such time and have not been continuously over the preceding 12-month period
registered under Section 12 of the 1934 Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Shares of which are and have
been so registered, "Principal Party" shall refer to such other Person; (2) if
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest aggregate market value; and (3) if the Common
Shares of such Person are not and have not been so registered and 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 (1) and (2) 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) The Company shall not consummate any Section 13 Event unless prior
thereto the Principal Party shall have a sufficient number of authorized Common
Shares which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13, and unless
prior thereto the Company and such Principal party shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that the
requirements of Sections 13(a) and (b) hereof shall promptly be performed in
accordance with their terms and that such Section 13 Event shall not result in a
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<PAGE> 34
default by the Principal Party under this Agreement as the same shall have been
assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof and
further providing that, as soon as practicable after the date of any Section 13
Event the Principal Party will:
(i) prepare and file a registration statement under the 1933
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 (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the 1933 Act) until
the Expiration Date and to 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;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 (or any successor form) under the 1934 Act; and
(iv) use its best efforts to obtain waivers of any rights of
first refusal or preemptive rights in respect of the Common Shares of
the Principal Party subject to purchase upon exercise of outstanding
Rights.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers prior to the exercise of the Rights.
In the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter be exercisable in the manner described in
Section 13(a) hereof.
(d) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) hereof if (i) such transaction is consummated with
a Person or Persons (or a wholly owned subsidiary of any such Person or Persons)
who acquired Voting Shares pursuant to a tender offer or exchange offer for all
outstanding Voting Shares which complies with the exception provided for in
Section 11(a)(ii)(A) hereof, (ii) the respective prices per share for each class
of Voting Shares offered in such transaction is not less than the respective
price per share for
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each class of Voting Shares paid to all holders of each such class of Voting
Shares whose shares were purchased pursuant to such tender offer or exchange
offer and (iii) the respective forms of consideration being offered to the
remaining holders of each such class of Voting Shares pursuant to such
transaction is the same as the respective form of consideration paid pursuant to
such tender offer or exchange offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which
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evidence fractional Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred Share may, at
the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For the purposes of this Section
14(b), the current market value of a Preferred Share shall be the closing price
of a Preferred Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Company's Common Shares); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Company's Common Shares), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Shares), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement.
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Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Company's Common
Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent, if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of
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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 claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of, any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust 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 that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. The
purchase of all or substantially all of the Rights Agent's assets employed in
the performance of transfer agent activities shall be deemed a merger or
consolidation for purposes of this Section 19. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement any
of the Right Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
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In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who or
which may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman, the President,
any Executive Vice President, the Treasurer 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
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or
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<PAGE> 40
the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 3, 11,
13 or 23, or the ascertaining of the existence of facts that would require any
such change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a certificate delivered
pursuant to Section 12 hereof, describing such change or adjustment); nor shall
it by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares to be issued pursuant
to this Agreement or any Right Certificate or as to whether any Preferred Shares
or Common Shares or other securities of the Company will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman, the President, any Executive Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this 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 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,
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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.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares of the Company or Preferred
Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail and upon payment to the Rights Agent of all
amounts due it hereunder through and including the date of removal. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the
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Company or by such a court, shall be (i) 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 stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million or (ii) an affiliate of an institution that satisfies the requirements
set forth in clause (i) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares of the Company or Preferred Shares,
and mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be. In addition, in connection with the issuance
or sale of shares of Common Shares of the Company following the Distribution
Date (other than upon exercise of a Right) and prior to the Close of Business on
the Final Expiration Date, the Company (a) shall, with respect to Common Shares
of the Company so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange or securities, notes or debentures issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by the Board (with the
concurrence of a majority of the Continuing Directors), issue Right Certificates
representing the appropriate number of Rights in connection with such issuance
of sale; provided, however, that (i) no such Right Certificate shall be issued
if and to the extent that the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences to
the Company or the Person to whom such Right Certificate would be issued and
(ii) no such Right Certificate shall be issued if and to the extent that
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as
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may be approved by its Board to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Agreement.
Section 23. Redemption. (a) The Rights may be redeemed by
action of the Board pursuant to paragraph (b)(i) of this Section
23 or by the Continuing Directors pursuant to paragraph (b)(ii)
of this Section 23 and shall not be redeemed in any other
manner.
