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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 12 (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
RAILAMERICA
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 65-0328006
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(State of Incorporation (I.R.S. Employer
or Organization) Identification no.)
301 YAMATO ROAD, SUITE 1190, BOCA RATON, FL 33431
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(Address of Principal Executive Offices) (Zip Code)
If this form relates to the If this form relates to the
registration of a class of securities registration of a class of securities
pursuant to Section 12(b) of the pursuant to Section 12(g) of the
Exchange Act and is effective Exchange Act and is effective
pursuant to General Instruction pursuant to General Instruction
A.(c), please check the following A.(d), please check the following
box. [ ] box. [X]
Securities Act registration statement file number to which this form
relates: N/A
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(If applicable)
Securities to be registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK PURCHASE RIGHTS
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(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On January 6, 1998, the Board of Directors (the "Board") of
RailAmerica, Inc., a Delaware corporation (the "Company"), authorized and
approved a dividend distribution of one Right (each "Right" and collectively the
"Rights") for each outstanding share of common stock, $.001 par value per share
(the "Common Stock"), of the Company to stockholders of record at the close of
business on January 20, 1998. Each Right initially entitles the registered
holder to purchase from the Company one share of Common Stock at a price of
$36.00 per share (the "Purchase Price"), subject to certain adjustments. The
Purchase Price shall be paid in cash. The description and terms of the Rights
are set forth in the Common Stock Purchase Rights Agreement (the "Rights
Agreement") between the Company and American Stock Transfer & Trust Company, as
Rights Agent. The material terms of the Rights Agreement are summarized below.
Initially, the Rights will be represented by the Common Stock
certificates representing shares then outstanding, and no separate Rights
certificates will be distributed. The Rights will separate from the Common Stock
and a distribution of the Rights certificates will occur upon the earlier of (i)
ten business days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock, (ii) ten business days following a public
announcement that a person or group of affiliated or associated persons has (x)
become the direct or indirect beneficial owner of at least 10% of the Company's
outstanding Common Stock, and (y) whose ownership interest is deemed by the
Board to cause a material adverse impact on the business or prospects of the
Company or its stockholders (such persons or group hereinafter called an
"Adverse Person"), or (iii) ten business days following the commencement of a
tender offer or exchange offer that would result in a person or group becoming
an Acquiring Person or an Adverse Person. Until the date that the Rights
certificates are distributed (the "Distribution Date"), (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after the date that the Rights Plan is adopted will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding also will constitute
the transfer of the Rights associated with the Common Stock represented by such
certificates.
The Rights are not exercisable until the Distribution Date and will
expire ten years after the adoption of the Rights Agreement, unless earlier
redeemed by the Company as described below.
Upon a triggering event and as soon as practicable after the
Distribution Date, Rights certificates will be mailed to holders of record of
the Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights certificates alone will represent the Rights.
Except as otherwise determined by the Board, only shares of Common Stock issued
prior to the Distribution Date will be issued with Rights.
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In the event a person or group of affiliated or associated persons
becomes an Acquiring Person or an Adverse Person (except pursuant to an offer
for all outstanding shares of Common Stock that is determined by the Board to be
fair to and otherwise in the best interest of the Company and its stockholders,
a "Qualifying Tender Offer"), each Right then outstanding would "flip-in" and
become a right to buy that number of shares of Common Stock of the Company which
at the time of such acquisition would have a market value of two times the
exercise price of the Right. The acquiror who triggered the Rights would be
excluded from the "flip-in" because his Rights would have become null and void
upon his triggering acquisition.
In the event that the "flip-in" is triggered, if there is not
sufficient authorized Common Stock available for issuance upon the exercise of
each Right or if the Board so elects, the Board may: (i) seek stockholder
approval to increase the number of authorized shares of Common Stock or (ii)
designate as issuable upon exercise of the Rights such amount of Common Stock,
cash, other equity or debt securities, assets and/or other consideration as
would be equal to the value that would have been received if each Right had
received only Common Stock upon exercise.
If, following a person or group of affiliated or associated persons
becoming an Acquiring Person or an Adverse Person, (i) the Company shall
consolidate with or merge into any other person or entity in which the Company
is not the surviving corporation, (ii) any other person or entity shall merge
into the Company and all or part of the outstanding Common Stock shall be
changed into or exchanged for securities of any other person or entity, or cash
or any other property, or (iii) the Company sells 50% or more of its assets or
earning power, each Right then outstanding would "flip-over" and thereby would
become a right to buy that number of shares of common stock of the acquiring
company which at the time of such transaction has a market value of two times
the exercise price of the Right.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person or an Adverse Person and before the acquisition by
such person or group of 50% or more of the outstanding Common Stock of the
Company, the Board may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, for Common Stock
at an exchange ratio of 1.0 share of the Company's Common Stock per Right,
subject to adjustment.
At any time until ten days (subject to extension) by the Company
following the public announcement that a person or group of affiliated or
associated persons has become an Acquiring Person or an Adverse Person, the
Company may redeem the Rights at a price of $.001 per Right, payable in cash.
For as long as the Rights are then redeemable, the Company may extend the period
during which it may redeem the Rights. Under certain circumstances set forth in
the Rights Agreement, the decision to redeem or to extend the period during
which the Rights are redeemable shall require the concurrence of at least two
thirds of the members of the Board and a majority of the Independent Directors
(as hereinafter defined). After the redemption period has expired, the Company's
rights of redemption may be reinstated if the Acquiring Person or Adverse Person
reduces his or her beneficial ownership to less than 10% of the outstanding
shares of
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Common Stock in a transaction or series of transactions not involving the
Company. Immediately upon the action of the Board ordering redemption of the
Rights, with, where required, the concurrence of at least two thirds of the
members of the Board and a majority of the Independent Directors, the Rights
will terminate and the only right which the holders of Rights will thereafter
have will be to receive the $.001 redemption price.
The term "Independent Directors" means any member of the Board who is
not an Acquiring Person or Adverse Person, is not an employer or officer of the
Company or an employee, officer or director of any Acquiring Person or Adverse
Person, and is not a relative or spouse of (i) an Acquiring Person or Adverse
Person, (ii) any officer or other person employed in a management position with
the Company or with any Acquiring Person or Adverse Person, or (iii) any
director of any Acquiring Person or Adverse Person.
