SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF
SECURITIES PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
MICRO WAREHOUSE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 06-1192793
- ---------------------------------------- -------------------
(State of Incorporation or organization) (IRS Employer
Identification No.)
535 Connecticut Avenue
Norwalk, Connecticut 06854
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
- ------------------------------- ------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
- -------------------------------------------------------------------------------
(Title of Class)
Index to Exhibits Appears on Page 8
<PAGE>
ITEM 1. Description of Registrant's Securities to be Registered.
-------------------------------------------------------
On June 17, 1996, the Board of Directors of Micro Warehouse, Inc. (the
"Company") declared a dividend distribution of one right (a "Right") for each
outstanding share of Common Stock, par value $.01 per share (the "Common
Shares"), of the Company. The distribution is payable on June 27, 1996 (the
"Record Date") to the stockholders of record as of the close of business on the
Record Date. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Shares"), of the Company at a
price of $110.00 per one one-thousandth of a Preferred Share (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of June 17, 1996 (the "Rights Agreement"),
between the Company and State Street Bank and Trust Company NA, as Rights Agent
(the "Rights Agent").
Until the earliest to occur of (i) the close of business on the tenth
calendar day after the first date of public announcement that a person or group
of affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the outstanding Common Shares
(an "Acquiring Person") and (ii) the close of business on the tenth business day
(or such later date as may be specified by the Board of Directors of the Company
prior to such time as any person or group of affiliated or associated persons
becomes an Acquiring Person) after the date of the commencement of a tender
offer or exchange offer by a person or group of affiliated or associated
persons, the consummation of which would result in beneficial ownership by such
person or group of 20% or more of the outstanding Common Shares (the earlier of
such dates being hereinafter called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificates.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), Common
Share certificates issued upon issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for Common Shares in respect of which Rights have been issued
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificates. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (the "Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
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<PAGE>
No Right is exercisable at any time prior to the Distribution Date. The
Rights will expire on June 27, 2006 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company as described below. 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 Purchase Price payable, and the number of Preferred Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Shares, (ii) upon
the grant to holders of the Preferred Shares of certain rights or warrants to
subscribe for or purchase Preferred Shares at a price, or securities convertible
into Preferred Shares with a conversion price, less than the then current market
price of the Preferred Shares, or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness or cash (excluding regular
periodic cash dividends), assets, stock (excluding dividends payable in
Preferred Shares) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock dividend on the Common Shares payable in
Common Shares or subdivision, combination or reclassification of the Common
Shares occurring, in any such case, prior to the Distribution Date.
Preferred Shares issuable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of (i) $1.00 per share and (ii)
an amount equal to 1,000 times the aggregate dividends declared per Common Share
during the related quarter. In the event of liquidation, the holders of the
Preferred Shares will be entitled to a preferential liquidation payment equal to
the greater of (a) $1,000 per share and (b) an amount equal to 1,000 times the
liquidation payment made per Common Share. Each Preferred Share will have 1,000
votes, voting together with the Common Shares. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares are exchanged,
each Preferred Share will be entitled to receive 1,000 times the amount received
per Common Share. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Shares' dividend, voting and
liquidation rights, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision
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<PAGE>
shall be made so that each holder of a Right, other than Rights that are or
were owned beneficially by the Acquiring Person (which, from and after the later
of the Distribution Date and the date of the earliest of any such events, will
be void), will thereafter have the right to receive, upon exercise thereof at
the then current exercise price of the Right, that number of Common Shares (or,
under certain circumstances, an economically equivalent security or securities
of the Company) having a market value of two times the exercise price of the
Right.
To illustrate the operation of such an adjustment, at a Purchase Price
of $110, assuming the current market price (as determined pursuant to the
provisions of the Rights Agreement) per Common Share were $35.00, each Right not
owned beneficially by an Acquiring Person at or after the time of such an
occurrence would entitle its holder to purchase (after the Distribution Date)
from the Company 6.29 Common Shares (having a market value of $220) for $110.
In the event that, at any time after a person or group of affiliated or
associated persons has become an Acquiring Person, (i) the Company merges with
or into any person and the Company is not the surviving corporation, (ii) any
person merges with or into the Company and the Company is the surviving
corporation, but its Common Shares are changed or exchanged, or (iii) 50% or
more of the Company's assets or earning power, including without limitation
securities creating obligations of the Company, are sold, proper provision shall
be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock (or, under certain circumstances,
an economically equivalent security or securities) of such other person which at
the time of such transaction would have a market value of two times the exercise
price of the Right.