(b) (i) The Board may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person or is determined by the
Board to be an Adverse Person (or, if such date shall have occurred prior to the
Record Date, the Record Date), redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); provided that, on or after the date of a
change (resulting from a proxy or consent solicitation effected in compliance
with applicable law and the requirements of any national securities exchange on
which the Company's Common Shares are listed) 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, the Board has determined in good faith) that such Person (or
any of such Person's Affiliates or Associates) intends to take, or may consider
taking, any action that would result in such Person becoming an Acquiring Person
or which would cause the occurrence of a Section 11(a)(ii) Event or a Section 13
Event unless, concurrent with such solicitation such Person is making a cash
tender offer pursuant to a Schedule 14D- 1 (or any successor form) filed with
the Securities and Exchange Commission for all outstanding Voting Shares not
beneficially owned by such Person (or by such Person's Affiliates or
Associates), the Board may act only with the concurrence of the Continuing
Directors and only if the Continuing Directors constitute a majority of the
directors then in office in authorizing redemption of the Rights. The redemption
of the Rights by the Board may be made effective at such time, on such basis and
with such conditions as the Board in its sole discretion may establish.
(ii) The Continuing Directors then in office may at any time
during the period commencing on the Shares Acquisition Date and terminating at
the Close of Business on the tenth day following the Shares Acquisition Date
(which period
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<PAGE> 44
may be extended pursuant to Section 26), at their option, upon the affirmative
vote or written consent of not less than two-thirds of such Continuing Directors
redeem all (but not less than all) of the then outstanding Rights at the
Redemption Price; provided that, on or after the date of a change (resulting
from a proxy or consent solicitation effected in compliance with applicable law
and the requirements of any national securities exchange on which the Company's
Common Shares are listed) 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, the
Board has determined in good faith) that such Person (or any of such Person's
Affiliates or Associates) intends to take, or may consider taking, any action
that would result in such Person becoming an Acquiring Person or which would
cause the occurrence of a Section 11(a)(ii) Event or a Section 13 Event unless,
concurrent with such solicitation such Person is making a cash tender offer
pursuant to a Schedule 14D-1 (or any successor form) filed with the Securities
and Exchange Commission for all outstanding Voting Shares not beneficially owned
by such Person (or by such Person's Affiliates or Associates), the Continuing
Directors may act only if the Continuing Directors constitute a majority of the
directors then in office in authorizing redemption of the Rights. The redemption
of the Rights by the Continuing Directors may be made effective at such time, on
such basis and with such conditions as the Continuing Directors in their sole
discretion may establish.
(c) Immediately upon the action of the Board or the Continuing
Directors, as the case may be, ordering the redemption of the Rights pursuant to
paragraph (b) of this Section 23, and without any further action and without any
notice, the right to exercise the Rights shall terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after such action ordering the
redemption of the Rights pursuant to paragraph (b) the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares; provided that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. 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
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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 as
specifically set forth in this Section 23, and other than in connection with the
purchase of Common Shares prior to the Distribution Date.
Section 24. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular periodic cash dividend), (ii) to offer to
the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, 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 or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person 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 Right, in accordance with Section 25
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or 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 Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event or Section 13 Event
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right, in accordance with Section 25 hereof, a notice of the
occurrence of such Section 11(a)(ii) Event or Section 13 Event, which notice
shall describe such event and the consequences of such event to holders of
Rights under Section 11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the
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holder of any Right Certificate to or on the Company shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
America Online, Inc.
8619 Westwood Center Drive
Vienna, Virginia 22182
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Security Trust Company, N.A.
2 North Charles Street
Baltimore, Maryland 21201
Attention: James Clark
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company.