The Purchase Price payable, and the number of shares of Common Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Stock, (ii) if
holders of the Common Stock are granted certain rights or warrants to subscribe
for Common Stock or convertible securities at less than the current market price
of the Common Stock, or (iii) upon the distribution to holders of the Common
Stock of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Common Stock will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
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 implementation of the Rights Agreement will not interfere with the
day-to-day operations of the Company. The Rights Agreement provides that the
Company may not enter into any transaction of the sort enumerated in the
"flip-in/flip-over" provisions if, in connection therewith, there are
outstanding securities or there are agreements or arrangements intended to
counteract the protective provisions of the Rights. For example, the Company may
not merge with an acquiring corporation if the acquiring corporation has granted
its shareholders rights to purchase its Common Stock at less than fair market
value upon the triggering of flip-over rights in one of its acquisition targets.
Any of the provisions of the Rights Agreement may be amended by the Board as
long as the Rights are then redeemable. When the Rights are not redeemable, the
provisions of the Rights Agreement may be amended by the Board only in order to
cure any ambiguity, to correct or supplement any provision which may be
inconsistent with any other provision or make changes which do not affect
adversely the interests of holders of Rights; PROVIDED, HOWEVER, that no
amendment may change the redemption price or the expiration date of the Rights,
and amendments after a person or group of affiliated or associated persons
becomes an Acquiring Person or an Adverse Person (other than pursuant to a
Qualifying Tender Offer)
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may be made only if approved by a majority of the Independent Directors and at
least two thirds of the Board.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to this Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Rights Agent.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
ITEM 2. EXHIBITS.
4.1 Form of Common Stock Purchase Rights Agreement, dated as of
January 6, 1998, between the Company and American Stock
Transfer & Trust Company.
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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, thereto duly authorized.
January 7, 1998 RAILAMERICA, INC.
By: /s/ Donald D. Redfearn
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Donald D. Redfearn, Executive
Vice President
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Exhibit 4.1
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RAILAMERICA, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
1998 COMMON STOCK PURCHASE RIGHTS AGREEMENT
DATED AS OF JANUARY 6, 1998
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Section 1. Certain Definitions..................................................................1
Section 2. Appointment of Rights Agent..........................................................4
Section 3. Issuance of Rights Certificates......................................................4
Section 4. Form of Rights Certificates..........................................................6
Section 5. Countersignature and Registration....................................................7
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights
Certificates.........................................................................7
Section 7. Exercise of Rights: Purchase Price: Expiration Date of Rights........................8
Section 8. Cancellation and Destruction of Rights Certificates.................................10
Section 9. Reservation and Availability of Capital Stock.......................................10
Section 10. Common Stock Record Date............................................................11
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights; Exchange of Rights for Shares of Common
Stock...............................................................................11
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..........................19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................20
Section 14. Fractional Rights and Fractional Shares.............................................22
Section 15. Rights of Action....................................................................23
Section 16. Agreement of Rights Holders.........................................................23
Section 17. Rights Certificate Holder Not Deemed a Shareholder..................................24
Section 18. Concerning the Rights Agent.........................................................24
Section 19. Merger or Consolidation or Change of Name of Rights Agent...........................24
Section 20. Duties of Rights Agent..............................................................25
Section 21. Change of Rights Agent..............................................................26
Section 22. Issuance of New Rights Certificates.................................................27
</TABLE>
(i)
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<TABLE>
<S> <C>
Section 23. Redemption and Termination..........................................................27
Section 24. Notice of Certain Events............................................................28
Section 25. Notices.............................................................................29
Section 26. Supplements and Amendments..........................................................30
Section 27. Successors..........................................................................30
Section 28. Determinations and Actions by the Board of Directors, etc...........................31
Section 29. Benefits of this Agreement..........................................................31
Section 30. Severability........................................................................31
Section 31. Governing Law.......................................................................32
Section 32. Consent to Jurisdiction; Service of Process.........................................32
Section 33. Counterparts........................................................................32
Section 34. Descriptive Headings................................................................32
</TABLE>
(ii)
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RIGHTS AGREEMENT
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RIGHTS AGREEMENT, dated as of January 6, 1998 (the "Agreement"),
between RailAmerica, Inc., a Delaware corporation (the "Company"), and American
Stock Transfer & Trust Company (the "Rights Agent").
RECITALS
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WHEREAS, on January 6, 1998 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right (each, a "Right" and collectively the "Rights") for
each share of common stock, $.001 par value, of the Company (the "Common Stock")
outstanding at the close of business on January 20, 1998 (the "Record Date") and
has authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock issued between the Record Date and the Distribution Date; and
WHEREAS, each Right shall initially represent the right to purchase one
share of Common Stock upon the terms and subject to the conditions hereinafter
set forth;
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock
then outstanding. Notwithstanding the foregoing, the term "Acquiring Person"
shall not include (i) the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan, or (ii) any Person who or which, together with all
Affiliates and Associates of such Person, would be an Acquiring Person solely by
reason of a reduction in the number of issued and outstanding shares of Common
Stock of the Company pursuant to a transaction or a series of related
transactions approved by a majority of the Independent Directors, if any, then
in office and approved by a Supermajority Vote; provided, further, however, that
in the event that such Person described in the foregoing clause (ii) does not
become an Acquiring Person by reason of the foregoing clause (ii), such Person
shall nonetheless become an Acquiring Person in the event such Person thereafter
acquires Beneficial Ownership of an additional 1% of the Common Stock of the
Company, unless such additional Common Stock ownership results solely from a
subsequent reduction in the number of issued and outstanding shares of Common
Stock of the Company.
(b) "Act" shall mean the Securities Act of 1933, as amended.
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(c) "Adverse Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person shall become the
direct or indirect Beneficial Owner of ten percent (10%) or more of the
outstanding shares of Common Stock and is deemed by a majority of the members of
the Board of Directors of the Company to be a Person whose ownership interest
would cause a material adverse impact on the business or prospects of the
Company or its shareholders.