At any time after the first date of public announcement that an
Acquiring Person has become such and prior to the acquisition by any person or
group of affiliated or associated persons of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than any Rights which have become void), in whole or in part, at an
exchange ratio of one Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment in the Purchase
Price of at least 1%. The Company is not required to issue fractional Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share, which may, at the option of the Company, be evidenced by
depositary receipts) or fractional Common Shares or other securities issuable
upon the exercise of Rights. In lieu of issuing such securities, the Company may
make a cash payment, as provided in the Rights Agreement.
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<PAGE>
The Company may redeem the Rights in whole, but not in part, at a price
of $0.001 per Right (the "Redemption Price"), at any time prior to such time as
a person or group of affiliated or associated persons becomes an Acquiring
Person. Immediately upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The Rights Agreement may be amended by the Company without the approval
of any holders of Right Certificates, including amendments which add other
events requiring adjustment to the purchase price payable and the number of
Preferred Shares or other securities issuable upon the exercise of the Rights or
which modify procedures relating to the redemption of the Rights, provided that
no amendment may be made which decreases the stated Redemption Price or the
period of time remaining until the Final Expiration Date or which modifies a
time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors since (subject to the limitations described above) the Rights
may be redeemed by the Company at the Redemption Price prior to the time that
the Rights would otherwise become exercisable, or if later, the time that a
person or group has become an Acquiring Person.
A form of the Rights Agreement, which includes as Exhibit A the form of
Certificate of Designations of Series A Junior Participating Preferred Shares,
as Exhibit B the form of Right Certificate and as Exhibit C the form of Summary
of Rights to Purchase Preferred Shares, and the letter to stockholders
announcing the declaration of the dividend distribution of the Rights are
attached hereto as exhibits and are incorporated herein by this reference. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to such exhibits.
ITEM 2. Exhibits.
1. Form of Certificate of Designations of Series A Junior
Participating Preferred Stock (Exhibit A to the form of Rights
Agreement filed as Exhibit 2 hereto).
2. Form of Rights Agreement.
3. Form of Right Certificate (Exhibit B to the form of Rights
Agreement filed as Exhibit 2 hereto).
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4. Summary of Rights to Purchase Preferred Shares (Exhibit C
to the form of Rights Agreement filed as Exhibit 2 hereto).
5. Form of letter to stockholders dated June __, 1996.
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<PAGE>
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.
MICRO WAREHOUSE, INC.
By /s/ Bruce L. Lev
----------------------------
Bruce L. Lev
Vice President and Secretary
Dated: June 24, 1996
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<PAGE>
INDEX TO EXHIBITS
Exhibit Exhibit
-------
Number
------
1 Form of Certificate of Designations of Series
A Junior Participating Preferred Stock
(Exhibit A to the form of Rights Agreement filed as
Exhibit 2 hereto).
2 Form of Rights Agreement.
3 Form of Right Certificate (Exhibit B to the form of
Rights Agreement filed as Exhibit 2 hereto).
4 Summary of Rights to Purchase Preferred Shares
(Exhibit C to the form of Rights Agreement filed as
Exhibit 2 hereto)
5 Form of letter to stockholders dated June __,
1996.
8
EXHIBIT 2
---------
=============================================================================
MICRO WAREHOUSE, INC.