Section 26. Supplements and Amendments. Subject to the last sentence of
this Section 26, the Company, as authorized and directed by the Board, may from
time to time supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or to make any other provisions with respect
to the Rights which the Board may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by the Company and,
if the Company so directs, the Rights Agent; provided that, from and after such
time as any Person becomes an Acquiring Person or is determined by the Board to
be an Adverse Person, this Agreement shall not be amended in any manner which
would adversely affect the interests of the holders of Rights (other than an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person) except as set forth in the following sentence. After such time as any
Person becomes an Acquiring Person or is determined by the Board to be an
Adverse Person and while the Rights remain redeemable pursuant to Section
23(b)(ii) hereof, the Continuing Directors, acting by the vote of two-thirds of
the Continuing Directors then in office and subject to the last
43
<PAGE> 47
sentence of this Section 26, may extend the period during which the Rights may
be redeemed pursuant to Section 23(b)(ii) hereof; provided that, on or after the
date of a change (resulting from a proxy or consent solicitation effected in
compliance with applicable law and the requirements of any national securities
exchange on which the Company's Common Shares are listed) 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, the Board has determined in good faith) that such Person
(or any of such Person's Affiliates or Associates) intends to take, or may
consider taking, any action that would result in such Person becoming an
Acquiring Person or which would cause the occurrence of a Section 11(a)(ii)
Event or a Section 13 Event unless, concurrent with such solicitation such
Person is making a cash tender offer pursuant to a Schedule 14D-1 (or any
successor form) filed with the Securities and Exchange Commission for all
outstanding Voting Shares not beneficially owned by such Person (or by such
Person's Affiliates or Associates), the Continuing Directors may supplement or
amend this Agreement only if the Continuing Directors constitute a majority of
the directors then in office. Without limiting the foregoing, the Company, as
authorized and directed by the Board, may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement to lower the thresholds
set forth in Sections 1(a) and 3(a)(ii) hereof from the Threshold Amount to not
less than the greater of (i) any percentage greater than the largest percentage
of the outstanding Common Shares of the Company then known by the Company to be
beneficially owned by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the terms of any
such plan) and (ii) 10%.
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 26, the Rights Agent shall execute such
supplement or amendment, shall be under no obligation to investigate such
compliance, and shall be fully protected hereunder by so doing. Nothing herein
shall require the Rights Agent to execute any supplement or amendment that
adversely affects the rights and protections of the Rights Agent hereunder.
Notwithstanding anything contained in this Agreement to the contrary,
no supplement or amendment shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number of one one-hundredths of
a Preferred Share for which a Right is exercisable.
44
<PAGE> 48
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefits of their respective successors and assigns hereunder.
Section 28. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Company's Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Company's Common Shares).
Section 29. 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.
Section 30. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 31. 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 32. 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.
45
<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
AMERICA ONLINE, INC.
Attest:
By: /s/ Lennert J. Leader By: /s/ Stephen M. Case
---------------------------------- -------------------------
Title: Secretary Title: President
Attest: SECURITY TRUST COMPANY, N.A.
By: /s/ Dorothy T. Laskey By: /s/ James M. Clark
---------------------------------- -------------------------
Title: Assistant Secretary Title: Assistant Vice
President
46
<PAGE> 50
EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
AMERICA ONLINE, INC.
------------------------------------------------
America Online, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"),
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors of
this Corporation (the "Board of Directors") by the Restated Certificate of
Incorporation of this Corporation, and pursuant to the provisions of Section 151
of Title 8 of the Delaware Code, the Board of Directors, at a meeting of its
members held on April 22, 1993, adopted a resolution providing for the
designations, preferences and relative, participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of two hundred
thousand (200,000) shares of the Corporation's Preferred Stock, par value one
cent ($.01) per share, which resolution is as follows:
<PAGE> 51
RESOLVED: That pursuant to the authority granted to and vested
in the Board of Directors of this Corporation in
accordance with the provisions of the Restated
Certificate of Incorporation, the Board of Directors
hereby designates a series of Preferred Stock, par
value $.01 per share, and hereby fixes the designation
and number of shares, and the relative rights,
preferences, and limitations thereof (in addition to
any provisions set forth in the Restated Certificate
of Incorporation which are applicable to preferred
stock of all classes and series) as follows:
Series A Junior Participating Preferred Stock. The preferences, privileges and
restrictions granted to or imposed on the Corporation's Series A Junior
Participating Preferred Stock, par value $.01 per share, or the holders thereof,
are as follows:
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 two hundred thousand (200,000). 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 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 Common Stock, $.01 par value (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, quarterly dividends payable in cash
on the first day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1 or (b) subject to the provision for
adjustment
A-2
<PAGE> 52
hereinafter set forth, 100 times the aggregate per share amount of all
cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. 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 to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $1 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
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 Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which
A-3
<PAGE> 53
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A 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 holder thereof
to 100 votes on all matters submitted to a vote of the stockholders 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, in any other Certificate
of Designation creating a series of Preferred Stock or any similar
stock, 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 stockholders of the
Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
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
A-4
<PAGE> 54
with holders of Common Stock as set forth herein) for taking
any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A 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
distributions, 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
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A 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
A-5
<PAGE> 55
faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A 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
subject to the conditions and restrictions on issuance set forth herein, in the
Restated Certificate of Incorporation, or in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) 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 $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of 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 distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the 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
A-6
<PAGE> 56
Preferred Stock were entitled immediately prior to such event under the proviso
in 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.