(d) "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 "Exchange
Act").
(e) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or (C)
securities issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 hereof (the "Original Rights") or pursuant to Section
11(i) hereof in connection with an adjustment made with respect to any Original
Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," any security under this subparagraph (ii)
as a result of an agreement, arrangement or understanding to vote such security
if such agreement, arrangement or understanding: (A) arises solely from a
revocable proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the General
Rules and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Persons Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in proviso (A) to subparagraph (ii) of this Section 1(e)) or disposing
of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this
Section 1(e) shall cause a
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person engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
person's participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
Notwithstanding anything in this Section 1(e) to the contrary, a Person
engaged in the business of underwriting securities shall not be deemed a
"Beneficial Owner" of, or to "beneficially own", any securities acquired in good
faith in a firm commitment underwriting until the expiration of 40 days after
the date of such acquisition.
(f) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(g) "Close of business" on any given date shall mean 5:00
P.M., New York time, on such date; PROVIDED, HOWEVER, that if such date if not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding day
which is a Business Day.
(h) "Common Stock" shall mean the common stock, $.001 par
value, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(i) "Current market price" shall have the meaning set forth in
Section 11(d) hereof.
(j) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(k) "Exchange Act" shall have the meaning set forth in Section
1(d) hereof.
(l) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(m) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(n) "Independent Director" means any member of the Company's
Board of Directors, while such person is a member of the Board, who (i) is not
an Acquiring Person or Adverse Person, (ii) is not an employee or officer of the
Company or an employee, officer or director of any Acquiring Person or Adverse
Person, and (iii) is not a relative or spouse of (1) an Acquiring Person or
Adverse Person, (2) any officer or other person employed in a management
position with the Company or with any Acquiring Person or Adverse Person or (3)
any director of any Acquiring Person or Adverse Person.
(o) "Person" shall mean any individual, firm or corporation,
partnership or other entity.
(p) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
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(q) "Purchase Price" shall have the meaning set forth in
Section 4(a) and 7(b) hereof.
(r) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(s) "Rights" shall have the meaning set forth in the recitals
at the beginning of this Agreement.
(t) "Rights Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(u) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) hereof.
(v) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(w) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include, a
report filed pursuant to the Exchange Act) by the Company, an Acquiring Person
or an Adverse Party that an Acquiring Person and/or an Adverse Party has become
such.
(x) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(y) "Supermajority Vote" shall mean the affirmative vote of
directors of the Company constituting not less than two thirds of the number of
members of the Company's Board of Directors then in office.
(z) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(aa) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
SECTION 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of business on the
Record Date), or (ii) the close of business on the tenth business day (or such
later date as may be approved by a majority of the Independent Directors, if
any, then in office and approved by a Supermajority Vote prior to such time as
any Person becomes an
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Acquiring Person or an Adverse Party) after the date that a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act, if upon consummation thereof, such Person would be an
Acquiring Person or an Adverse Party (the earlier of (i) or (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more rights
certificates, in substantially the form attached hereto as EXHIBIT A (the
"Rights Certificates"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of the Rights Certificates,
the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as EXHIBIT B (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for the Common Stock outstanding as
of the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates for the Common Stock and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date, the transfer of any
certificates representing shares of Common Stock in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated with
such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such shares
of Common Stock issued after the date hereof and prior to the earlier of the
Distribution Date or the Expiration Date shall also be deemed to be certificates
for Rights, and shall bear the following legend:
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"This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between
RailAmerica, Inc. (the "Company") and American Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent"), dated as of January 6,
1998 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. The Rights Agent will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after the receipt of a written request
therefor. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR
BECOMES AN ACQUIRING PERSON, AN ADVERSE PARTY OR ANY AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID."
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
in substantially the form attached hereto as EXHIBIT A and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of shares of Common Stock as shall be set forth therein
at the price per share set forth therein (such exercise price per share being
hereinafter referred to as the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person, an Adverse Person or any Associate or Affiliate thereof, (ii) a
transferee of an Acquiring Person or an Adverse Person (or of any such Associate
or Affiliate) who becomes a transferee after the Acquiring Person or Adverse
Person becomes such or (iii) a transferee of an Acquiring Person or an Adverse
Person (or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person or the Adverse Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or the Adverse Person to holders of
equity interests in such Acquiring Person or Adverse Person or to any Person
with whom such Acquiring Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or adjustment of
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<PAGE> 10
any other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person,
an Adverse Person or an Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement between RailAmerica, Inc. and
American Stock Transfer & Trust Company, as Rights Agent (the "Rights
Agreement"). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances
specified in Section 7(e) of the Rights Agreement."
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually or by facsimile
signature countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company authorized to
sign such Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the name and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e)
and Section 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the Expiration
Date, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, entitling
the registered holder thereof to purchase a like number of shares of Common
Stock as the Rights Certificate or Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or
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<PAGE> 11
exchanged at the principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c) and Section 23(a) hereof) in whole or
in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the principal office
or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of
shares of Common Stock as to which such surrendered Rights are then exercisable,
at or prior to the earlier of (i) the close of business on January 5, 2008 (the
"Final Expiration Date") or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the earlier of (i) and (ii) being herein referred
to as the "Expiration Date").
(b) The Purchase Price for EACH WHOLE SHARE of Common Stock
pursuant to the exercise of a Right shall initially be $36.00, and shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price for each share of Common Stock to be purchased, as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(j) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Common Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of shares of Common Stock to be
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<PAGE> 12
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests or (B) if the Company shall have elected to
depsosit the total number of shares of Common Stock issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of shares of Common Stock as
are to be purchased (in which case certificates for the shares of Common Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate. The payment of the
Purchase Price shall be made in cash or by certified bank check payable to the
Company.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person, an Adverse Person or an
Associate or Affiliate thereof, (ii) a transferee of an Acquiring Person or an
Adverse Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person or Adverse Person becomes such or (iii) a transferee
of an Acquiring Person or an Adverse Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person or Adverse Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person or the Adverse Person to holders of equity interests in such Acquiring
Person or Adverse Person or to any Person with whom the Acquiring Person or the
Adverse Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person, an Adverse Person or their
respective Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
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<PAGE> 13
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Subject to the Company's rights in Section 11(q) or
elsewhere herein to otherwise fulfill its obligations hereunder, the Company
covenants and agrees that, from and after the Distribution Date, it will cause
to be reserved and kept available out of its authorized and unissued shares of
Common Stock or any treasury shares of Common Stock not reserved for another
purpose the number of shares of Common Stock that, as provided in this
Agreement, will be sufficient to permit the exercise in full of all outstanding
Rights; provided, however, that the Company shall not be required to reserve and
keep available shares of Common Stock or other securities sufficient to permit
the exercise in full of all outstanding Rights pursuant to the adjustments set
forth in Section 11(a)(ii) or Section 13 hereof unless the Rights become
exercisable pursuant to such adjustments.