and
STATE STREET BANK AND TRUST COMPANY NA
RIGHTS AGREEMENT
Dated as of June __, 1996
=============================================================================
<PAGE>
<TABLE>
Table of Contents
-----------------
<CAPTION>
Page
----
<S> <C>
Section 1. Certain Definitions.............................................................................. 1
Section 2. Appointment of Rights Agent...................................................................... 7
Section 3. Issue of Right Certificates...................................................................... 7
Section 4. Form of Right Certificates....................................................................... 9
Section 5. Countersignature and Registration................................................................ 10
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.......................................... 11
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.................................... 12
Section 8. Cancellation and Destruction of Right Certificates............................................... 14
Section 9. Availability of Preferred Shares................................................................. 14
Section 10. Preferred Shares Record Date..................................................................... 17
Section 11. Adjustment of Exercise Price, Number and Kind of Securities or Number
of Rights........................................................................................ 17
Section 12. Certificate of Adjusted Exercise Price or Number of Securities................................... 28
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............................. 28
Section 14. Fractional Rights and Fractional Securities...................................................... 30
Section 15. Rights of Action................................................................................. 32
Section 16. Agreement of Rights Holders...................................................................... 33
Section 17. Right Certificate Holder Not Deemed a Stockholder................................................ 33
Section 18. Concerning the Rights Agent...................................................................... 34
Section 19. Merger or Consolidation or Change of Name of Rights Agent........................................ 35
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 20. Duties of Rights Agent........................................................................... 36
Section 21. Change of Rights Agent........................................................................... 39
Section 22. Issuance of New Right Certificates............................................................... 40
Section 23. Redemption....................................................................................... 40
Section 24. Exchange......................................................................................... 41
Section 25. Notice of Certain Events......................................................................... 44
Section 26. Notices.......................................................................................... 45
Section 27. Supplements and Amendments....................................................................... 46
Section 28. Successors....................................................................................... 47
Section 29. Benefits of this Agreement....................................................................... 47
Section 30. Severability..................................................................................... 47
Section 31. Governing Law.................................................................................... 48
Section 32. Counterparts..................................................................................... 48
Section 33. Descriptive Headings............................................................................. 48
List of Exhibits
----------------
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
</TABLE>
-ii-
<PAGE>
RIGHTS AGREEMENT
----------------
This RIGHTS AGREEMENT, dated as of June __, 1996 (this
"Agreement"), is made and entered into by and between Micro Warehouse, Inc., a
Delaware corporation (the "Company"), and State Street Bank and Trust Company
NA, a Massachusetts Trust Company, as Rights Agent (the "Rights Agent").
RECITALS
--------
WHEREAS, on June 17, 1996, the Board of Directors of the
Company authorized and declared a dividend distribution of one preferred share
purchase right (a "Right") for each Common Share (as hereinafter defined) of the
Company outstanding as of the Close of Business (as hereinafter defined) on June
27, 1996 (the "Record Date"), each Right initially representing the right to
purchase one one-thousandth of a Preferred Share (as hereinafter defined), upon
the terms and subject to the conditions herein set forth, and further authorized
and directed the issuance of one Right with respect to each Common Share that
shall become outstanding after the Record Date but prior to the earlier of the
Distribution Date (as hereinafter defined) and the Expiration Date (as
hereinafter defined).
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 shall 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 20% or more of the Common Shares then outstanding, but shall
not include (i) the Company, any Subsidiary of the Company, any employee benefit
or stock ownership plan of the Company
<PAGE>
or of any Subsidiary of the Company or any entity holding Common Shares
for or pursuant to the terms of any such plan, or (ii) any Person who would
otherwise become an Acquiring Person solely as a result of a reduction in the
number of Common Shares outstanding unless and until (A) such time as such
Person or any Affiliate or Associate of such Person shall thereafter become the
Beneficial Owner of any additional Common Shares, other than as a result of a
stock dividend, stock split or similar transaction effected by the Company in
which all holders of Common Shares are treated equally, or (B) any other Person
who is the Beneficial Owner of any Common Shares shall thereafter become an
Affiliate or Associate of such Person. Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
an "Acquiring Person for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, to
"beneficially own" and to have "beneficial ownership" of, any securities:
(i) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, beneficially owns;
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<PAGE>
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary
agreements with and among underwriters and selling group
members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise (in
each case, other than upon exercise or exchange of the
Rights); PROVIDED, however, that a Person shall not be deemed
the Beneficial Owner of, to beneficially own or to have
beneficial ownership of, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such
tendered securities are accepted for payment or exchange; or
(B) the right to vote, including pursuant to any agreement,
arrangement or understanding; PROVIDED, HOWEVER, that a Person
shall not be deemed the Beneficial Owner of, to beneficially
own or to have beneficial ownership of, any security if such
Person has the right to vote such security pursuant to an
agreement, arrangement or understanding which (1) arises
solely from a revocable proxy given to such Person in response
to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations
of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report); or
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<PAGE>
(iii) of which any other Person is the
Beneficial Owner, if such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and among
underwriters and selling group members with respect to a bona
fide public offering of securities) with such other Person (or
any of such other Person's Affiliates or Associates) with
respect to acquiring, holding, voting (except with respect to
any right to vote such security pursuant to an agreement,
arrangement or understanding which (A) arises solely from a
revocable proxy given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the
Exchange Act and (B) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor
report)) or disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
p.m., Boston, Massachusetts time, on such date; PROVIDED, HOWEVER, that if such
date is not a Business Day it shall mean 5:00 p.m., Boston, Massachusetts time,
on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock or equity security with the greatest aggregate
voting power of such Person, or, if such other
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<PAGE>
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(g) "Distribution Date" shall mean the earlier of: (i) the
Close of Business on the tenth calendar day after the Share Acquisition Date,
and (ii) the Close of Business on the tenth Business Day (or such later date as
may be specified by the Board of Directors of the Company prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement of a
tender or exchange offer by any Person (other than the Company or any Subsidiary
of the Company or any employee benefit or stock ownership plan of the Company or
of any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan), if upon the consummation thereof such
Person would be the Beneficial Owner of 20% or more of the then outstanding
Common Shares.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(i) "Exercise Price" shall mean initially $110.00 per one
one-thousandths of a Preferred Share and shall be subject to adjustment from
time to time as provided in this Agreement.