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 each share 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 at any time declares or pays any dividend on the
Common Stock payable in shares of Common Stock, or effects 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 junior with
respect to the payment of dividends and the distribution of assets to all other
series of the Corporation's Preferred Stock.
Section 10. Amendment. The Restated Certificate 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 two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
A-7
<PAGE> 57
IN WITNESS WHEREOF, America Online, Inc. has caused this certificate to
be executed by its President and attested by its Secretary this 22nd day of
April, 1993.
________________________________
President
Attest:
_________________________________
Secretary
A-8
<PAGE> 58
Exhibit B
Form of Right Certificate
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER MAY 3, 2003 OR EARLIER IF REDEMPTION
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IN THE EVENT
THAT THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE
ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON, AN ADVERSE
PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON OR
ADVERSE PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR CERTAIN
TRANSFEREES OF ANY OF THE FOREGOING, THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID. THE RIGHTS SHALL NOT BE
EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN
ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE
ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF
THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED
OR BE OBTAINABLE.
** [THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN /ACQUIRING/ /ADVERSE/ PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN /ACQUIRING/ /ADVERSE/ PERSON AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT.
ACCORDINGLY, UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN
THE RIGHTS AGREEMENT, THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID AS
PROVIDED IN SECTION 11(a)(ii) OF THE RIGHTS AGREEMENT.]
Right Certificate
AMERICA ONLINE, INC.
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of
________________
** Include and modify bracketed language, as applicable. If included,
delete second sentence of legend.
B-1
<PAGE> 59
Exhibit B
April 23, 1993 (the "Rights Agreement"), between America Online, Inc., a
Delaware corporation (the "Company"), and Security Trust Company, 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 5:00 p.m., Vienna, Virginia time, on May 3, 2003 (or earlier
expiration or redemption of the Rights) at the office of the Rights Agent
designated for such purposes, or at the office of its successor as Rights Agent,
one one-hundredth of a fully paid nonassessable share of Series A Junior
Participating Preferred Stock, $.01 par value (the "Preferred Shares"), of the
Company, at a purchase price of $150 per one one-hundredth of a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one one-hundredths
of a Preferred Share which may be purchased upon exercise hereof) and the
Purchase Price set forth above, are the number and Purchase Price as of May 3,
1993 based on the Preferred Shares as constituted at such date. As provided in
the Rights Agreement, the Purchase Price and the number of one one-hundredths of
a Preferred Share which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events, including Section 11(a)(ii) Events and
Section 13 Events (as defined in the Rights Agreement).
This Right 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 Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
B-2
<PAGE> 60
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at a redemption price of $.01
per Right.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-3
<PAGE> 61
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of __________________, 19 __.
ATTEST: AMERICA ONLINE, INC.
___________________________ By:___________________________________
Secretary President
Countersigned:
___________________________
By:________________________
Authorized Signature
B-4
<PAGE> 62
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED________________________________________________
hereby sells, assigns and transfers unto __________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________________, 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., or a commercial bank or trust company having an office or correspondent in
the United States that is a guarantor institution meeting the requirements of
the Rights Agent's signature guarantee procedures.
_______________________________________________________________________________
___________________________________
Signature
B-5
<PAGE> 63
Form of Reverse Side of Right Certificate -- continued
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person, an Adverse Person or
an Affiliate or Associate of any such Acquiring Person or
Adverse Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidence by this Right
Certificate from any Person who is, was or subsequently became
an Acquiring Person, an Adverse Person or an Affiliate or
Associate of any such Acquiring Person or Adverse Person.
Dated: __________________, 19__ ____________________________________________
Signature
Signature Guarantee:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States that is a guarantor institution meeting the requirements of
the Rights Agent's signature guarantee procedures.
_______________________________________________________________________________
____________________________________________-
Signature
B-6
<PAGE> 64
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires
to exercise the Right Certificate.)
To: AMERICA ONLINE, INC.