(b) So long as the shares of Common Stock issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable and as required by law following the Distribution Date, a
registration statement under the Act, with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the date of the expiration of the Rights. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period or periods of
time from time to time, not to exceed ninety (90) days in the aggregate after
the date set forth in clause (i) of the
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<PAGE> 14
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 unless the
requisite qualification in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Common Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for shares of Common Stock upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of
shares of Common Stock in respect of a name other than that of, the registered
holder of the Rights Certificates evidencing Rights surrendered for exercise or
to issue or deliver any certificates for shares of Common Stock in a name other
than that of the registered holder upon the exercise of any Rights until such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
SECTION 10. COMMON STOCK RECORD DATE. Each person in whose name any
certificate for a number of shares of Common Stock (or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such shares of Common Stock
represented thereby on, and such certificates shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable transfer taxes) was made;
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date upon
which the Common Stock 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 Common
Stock transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a shareholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceeding of the Company except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS; EXCHANGE OF RIGHTS FOR SHARES OF COMMON STOCK. The Purchase
Price, the number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
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<PAGE> 15
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, (C) combine
the outstanding Common Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of
shares of 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 shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the stock transfer books of
the Company were open, he would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event that any Person shall, at any time
after the Rights Dividend Declaration Date (as defined in the recitals at the
beginning of this Agreement), become an Acquiring Person or an Adverse Person,
unless the event causing such Person to become an Acquiring Person or an Adverse
Person is an acquisition of shares of Common Stock pursuant to a cash tender
offer for all outstanding shares of Common Stock at a price and on terms
approved by a majority of the Independent Directors, if any, then in office and
approved by a Supermajority Vote, after receiving advice from one or more
investment banking firms, to be (a) at a price which is fair to the
Corporation's stockholders (taking into account all factors which such members
of the Board deem relevant including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value) and (b) otherwise in the best interests
of the Company and its stockholders (a "Qualifying Tender Offer"), then, subject
to Section 23(a) and except as otherwise provided in this Section 11, each
holder of a Right (except as provided in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof, the number of shares of Common
Stock as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the number of shares of Common Stock for which a Right was
exercisable immediately prior to the first occurrence of the Section 11(a)(ii)
Event and (y) dividing that product by 50% of the current market price (as
determined pursuant to Section 11(d) hereof) per share of the Common Stock on
the date of the occurrence of such Section 11(a)(ii) Event.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five (45)
calendar days after such record date) Common Stock (or shares having the same
rights, privileges and preference as the shares of Common Stock ("equivalent
common stock")) or securities convertible into Common Stock or equivalent common
stock at a price per share of Common Stock or per share of equivalent common
stock (or having a conversion price per share, if a security convertible into
Common Stock or equivalent
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<PAGE> 16
common stock) less than the current market price as determined pursuant to
Section 11(d) hereof) per share of Common Stock on such record date, the
Purchase Price to be in effect after such record date, shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding on such record date, plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
and/or equivalent common stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Common Stock outstanding on such record date, plus the number of
additional shares of Common Stock and/or equivalent common stock to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
by delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Shares of Common Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Common Stock, but including
any dividend payable in stock other than Common Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Common Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to a share of Common Stock and the denominator of which
shall be such current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the "current
market price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; PROVIDED, HOWEVER, that in the event that the
current market price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or
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<PAGE> 17
distribution of such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of the requisite thirty (30) Trading Day period
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the "current market price" shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or such other system then in use, or, if on any such
date the shares of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is making a market
in the Common Stock, the fair value of such shares on such date as determined in
good faith by the Board of Directors of the Company shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
is open for the transaction of business or, if the shares or Common Stock are
not listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so listed or
traded, "current market price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes of this Agreement.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Purchase
Price; PROVIDED, HOWEVER, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-thousandth of a share of
Common Stock or other share as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares or fraction of a share of capital
stock other than Common Stock, thereafter the number or fraction of such other
shares so receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Common
Stock contained in
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<PAGE> 18
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Common
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest one-thousandth) obtained by
(i) multiplying (x) the number of shares covered by a Right immediately prior to
this adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Common Stock issuable upon the exercise of the
Rights, the Rights
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<PAGE> 19
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated or par value, if any, of the
number of shares of Common Stock issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
such number of fully paid and nonassessable shares of Common Stock at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of shares of Common Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the number of
shares of Common Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Board of Directors of the Company
shall determine in good faith to be advisable in order that any (i)
consolidation or subdivision of the Common Stock, (ii) issuance wholly for cash
of any shares of Common Stock at less than the current market price, (iii)
issuance wholly for cash of shares of Common Stock or securities which by their
terms are convertible into or exchangeable for shares of Common Stock, (iv)
stock dividends, or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Common Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof) or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a)
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<PAGE> 20
hereof shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 26
hereof or otherwise specifically permitted by this Agreement, take (or permit
any Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i) declare
a dividend on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator which
shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately following the
occurrence of such event.