(j) "Expiration Date" shall mean the earliest of (i) the Close
of Business on the Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 23, and (iii) the time at which all exercisable
Rights are exchanged as provided in Section 24.
(k) "Final Expiration Date" shall mean the tenth anniversary
of the Record Date.
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(l) "Person" shall mean any individual, corporation,
partnership, association, trust or other entity, and shall include any successor
(by merger or otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set forth in the Form of Certificate of Designations
attached to this Agreement as Exhibit A.
(n) "Redemption Price" shall mean $.001 per Right, subject to
adjustment by resolution of the Board of Directors of the Company to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof.
(o) "Right Certificates" shall mean certificates evidencing
the Rights, in substantially the form of the Form of Right Certificate attached
to this Agreement as Exhibit B.
(p) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(q) "Share Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person (by press release,
filing made with the Securities and Exchange Commission or otherwise) that an
Acquiring Person has become such.
(r) "Subsidiary" when used with reference to any Person shall
mean any corporation or other entity of which a majority of the voting power of
the voting equity securities or equity interests is owned, directly or
indirectly, by such Person.
(s) "then outstanding" when used with reference to a Person's
beneficial ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to be the Beneficial Owner of hereunder.
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<PAGE>
(t) "Trading Day" shall mean any day on which the principal
national securities exchange or transaction reporting system on which the Common
Shares are listed or quoted is open for the transaction of business or, if the
Common Shares are not listed or quoted on any national securities exchange or
transaction reporting system, a Business Day.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3, shall also be, prior to the
Distribution Date, the holders of the Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable. Any actions which may be taken by the Rights
Agent pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent. To the extent that any Co-Rights Agent takes any action pursuant to this
Agreement, such Co-Rights Agent shall be entitled to all of the rights and
protections of, and subject to all of the applicable duties and obligations
imposed upon, the Rights Agent pursuant to the terms of this Agreement.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the
Distribution Date, (i) the Rights shall be evidenced by the certificates
representing Common Shares, registered in the names of the record holders
thereof (which certificates shall also be deemed to be Right Certificates), and
(ii) the Rights, including the right to receive Rights Certificates, shall be
transferable only in connection with the transfer of the underlying Common
Shares.
(b) As promptly as practicable after the Record Date, the
Company shall send a copy of a Summary of Rights to Purchase Preferred Shares in
substantially the form attached to this Agreement as Exhibit C, by first-class,
pmostage prepaid mail, to each record
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<PAGE>
holder of Common Shares as of the close of business on the Record Date, at the
address of such holder shown on the records of the Company as of such date.
(c) Certificates evidencing Common Shares which become
outstanding after the Record but prior to the earlier of the Distribution Date
and the Expiration Date shall have stamped on, impressed on, printed on, written
on or otherwise affixed to them the following legend or such similar legend as
the Company may deem appropriate and as is 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 or transaction reporting system on which the Common Shares
may from time to time be listed or quoted, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Micro
Warehouse, Inc. (the "Company") and State Street Bank and Trust
Company NA, dated as of June 17, 1996 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices of
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire, may be amended
or may be evidenced by separate certificates and no longer be
evidenced by this Certificate. The Company will mail to the holder
of this Certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request therefor. Under certain
circumstances as set forth in the Rights Agreement, Rights issued
to an Acquiring Person or any Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement) may
become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares evidenced by
such certificates shall be evidenced by such certificates alone, and the
transfer of any such certificate shall also constitute the transfer of the
Rights associated with the Common Shares evidenced by such certificates. In the
event that the Company purchases or acquires any Common Shares after the Record
Date but prior to the Distribution Date, any Rights associated with such Common
8
<PAGE>
Shares shall be deemed cancelled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Shares which are no
longer outstanding.