The undersigned hereby irrevocably elects to exercise _________________
___________________________ Rights represented by this Right Certificate to
purchase the Preferred Shares issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares be issued in the name of:
Please 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 Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: _______________________, 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., or a commercial bank or trust company having an office or correspondent in
the United States that is a guarantor institution meeting the requirements of
the Rights Agent's signature guarantee procedures.
B-7
<PAGE> 65
Form of Reverse Side of Right Certificate -- continued
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an
Acquiring Person, an Adverse Person or an Affiliate or Associate
of any such Acquiring Person or Adverse Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidence by this Right
Certificate from any Person who is, was or subsequently became
an Acquiring Person, an Adverse Person or an Affiliate or
Associate of any such Acquiring Person or Adverse Person.
Dated: __________________, 19__ ______________________________________
Signature
Signature Guarantee:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States that is a guarantor institution meeting the requirements of
the Rights Agent's signature guarantee procedures.
_______________________________________________________________________________
______________________________________
Signature
B-8
<PAGE> 66
Form of Reverse Side of Right Certificate -- continued
NOTICE
The signature in the foregoing Forms of Assignment and Election to
Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person, an
Adverse Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be honored and,
in the case of an assignment, will affix a legend to that effect on any Right
Certificate issued in exchange for this Right Certificate.
B-9
<PAGE> 67
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE SERIES A JUNIOR
PARTICIPATING PREFERRED SHARES
On April 23, 1993, the Board of Directors of America Online, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of common stock, $.01 par value (the "Common
Shares"), of the Company. The dividend is payable to stockholders of record on
May 3, 1993 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, $.01 par value (the "Preferred Shares"), of the
Company at a price of $150 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement dated as of April 23, 1993 (the
"Rights Agreement") between the Company and Security Trust Company, N.A., as
Rights Agent. Capitalized terms not otherwise defined herein have the meanings
assigned to such terms in the Rights Agreement.
Until the earliest to occur of (the earliest of such dates being called
the "Distribution Date"):
(i) 10 days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has
acquired beneficial ownership of 25%, or such higher percentage as was
beneficially owned by any person at 9:00 A.M. (Boston local time) on
April 23, 1993 (25%, or such higher percentage, as applicable, being
the "Threshold Amount"), or more of the outstanding Common Shares,
(ii) 10 business days (or such later specified or unspecified date
as may be determined by action of the Board of Directors with the
concurrence of a majority of the Continuing Directors, prior to such
time as any Person becomes an Acquiring Person) after the date that a
tender or exchange offer by any person is first published, sent or
given within the meaning of Rule 14d-2(a) under the Securities Exchange
Act of 1934, as amended if, upon consummation thereof, such Person
(together with such person's Affiliates and Associates) would be the
beneficial owner of the Threshold Amount or more of such outstanding
Common Shares (irrespective of whether or not any Common Shares are
actually purchased pursuant to such offer), or
(iii) 10 business days after the Board of Directors of the Company
determines that a person is an "Adverse Person" as described below,
the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such
<PAGE> 68
Common Share certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 3, 2003 (the "Final Expiration Date"), unless the Rights are
earlier redeemed by the Company, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, split, reverse split, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to holders of the
Preferred Shares of certain rights or warrants to subscribe for or purchase
Preferred Shares at a price, or securities convertible into Preferred Shares
with a conversion price, less than the then current market price of the
Preferred Shares or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends payable in
Preferred Shares) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights 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 Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
C-2
<PAGE> 69
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that (i) any person becomes an Acquiring Person (unless
the event causing such person to become an Acquiring Person is a Section 13
Event (as hereinafter defined) or an acquisition of the Company's voting stock
pursuant to a tender or exchange offer approved by the Board with the
concurrence of a majority of the Continuing Directors) or (ii) the Company's
Board of Directors determines that a person who is the beneficial owner of at
least 10% of the Common Shares is an "Adverse Person" (because such person
intends to cause the repurchase of such Common Shares or is causing other
adverse impacts on the Company), proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
or Adverse Person or certain affiliates or associates of such persons or certain
transferees of any of the foregoing (which will thereafter be void), will, after
the Rights are no longer redeemable, have the right to receive upon exercise
that number of Common Shares having a market value of two times the exercise
price of the Right. In the event that the Company does not have sufficient
Common Shares available for all Rights to be exercised, the Company will make
adequate provision for such shortfall by substituting cash, assets or other
securities (including Preferred Shares), reducing the purchase price thereof, or
any combination of the foregoing. In lieu of Common Shares the Company may also,
in its discretion, substitute cash, assets or other securities (including
Preferred Shares), reduce the purchase price thereof, or any combination of the
foregoing, for any such Common Shares.