(q) In lieu of issuing shares of Common Stock in accordance
with Section 11(a)(ii) hereof, the Board of Directors may, if the number of
shares of Common Stock which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights is not sufficient to permit the exercise in
full of the Rights in accordance with Section 11(a)(ii) hereof, the Board of
Directors shall, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, (A) determine the
value of the shares of Common Stock (the "Adjustment Shares") issuable upon the
exercise of a Right immediately after the adjustments provided for in Section
11(a)(ii) (the "Current Value"), and (B) with respect to each Right (other than
Rights which have become void pursuant to the provisions hereof), make adequate
provision to substitute for any or all such Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) other equity securities of the
Company (including, without limitation, shares, or units of shares, of preferred
stock which are deemed in good faith by the Board of Directors to have
substantially the same value as shares of Common Stock (such shares or units of
shares of preferred stock are herein called "Common Stock equivalents")), (3)
debt securities of the Company, (4) other assets, (5) a reduction of the
Purchase Price, or (6) any combination of the foregoing having a value which,
when added to the value of the shares of Common Stock actually issued upon
exercise of such Right, shall have an aggregate value equal to the Current
Value, where such aggregate value has been determined in good faith by the Board
of Directors based upon the advice of a nationally recognized independent
investment banking firm selected in good faith by the Board of Directors;
provided that if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the date
(the "Section 11(a)(ii) Trigger Date") which is the later of (x) the first
occurrence of a Section 11(a)(ii)
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<PAGE> 21
Event and (y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires, then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if necessary,
cash, which shares and cash have an aggregate value equal to the excess of (x)
the Current Value over (y) the Purchase Price for the number of shares (or
fraction of a share) of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event. If, upon
the occurrence of a Section 11(a)(ii) Event, the number of shares of Common
Stock that are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof, and if the Board of Directors shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of the
Rights, then, if the Board of Directors so elects, the thirty (30) day period
set forth above may be extended to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of such additional
shares (such thirty (30) day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the Company determines that some
action must be taken pursuant to the first or second sentence of this Section
11(q), the Company (x) shall provide, subject to Section 7(e) hereof and the
last sentence of this Section 11(q), that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such times as the
suspension is no longer in effect. For purposes of this Section 11(q), the value
of the Common Stock shall be the current market price per share of the Common
Stock on the Section 11(a)(ii) Trigger Date and the per share or per unit value
of any "Common Stock equivalent" shall be deemed to equal the current market
price per share of the Common Stock on such date. The Board of Directors may,
but shall not be required to, establish procedures to allocate the right to
receive Common Stock upon the exercise of the Rights among holders of Rights
pursuant to this Section 11(q).
(r) (i) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person or an Adverse
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for Common Stock at an exchange ratio of one (1.0) share
of Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
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<PAGE> 22
(ii) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (i) of this Section 11(r) and without any further action and without
any notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; PROVIDED, HOWEVER, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.
(iii) In the event that there shall not be sufficient
shares of Common Stock available for issuance to permit any exchange of Rights
as contemplated in accordance with this Section 11(r), the Company shall either
take such action as may be necessary to authorize additional shares of Common
Stock for issuance upon exchange of the Rights or alternatively, at the option
of a majority of the Board of Directors, in lieu of issuing Common Stock in
exchange for each such Right, (x) pay cash in an amount equal to the Current
Value (as hereinafter defined), (y) issue debt or equity securities or a
combination thereof, having a value equal to the Current Value, where the value
of such securities shall be determined by the Board of Directors in good faith
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors, or (z) deliver any combination of cash,
property, Common Stock and/or other securities having a value equal to the
Current Value. For purposes of this paragraph (iii) only, the term "Current
Value" shall mean the product of the current market price per share of Common
Stock (determined pursuant to Section 11(d) as of the Stock Acquisition Date)
multiplied by the number of shares of Common Stock for which the Right otherwise
would be exchangeable if there were sufficient shares available. To the extent
that the Company determines that some action need be taken pursuant to clauses
(x), (y) or (z) of this paragraph (iii), the Board of Directors may temporarily
suspend the exercisability of the Rights for a period of up to ninety (90) days
following the Stock Acquisition Date, in order to seek any authorization of
additional shares of Common Stock and/or to decide the appropriate form of
distribution to be made pursuant to this paragraph (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.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with the transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if prior to the Distribution Date,
to each holder of a certificate representing shares of Common Stock) in
accordance with Section 25 hereof.
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<PAGE> 23
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer)
in one transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case, proper
provisions shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof, in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, nonassessable and freely tradeable
shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of shares of Common
Stock for which a Right is exercisable immediately prior to the first occurrence
of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of shares for
which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to
such first occurrence), and dividing that product (which product, following the
first occurrence of a Section 13 Event, shall be the aggregate "Purchase Price"
for all the securities that may be purchased pursuant to the Right upon the
adjustment pursuant to this clause (i) and for all purposes of this Agreement)
by (2) 50% of the current market price (determined pursuant to Section 11(d)(i)
hereof) per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any Section 13 Event.
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<PAGE> 24
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), the Person that is the issuer
of any securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date of
any consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a registration statement under the
Act, with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares of Common
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<PAGE> 25
Stock pursuant to a cash tender offer for all outstanding shares of Common stock
which complies with the provisions of Section 11(a)(ii) hereof, (ii) the price
per share of Common Stock offered in such transaction is not less than the price
per share of Common Stock paid to all holders of shares of Common Stock whose
shares were purchased pursuant to such tender offer, and (iii) the form of
consideration being offered to the remaining holders of shares of Common stock
pursuant to such transaction is the same as the form of consideration paid
pursuant to such tender offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Rights Certificates with regard to which such fractional Rights would be
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the Rights for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of
shares of Common Stock upon exercise or exchange of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock the Company may pay to the registered holders
of Rights Certificates at the time such Rights are exercised or exchanged as
herein provided an amount in cash equal to the same fraction of the current
market value of a share of Common Stock. For purposes of this Section 14(b), the
current market value of a share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.
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<PAGE> 26
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise or exchange of a Right, except as permitted by this Section
14.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of the
Rights, the holders of the Rights would not have an adequate remedy at law for
any breach of this Agreement and shall be entitled to specific performance of
the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
acceptance of the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligations.