(d) As promptly as practicable after the Distribution Date,
the Company shall prepare and execute, the Rights Agent shall countersign and
the Company shall send or cause to be sent (and the Rights Agent shall, if
requested, send), by first-class, insured, postage prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, evidencing one Right for each Common Share so held, subject to
adjustment. As of and after the Distribution Date, the Rights shall be evidenced
solely by such Right Certificates.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates
(and the forms of election to purchase and assignment to be printed on the
reverse thereof) shall be substantially in the form set forth as Exhibit B
hereto with such changes, 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 or transaction reporting system on which the Rights may from time to
time be listed or quoted, or to conform to usage. Subject to the provisions of
Section 22, the Right Certificates, whenever issued, on their face shall entitle
the holders thereof to purchase such number of one one-thousandths of a
Preferred Share as shall be set forth therein at the Exercise Price
set forth therein, but the Exercise Price, the number and kind of securities
issuable upon
9
<PAGE>
exercise of each Right and the number of Rights outstanding shall be subject to
adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right
Certificates shall be executed on behalf of the Company by its Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer or Vice President and
General Counsel, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
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 Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall
keep or cause to be kept, at one of its offices designated for such purpose,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and
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addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a)
Subject to the provisions of Section 14, at any time after the Close of Business
on the Distribution Date and prior to the Expiration Date, any Right Certificate
or Right Certificates (other than Right Certificates representing Rights that
have become void pursuant to this Agreement) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths
of a Preferred Share (or other securities or property, as the case may be) as
the Right Certificate or Right 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 such Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent designated for such purpose. Thereupon or as promptly as
practicable thereafter, subject to the provisions of Section 14, the Rights
Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates. 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 any purported transfer of a
Right Certificate as set forth in this Section 6 unless
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the registered holder of such Right Certificate shall have (i) completed and
signed the certificate following the form of assignment set forth on the reverse
side of the Right Certificate surrendered for such transfer, 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 have
reasonably requested.
(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 Right 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 Right Certificate
if mutilated, the Company shall execute and deliver a new Right Certificate of
like tenor to the Rights Agent and the Rights Agent shall countersign and
deliver such new Right Certificate to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE
OF RIGHTS. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date and prior to the Expiration Date,
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the office or
offices of the Rights Agent designated for such purpose, together with payment
of the aggregate Exercise Price for the total number of one one-thousandths of a
Preferred Share (or other securities or property, as the case may be) as to
which such surrendered Rights are exercised.
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(b) Upon receipt of a Right Certificate representing
exercisable Rights with the form of election to purchase duly executed,
accompanied by payment of the Exercise Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall promptly thereupon (i) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent
therefor) certificates representing the number of Preferred Shares to be
purchased (and the Company hereby irrevocably authorizes and directs its
transfer agent to comply with all such requests), or, if the Company shall have
elected to deposit Preferred Shares issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of Preferred Shares as are to be
purchased (and the Company hereby irrevocably authorizes and directs such
depositary agent to comply with all such requests), (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with the provisions of Section 14,
(iii) after receipt of such certificates (or depositary receipts, as the case
may be), cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such Right
Certificate.
(c) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered
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holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14.
(d) 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 any purported exercise of a Right
Certificate as set forth in this Section 7 unless the registered holder of such
Right Certificate shall have (i) completed and signed the certificate following
the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall have reasonably requested.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. AVAILABILITY OF PREFERRED SHARES. The Company
covenants and agrees that:
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(a) It shall cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that shall be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7.
(b) It shall take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise of Rights, at the time
of delivery of the certificates for such securities, shall be (subject to
payment of the Exercise Price) duly and validly authorized and issued, fully
paid and nonassessable securities.