If, after the public announcement that there is an Acquiring Person or
after the determination that there is an Adverse Person, the Company is acquired
in a merger or other business combination transaction or 50% or more of its
consolidated assets
C-3
<PAGE> 70
or earning power is sold (a "Section 13 Event"), proper provision will be made
so that each holder of a Right will thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of the Threshold Amount or more of
the outstanding Common Shares or the determination by the Board of Directors
that a person is an Adverse Person, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The Rights may also be redeemed during the 10-day period
(which period may be extended in certain circumstances) following the public
announcement of such acquisition or following such determination by the Board of
Directors by approval of two-thirds of the Continuing Directors (as defined in
the Rights Agreement), and in some instances only if the Continuing Directors
constitute a majority of the directors then in office. The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors or the Continuing Directors, as the case
may be, may establish. Immediately upon any redemption of the Rights, the right
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended as authorized and directed by
the Board of Directors of the Company without the consent of the holders of the
Rights. However, from and after such time as any person becomes an Acquiring
Person or is determined to be an Adverse Person, no such amendment may adversely
affect the interests of the holders of the Rights (other than an Acquiring
Person, Adverse Person or certain affiliates or associates of such person),
except that the Continuing Directors may extend the period during which the
Rights may be redeemed, but in some instances only if the Continuing Directors
constitute a majority of the directors then in office. Prior to such time as any
person becomes an Acquiring Person, the Board of Directors may lower the
threshold for
C-4
<PAGE> 71
exerciseability of the Rights from the Threshold Amount to not less than the
greater of (i) any percentage greater than the largest percentage of the
outstanding Common Shares then known to the Company to be beneficially owned by
any person or group of affiliated or associated persons and (ii) 10%.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission (the "SEC") as an Exhibit to a Registration Statement on
Form 8-A filed with the SEC on May 3, 1993. 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.
C-5
<PAGE> 1
AMENDMENT TO RIGHTS AGREEMENT
This AMENDMENT, dated as of January 31, 1995, between AMERICA ONLINE,
INC., a Delaware corporation (the "Company"), and CHEMICAL BANK, N.A., a
national banking association (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have entered into that
certain Rights Agreement, dated as of April 23, 1993, as amended (the "Rights
Agreement");
WHEREAS, the Board of Directors of the Company has authorized and
directed the Company to execute and deliver this Amendment to the Rights
Agreement; and
WHEREAS, the Company and the Rights Agent are authorized to execute and
deliver this Amendment pursuant to the provisions of Section 26 of the Rights
Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. Amendment to Rights Agreement. The definition of "Acquiring
Person" as set forth in Section 1(a) of the Rights Agreement is amended by
deleting the first sentence thereof and substituting in lieu thereof the
following:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
15% (the "Threshold Amount") or more of the Common Shares of the
Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company
or any entity holding Common Shares of the Company for or pursuant to
the terms of any such plan.
Section 2. Rights Agent. In accordance with the provisions of Section
26 of the Rights Agreement, upon the delivery of a certificate from an
appropriate officer of the Company that states that this Amendment is in
compliance with the terms of Section 26 of the Rights Agreement, the Rights
Agent shall execute this Amendment, shall be under no obligation to investigate
such compliance, and shall be fully protected hereunder and thereunder by so
doing.
<PAGE> 2
Section 3. Effect of Amendment. The parties hereby ratify and confirm
all of the provisions of the Rights Agreement, as amended hereby, and agree and
acknowledge that the Rights Agreement as so amended remains in full force and
effect.
Section 4. Governing Law. This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
Section 5. Counterparts. This Amendment 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.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and attested, all as of the day and year first above written.
AMERICA ONLINE, INC.
Attest:
By: /s/ Ellen M. Kirsh By: /s/ Stephen M. Case
------------------------ ------------------------
Title: Secretary Title: President
Attest: CHEMICAL BANK, N.A.
By: /s/ (name illegible) By: /s/ (name illegible)
------------------------ ------------------------
Title: Assistant V.P. Title: Vice President