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<PAGE> 27
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; PROVIDED, HOWEVER, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such
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<PAGE> 28
Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENTS. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel acceptable
to the Company (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "current market price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, the President, any Vice President, the Treasurer 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 only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method or amount
of any such adjustment (except with respect to the exercise of Rights evidenced
by Rights Certificates after actual notice of any such adjustment); nor shall it
by any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any shares of
Common Stock will, when so issued, be validly authorized and issued, fully paid
and nonassessable.
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<PAGE> 29
(e) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(f) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the Secretary 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 to be taken by it in good faith in accordance with
instructions of any such officer.
(g) 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.
(h) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; PROVIDED, HOWEVER, reasonable care was
exercised in the selection and continued employment thereof.
(i) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(j) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon sixty (60) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to the transfer agent of the Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
-26-
<PAGE> 30
Agent. If the Company shall fail to make such appointment within a period of
sixty (60) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of any state of the United States, in good standing, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$5,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property and records at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
PROVIDED, HOWEVER, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of
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<PAGE> 31
business on the tenth day following the Record Date), subject to extension by
the Company pursuant to Section 26 hereof, or (ii) the Final Expiration Date,
redeem all but not less than all of the then outstanding Rights for cash at a
redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); PROVIDED, HOWEVER, if the Board of
Directors of the Company authorizes redemption of the Rights in either of the
circumstances set forth in clauses (i) and (ii) below, then such authorization
must be approved by a majority of the Independent Directors, if any, then in
office and approved by a Supermajority Vote: (i) such authorization occurs on or
after the time a Person becomes an Acquiring Person or an Adverse Person, or
(ii) such authorization occurs on or after the date of a change (resulting from
a proxy or consent solicitation) in a majority of the directors in office at the
commencement of such solicitation if any Person who is a participant in such
solicitation has stated (or, if upon the commencement of such solicitation, a
majority of the Board of Directors of the Company has determined in good faith)
that such person (or any of its Affiliates or Associates) intends to take, or
may consider taking, any action which would result in such Person becoming an
Acquiring Person or an Adverse Person or which would cause the occurrence of a
Triggering Event; PROVIDED further, however, that if, following the occurrence
of a Stock Acquisition Date and following the expiration of the right of
redemption hereunder but prior to any Triggering Event, (i) a Person who is an
Acquiring Person or an Adverse Person shall have transferred or otherwise
disposed of a number of shares of Common Stock in one transaction or a series of
transactions, not directly or indirectly involving the Company or any of its
Subsidiaries, which did not result in the occurrence of a Triggering Event such
that such Person is thereafter a Beneficial Owner of less than 10% of the
outstanding shares of Common Stock, and (ii) there are no other Persons,
immediately following the occurrence of the event described in clause (i), who
are Acquiring Persons or Adverse Persons, then the right of redemption shall be
reinstated and thereafter be subject to the provisions of this Section 23.
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event
until such time as the Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the Board
of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at each holder's
last address as it appears upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the Transfer Agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
SECTION 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Common Stock or to make
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<PAGE> 32
any other distribution to the holders of Common Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company), or
(ii) to offer to the holders of Common Stock rights or warrants to subscribe for
or to purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Common Stock), or (iv) to effect
any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the shares of Common Stock for purposes of such action,
and in the case of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Common Stock whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Common Stock shall be deemed thereafter
to refer, if appropriate, to other securities.
(c) The failure to give notice required by this Section 24 or
any defect therein shall not affect the legality or validity of the action taken
by the Company or the vote on any such action.
SECTION 25. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
RailAmerica, Inc.
301 Yamato Road
Suite 1190
Boca Raton, Florida 33431
Attention: Chairman of the Board
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<PAGE> 33
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: ____________________
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage pre-paid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. For as long as the Rights are
then redeemable and except as provided in the last sentence of this Section 26,
the Company may in its sole and absolute discretion, and the Rights Agent shall
if the Company so directs, supplement or amend any provision of this Agreement
without the approval of any holders of the Rights or the Common Stock. At any
time when the Rights are not then redeemable and except as provided in the last
sentence of this Section 26, the Company may, and the Rights Agent shall if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights Certificates in order (a) to cure any ambiguity, (b) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or (c) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable, provided, that no such supplement or amendment pursuant to clause (c)
above shall materially adversely affect the interests of the holders of Rights
Certificates as such. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this Rights
Agreement to the contrary, no supplement or amendment may be made after the time
that any Person becomes an Acquiring Person or an Adverse Person (other than
pursuant to a Qualifying Tender Offer) unless such supplement or amendment is
approved by a majority of the Independent Directors, if any, then in office and
approved by a Supermajority Vote.
SECTION 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
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<PAGE> 34
SECTION 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, a Supermajority Vote and the approval of
Independent Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein, a
Supermajority Vote and the approval of Independent Directors) or to the Company,
or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board (with, where specifically provided for herein, a Supermajority
Vote and the approval of Independent Directors) in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and (y) not subject the Board or the
Independent Directors to any liability to the holders of the Rights.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Without limiting the foregoing, if any provision requiring that a determination
be made by less than the entire Board (or at a time or with the concurrence of a
group of directors consisting of less than the entire Board) is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the Board in accordance
with applicable law and the Company's Certificate of Incorporation and By-laws.
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<PAGE> 35
SECTION 31. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
SECTION 32. CONSENT TO JURISDICTION; SERVICE OF PROCESS. The Company,
the Rights Agent and the holders of the Rights Certificates hereby irrevocably
submit to the jurisdiction of the state or federal courts located in Dade
County, Florida in connection with any suit, action or other proceeding arising
out of or relating to this Agreement and the transactions contemplated hereby,
and hereby agree not to assert, by way of motion, as a defense, or otherwise in
any such suit, action or proceeding that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or the subject matter hereof may
not be enforced by such courts.
SECTION 33. COUNTERPARTS. This Agreement may be executed in
counterparts and both of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the date first above written.
RAILAMERICA, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
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<PAGE> 37
EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
RAILAMERICA, INC.