(c) It shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right Certificates and of any certificates representing
securities issued upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax or charge which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts representing
securities issued upon the exercise of Rights in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise, or to issue or deliver any certificates or depositary receipts
representing securities issued upon the exercise of any Rights until any such
tax or charge shall have been paid (any such tax or charge being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax is due.
(d) It shall use its best efforts (i) to file on an
appropriate form, as soon as required by law after the Distribution Date, a
registration statement under the Securities Act
with respect to the securities issuable upon exercise of the Rights, (ii) to
cause such
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registration statement to become effective as soon as practicable
after such filing, and (iii) to 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 Expiration Date. The Company shall
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, upon a determination in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent, may temporarily suspend, for a period
of time after the date set forth in clause (i) of the first sentence of this
Section 9(d), the exercisability of the Rights in order to prepare and file such
registration statement and to permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if the Company shall determine, upon a determination in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent, that a registration statement should be
filed under the Securities Act or any state securities laws following the
Distribution Date, the Company may temporarily suspend the exercisability of the
Rights in each relevant jurisdiction until such time as a registration statement
has been declared effective and, 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.
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Section 10. PREFERRED SHARES RECORD DATE. Each Person in whose
name any certificate representing Preferred Shares is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Preferred Shares represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and all applicable transfer
taxes) was made; PROVIDED, HOWEVER, that if the date of such surrender and
payment is a date upon which the Preferred Shares transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
securities on, and such certificate shall be dated, the next succeeding Business
Day on which the Preferred Shares transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a stockholder of the Company
with respect to securities for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER AND KIND OF
SECURITIES OR NUMBER OF RIGHTS. The Exercise Price, the number and kind of
securities or other property issuable upon exercise of each Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event that the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares, or (D) issue any shares of its capital stock in a
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reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Exercise 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 upon exercise of a Right, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive upon payment of the Exercise 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 Preferred
Shares transfer books of the Company were open, the holder of such Right would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; PROVIDED, HOWEVER, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), 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).
(ii) Subject to the provisions of Section 24, in the event
that any Person shall become an Acquiring Person, each holder of a Right, except
as provided below, shall thereafter have a right to receive, upon exercise
thereof in accordance with the terms of this Agreement at an exercise price per
Right equal to the then-current Exercise Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with this Agreement and in lieu of Preferred Shares, such number
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<PAGE>
of Common Shares as shall equal the result obtained by (A) multiplying the
then-current Exercise Price by the number of one one-thousandths of a Preferred
Share for which a Right is then exercisable, and dividing that product by (B)
50% of the current per share market price of the Common Shares (determined
pursuant to Section 11(d)) on the date of the occurrence of such event.
Notwithstanding anything in this Agreement to the contrary, from and after the
occurrence of such event (1) any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Affiliate or Associate of
such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of this
Agreement, (2) no Right Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the foregoing clause (1) or any Affiliate or Associate
thereof, (3) no Right Certificate shall be issued at any time upon the transfer
of any Rights to an Acquiring Person whose Rights would be void pursuant to the
foregoing clause (1) or any Affiliate or Associate thereof or to any nominee of
such Acquiring Person, Affiliate or Associate, and (4) any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the foregoing clause (1) or any Affiliate or Associate
thereof shall be cancelled.
(iii) In the event there shall not be sufficient Common Shares
authorized but unissued or issued but not outstanding to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company
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<PAGE>
shall substitute, for each Common Share that would otherwise be issuable upon
exercise of a Right, a number of Preferred Shares or fraction thereof such that
the current per share market price (as defined in Section 11(d)) of one
Preferred Share multiplied by such number or fraction is equal to the current
per share market price of one Common Share as of the date of issuance of such
Preferred Shares or fraction thereof.
(b) In the event that the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or securities having the
same or more favorable rights, privileges and preferences as the Preferred
Shares ("equivalent preferred shares")) or securities convertible into Preferred
Shares or equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the then-current per share market price of the Preferred Shares (determined
pursuant to Section 11(d)) on such record date, the Exercise Price to be in
effect after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or equivalent preferred shares
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current per
share market price and the denominator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of additional Preferred
Shares and/or equivalent preferred shares to be offered for subscription or
20
<PAGE>
purchase (or into which the convertible securities so to be offered are
initially convertible); PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.