Certificate No. R-_____________________ ________________________ Rights
NOT EXERCISABLE AFTER JANUARY 5, 2008 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ADVERSE
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF THE RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN ACQUIRING PERSON, AN ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH AGREEMENT.]1
RIGHTS CERTIFICATE
This certifies that _________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of January 6, 1998 (the "Rights
Agreement"), between RailAmerica, Inc., a Delaware corporation (the "Company"),
and American Stock Transfer & Trust Company (the "Rights Agent"), to purchase
from the Company at any time prior to 5:00 P.M. (New York time) on January 5,
2008 at the office or offices of the Rights Agent designated for such purpose,
or its successors as Rights Agent, one (1) fully paid, non-assessable share of
common stock, par value $.001 per share (the "Common Stock"), of the Company (or
in certain circumstances, cash, property or other securities), at a purchase
price of $36.00 per share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The Purchase Price shall be paid in cash. The
number of Rights evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise thereof) set
- ----------
1 The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
A-1
<PAGE> 38
forth above, and the Purchase Price per share set forth above, are the number
and Purchase Price as of January 6, 1998, based on the Common Stock as
constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person, an Adverse Person
or an Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Adverse Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, an Adverse Person or an Affiliate or Associate thereof, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Common Stock or other capital stock or other securities,
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right at any time prior to the earlier of the close of
business on (i) the tenth day following the Stock Acquisition Date (as such time
period may be extended pursuant to the Rights Agreement), and (ii) the Final
Expiration Date. Under certain circumstances set forth in the Rights Agreement,
the decision to redeem shall require the concurrence of two thirds of the
members of the Board of Directors and a majority of any Independent Directors.
After the expiration of the redemption period, the Company's right of redemption
may be reinstated if an Acquiring Person or an
A-2
<PAGE> 39
Adverse Person reduces his beneficial ownership to less than 10% of the
outstanding shares of Common Stock in a transaction or series of transactions
not involving the Company.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ______________, 19__
ATTEST: RAILAMERICA, INC.
By:
- --------------------------------- ---------------------------------
Secretary Title:
Countersigned:
[ ]
--------------------------
By:
------------------------------
Authorized Signature
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<PAGE> 40
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED __________________________________________ hereby
sells, assigns and transfers unto __________________________________________
____________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together will all right, title and interest therein,
and does hereby irrevocably constitute and appoint
________________________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _____________________, 19__
____________________________________
Signature
Signature Guaranteed:
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<PAGE> 41
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined pursuant
to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is or was or subsequently became an
Acquiring Person, an Adverse Person or an Affiliate or Associate thereof.
Dated: _______________, 19__
____________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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<PAGE> 42
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: RailAmerica, Inc.
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the shares of Common
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
(Please insert social security or other identifying number)
Dated: ______________, 19__
____________________________________
Signature
Signature Guaranteed:
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<PAGE> 43
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person,
an Adverse Person or an Affiliate or Associate thereof (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was or became an Acquiring Person, an
Adverse Person or an Affiliate or Associate thereof.
Dated: _________________, 19__
____________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
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<PAGE> 44
EXHIBIT B
[RAILAMERICA, INC. LETTERHEAD]
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
January __, 1998
To Our Stockholders:
On January 6, 1998, your Board of Directors adopted a common stock
purchase rights plan (the "Rights Plan") and declared a dividend distribution of
one right (a "Right") for each outstanding share of common stock, $.001 par
value (the "Common Stock"), of the Company to stockholders of record at the
close of business on January 20, 1998. Each Right entitles the registered holder
to purchase from the Company one (1) share of Common Stock (or in certain
circumstances, cash, property or other securities) at an initial price of $36.00
per share (the "Purchase Price"), subject to adjustment. This letter describes
the Board's reasons for adopting the Rights Plan and summarizes certain material
terms of the Rights Plan. The Rights Plan was not adopted in response to any
specific effort to acquire control of the Company, and the Board is not aware of
any such effort.
The Rights Plan contains provisions designed to protect stockholders in
the event of an unsolicited attempt to acquire the Company, including a gradual
accumulation of shares in the open market, a partial or two-tier tender offer
that does not treat all stockholders equally, a squeeze-out merger and other
abusive takeover tactics that could impair the Board's ability to represent your
interests fully. The main purpose and value of a rights plan is to potentially
slow down the process by which a takeover of the Company may occur in order to
allow the Company's Board of Directors and stockholders to have a sufficient
amount of time to research and evaluate whether or not a takeover is in the
Company's best interest. In terms of mechanics, rights plans deter certain
abusive takeover tactics by (i) making them unacceptably expensive to the
prospective acquiror, and (ii) by simultaneously encouraging the prospective
acquiror to negotiate with the board of directors of the target.
The Rights Plan is not intended to prevent an acquisition of the
Company on terms that are favorable and fair to all stockholders. The Rights
Plan should not dissuade any prospective offeror willing to negotiate with your
Board of Directors and should not interfere with a merger or any other business
combination transaction that your Board of Directors deems to be fair and
provide full value to the stockholders. Further, the Rights Plan is not intended
to perpetuate the existence of current management of the Company. The Rights
Plan, however, is designed to deal with the very serious problem of unilateral
actions by hostile acquirors that are calculated to
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<PAGE> 45
deprive the Company's Board and its stockholders of their ability to determine
the destiny of the Company.
Over 1,500 companies, including approximately half of the companies in
the Business Week 1000 and the Fortune 500 have issued rights to protect their
shareholders against these tactics.
According to a study conducted by Georgeson & Company, Inc., a
respected proxy solicitation and shareholder relations organization, companies
protected by shareholders rights plans received significantly higher premiums on
their shares in takeover contests than companies that had not adopted such a
plan, after adjustment for changes in the S&P 500 Index. The study also
concluded that such plans do not prevent takeovers and they also do not diminish
the value of a company's stock. There can be no assurance, however, that the
Plan will result in any premium being paid on the Company's Common Stock in the
event of a takeover contest.
The issuance of the Rights does not in any way weaken the financial
strength of the Company or interfere with its business plans. The issuance of
the Rights has no dilutive effect, will not affect reported earnings per share,
is not taxable to the Company or to you, and will not change the way in which
you can presently trade the Company's shares. As explained in detail below, the
Rights will only be exercisable if and when the specified circumstances arise
which they were created to deal with.
Your Board was aware when it acted that some people have advanced
arguments that plans such as the Rights Plan may deter legitimate acquisition
proposals. We carefully considered these views and concluded that the arguments
are speculative and do not justify leaving stockholders without any protection
against unfair treatment by a potential acquiror.
Initially, the Rights will be represented by the Common Stock
certificates then outstanding, and no separate Rights Certificates will be
distributed. The Rights will separate from the Common Stock and a distribution
of Rights Certificates will occur upon the "Distribution Date," which will be
the earlier of (i) ten business days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding shares of Common Stock, (ii) ten business days following a
public announcement that a person or group of affiliated or associated persons
has (x) become the direct or indirect beneficial owner of at least 10% of the
Company's outstanding Common Stock, and (y) whose ownership interest is deemed
by the Board of Directors of the Company to cause a material adverse impact on
the business or prospects of the Company or its shareholders (such persons or
group hereinafter called an "Adverse Person"), or (iii) ten business days
following the commencement of a tender offer or exchange offer that would result
in a person or group becoming an Acquiring Person or an Adverse Person. Until
the Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after the date that the
Rights Plan is adopted will contain a notation incorporating the Rights
Agreement by reference, and (iii) the surrender for transfer of any certificates
for Common Stock outstanding also will constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
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<PAGE> 46
The Rights are not exercisable until the Distribution Date and will
expire ten years after the adoption of the Rights Plan, unless earlier redeemed
by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event a person becomes an Acquiring Person or an Adverse Person
(except pursuant to an offer for all outstanding shares of Common Stock that is
determined by the Board of Directors to be fair to and otherwise in the best
interest of the Company and its stockholders, a "Qualifying Tender Offer"), each
Right then outstanding would "flip in" and become a right to buy that number of
shares of Common Stock of the Company which at the time of such acquisition
would have a market value of two times the exercise price of the Right. The
acquiror who triggered the Rights would be excluded from the "flip-in" because
his Rights would have become null and void upon his triggering acquisition.
Thus, if the Company's Common Stock at the time of the "flip-in" were trading at
$12.00 per share and the exercise price of the Rights at such time was $36.00
per share, each Right would thereafter be exercisable at $36.00 for 6.0 shares
of the Company's Common Stock (I.E., the number of shares that could be
purchased for $72.00, or two times the exercise price of the Right).
In the event that the "flip in" is triggered, if there is not
sufficient authorized Common Stock available for issuance upon the exercise of
each Right or if the Board so elects, the Board may (i) seek stockholder
approval to increase the number of authorized shares of Common Stock, or (ii)
designate as issuable upon exercise of the Rights such amount of Common Stock,
cash, other equity or debt securities, assets and/or other consideration as
would be equal to the value that would have been received if each Right had
received only Common Stock upon exercise.
If, following the time a person becoming an Acquiring Person or an
Adverse Person, (i) the Company shall consolidate with or merge with or into any
other person in which the Company is not the surviving corporation, (ii) any
other person shall merge with or into the Company and all or part of the
outstanding Common Stock shall be changed into or exchanged for securities of
any other person or cash or any other property, or (iii) the Company sells 50%
or more of its assets or earning power, each Right then outstanding would "flip
over" and thereby would become a right to buy that number of shares of common
stock of the acquiring company which at the time of such transaction has a
market value of two times the exercise price of the Right. Thus, if the
acquiring company's common stock at the time of such transaction were trading at
$24.00 per share and the exercise price of the Rights at such time was $36.00
per share, each Right would thereafter be exercisable at $36.00 for 3.0 shares
of the acquiring company's common stock.
At any time after a person becomes an Acquiring Person or an Adverse
Person and before the acquisition by a person or group of 50% or more of the
outstanding Common Stock of the Company, the board may exchange the Rights
(other than Rights owned by such person or group which have become void), in
whole or in part, for Common Stock at an exchange ratio of one (1.0) share of
the Company's Common Stock per Right, subject to adjustment.
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<PAGE> 47
At any time until ten days (subject to extension by the Company)
following the public announcement that a person has become an Acquiring Person
or an Adverse Person, the Company may redeem the Rights at a price of $.001 per
Right, payable in cash. For as long as the Rights are then redeemable, the
Company may extend the period during which it may redeem the Rights. Under
certain circumstances set forth in the Rights Agreement, the decision to redeem
or to extend the period during which the Rights are redeemable shall require the
concurrence of at least two-thirds of the members of the Board of Directors and
a majority of Independent Directors (as hereinafter defined). After the
redemption period has expired, the Company's rights of redemption may be
reinstated if the Acquiring Person or Adverse Person reduces his or her
beneficial ownership to less than 10% of the outstanding shares of Common Stock
in a transaction or series of transactions not involving the Company.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, with, where required, the concurrence of at least two-thirds of the
members of the Board of Directors and a majority of any Independent Directors,
the Rights will terminate and the only right which the holders of Rights will
thereafter have will be to receive the redemption price.
The term "Independent Director" means any member of the Board of
Directors of the Company who is not an Acquiring Person or Adverse Person, is
not an employee or officer of the Company or an employee, officer or director of
any Acquiring Person or Adverse Person, and is not a relative or spouse of (i)
an Acquiring Person or Adverse Person, (ii) any officer or other person employed
in a management position with the Company or with any Acquiring Person or
Adverse Person, or (iii) any director of any Acquiring Person or Adverse Person.
The Purchase Price payable, and the number of shares of Common Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time upon certain events to prevent dilution, including (i) in the event of a
stock dividend on, or a subdivision, combination or reclassification of, the
Common Stock, (ii) if holders of the Common Stock are granted certain rights or
warrants to subscribe for Common Stock or convertible securities at less than
the current market price of the Common Stock, or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Common Stock will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
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 as an Exhibit to the Company's Registration Statement on
Form 8-A dated January __, 1998. A copy of the Rights Agreement is available
free of charge from the Rights Agent. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by reference.
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<PAGE> 48
In declaring the Rights dividend, we have expressed our confidence in
the future and our determination that you, our shareholders, be given every
opportunity to participate fully in that future.
On behalf of the Board of Directors.
------------------------------------------
Gary O. Marino
Chairman of the Board, President and Chief
Executive Officer
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