(c) In the event that the Company shall fix a record date for
the making of a distribution to all holders of Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock
(other than a dividend payable in Preferred Shares) or subscription rights,
options or warrants (excluding those referred to in Section 11(b)), the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current per share market price of
the Preferred Shares (as determined pursuant to Section 11(d)) 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
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<PAGE>
statement filed with the Rights Agent) of the portion of the evidences of
indebtedness, cash, assets or stock so to be distributed or of such subscription
rights, options or warrants applicable to one Preferred Share, and the
denominator of which shall be such current per share market price of the
Preferred Shares; PROVIDED, HOWEVER, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right.
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 Exercise
Price shall again be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the "current
per share market price" of any security on any date shall be deemed to be the
average of the daily closing prices per share of such security for the 30
consecutive Trading Days immediately prior to such date; PROVIDED, HOWEVER, that
in the event that the current per share market price of such security is
determined during a period following the announcement by the issuer of such
security of (i) a dividend or distribution on such security payable in shares of
such security or securities convertible into such shares or (ii) any
subdivision, combination or reclassification of such security, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to take into account ex-dividend trading
or otherwise to reflect the current per share market price per Common Share
equivalent. 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
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<PAGE>
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 such security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such security is listed or admitted to trading or, if such security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date such security is 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 such security selected by the
Board of Directors of the Company. If the Preferred Shares are not publicly
traded, the "current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the Common
Shares, multiplied by 1,000. If neither the Preferred Shares nor the Common
Shares are publicly traded, or, with respect to any other security which is not
publicly traded, the "current per share market price" shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
(e) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such 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
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one-millionth of a Preferred Share or one ten-thousandth of a Common Share or
other security, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction which
requires such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a), the holder of any Right thereafter exercised shall become entitled to
receive any securities of the Company other than Preferred Shares, thereafter
the number of such other securities so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Preferred
Shares contained in Section 11(a) through (m), and the provisions of Sections 7,
9, 10, 13 and 14 with respect to the Preferred Shares shall apply on like terms
to any such other securities.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-thousandths of a
Preferred Share issuable 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 Exercise 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 Exercise Price, that number of
one one-thousandths of a Preferred Share (calculated to the nearest one
millionth
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of a Preferred Share) obtained by (i) multiplying (A) the number of
one one-thousandths of a Preferred Share issuable upon exercise of a Right
immediately prior to this adjustment by (B) the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price and (ii) dividing the
product so obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
(i) The Company may elect, on or after the date of any
adjustment of the Exercise Price, to adjust the number of Rights in substitution
for any adjustment in the number of one one-thousandths of a Preferred Share
issuable upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Exercise
Price in effect immediately prior to adjustment of the Exercise Price by the
Exercise Price in effect immediately after adjustment of the Exercise 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 Exercise Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 calendar days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to the provisions of Section 14, the additional
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<PAGE>
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Exercise Price) and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise
Price or the number or kind of securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price and the number and kind of securities which were
expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below one one-thousandth of the then par value, if
any, of the Preferred Shares or below the then par value, if any, of any other
securities of the Company issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares or such other securities, as the case may be, at
such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise 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
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<PAGE>
exercised after such record date the number of Preferred Shares or other
securities of the Company, if any, issuable upon such exercise over and above
the number of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise 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 Preferred Shares or other securities upon the
occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the
contrary, the Company shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this Section 11,
as and to the extent that in its good faith judgment the Board of Directors of
the Company shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Shares, (ii) issuance wholly for cash of
Preferred Shares at less than the current per share market price therefor, (iii)
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, (iv) stock dividends
on Preferred Shares, or (v) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to holders of Preferred Shares
shall not be taxable to such holders.
(n) In the event that the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (i) declare or pay any
dividend on the outstanding Common Shares payable in Common Shares or (ii)
effect a subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then, in each such case, the
number of Rights associated with each Common Share
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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 Common Share following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
Section 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER
OF SECURITIES. Whenever an adjustment is made as provided in Section 11 or
Section 13, the Company shall promptly (a) prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Preferred Shares and the Common Shares, a copy of such certificate, and (c) if
such adjustment is made after the Distribution Date, mail a brief summary of
such adjustment to each holder of a Right Certificate in accordance with Section
26.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER. (a) In the event that, at any time after a Person has
become an Acquiring Person, directly or indirectly (i) the Company shall
consolidate with, or merge with or into, any other Person and the Company shall
not be the continuing or surviving corporation of such consolidation or merger;
(ii) any Person shall consolidate with the Company, or merge with or into the
Company and the Company shall be the continuing or surviving corporation of
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such merger or consolidation and, in connection with such merger or
consolidation, all or part of the Common Shares shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property; or (iii) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power (including, without limitation, securities
creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing in the aggregate more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons, then, and in each such case, proper provision shall be made
so that (A) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at an exercise
price per Right equal to the product of the then-current Exercise Price
multiplied by the number of one one-thousandths of a Preferred Share for which a
Right is then exercisable, and in lieu of Preferred Shares, such number of
Common Shares of such other Person (including the Company as successor thereto
or as the surviving corporation) as shall equal the result obtained by (1)
multiplying the then-current Exercise Price by the number of one one-thousandths
of a Preferred Share for which a Right is then exercisable, and dividing that
product by (2) 50% of the current per share market price of the Common Shares of
such other Person (determined pursuant to Section 11(d)) on the date of
consummation of such consolidation, merger, sale or transfer; (B) the issuer of
such Common Shares shall thereafter be liable for, and shall assume, by virtue
of the consummation of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (C) the term
"Company" shall thereafter be deemed to refer to such issuer; and (D) such
issuer shall take such steps (including, without limitation, the reservation of
a sufficient
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number of Common Shares to permit the exercise of all outstanding Rights) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may be
possible, in relation to the Common Shares thereafter deliverable upon the
exercise of the Rights.
(b) The Company shall not consummate any such consolidation,
merger, sale or transfer, unless prior thereto the Company and the other Person
or Persons parties thereto shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in paragraph (a) of
this Section 13. The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SECURITIES. (a)
The Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company shall pay as promptly as practicable to the registered
holders of the Right Certificates with regard to which such fractional Rights
otherwise would be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights otherwise would have been issuable. The closing price for any
day shall be the last sale price,
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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
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts pursuant to an appropriate agreement between
the Company and a depositary selected by it; PROVIDED that such agreement shall
provide that the holders of such depositary receipts shall
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have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral multiples
of one one-thousandth of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one Preferred Share. For the purposes of this Section 14(b), the
current market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of Section 11(d))
for the Trading Day immediately prior to the date of such exercise.
Section 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement, excepting the rights of action given to the Rights Agent
under Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the holder of any Common Shares), may in such holder's own
behalf and for such holder's own benefit enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, such holder's right to exercise the Rights evidenced by such
Right Certificate or Common Share certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations under, and
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injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights shall be
transferable only in connection with the transfer of the Common Shares;
(b) After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) The Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Share certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Share
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) Such holder expressly waives any right to receive any
fractional Rights and any fractional securities upon exercise or exchange of a
Right, except as otherwise provided in Section 14.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for
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any purpose the holder of the Preferred Shares or any other securities of the
Company which may at any time be issuable upon the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of Directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions of this Agreement or
exchanged pursuant to the provisions of Section 24.
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 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, damage, claim, suit,
action, proceeding or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly.
(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
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of this Agreement in reliance upon any Right Certificate or certificate
evidencing Preferred Shares or other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons, or otherwise upon the
advice of counsel as set forth in Section 20.
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, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21. In
case at the time such successor Rights Agent shall succeed to the agency created
by this Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
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(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer or Vice President and General
Counsel of the Company and delivered to the Rights Agent; and such certificate
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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 gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including any of the Rights becoming void pursuant to Section
11(a)(ii)) or any adjustment in the terms of the Rights provided for in Sections
11, 13 or 24 or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice that any such adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or other
securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any shares of stock or other securities shall, when issued, be
validly authorized and issued, fully paid and nonassessable.
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(f) The Company agrees that it shall perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer or Vice President and General Counsel of the Company, and to apply to
such officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
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Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 calendar days' notice in writing mailed to the Company and to
each transfer agent of the Preferred Shares and the Common Shares and, if the
Distribution Date shall have occurred, to the registered holders of the Right
Certificates, by registered or certified mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 calendar days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Preferred Shares and the Common Shares and, if the
Distribution Date shall have occurred, to the registered holders of the Right
Certificates, by registered or certified mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 calendar days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business under the laws
of the United States or of the Commonwealth of Massachusetts (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the Commonwealth of Massachusetts, 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
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appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred
Shares and the Common Shares and, if the Distribution Date shall have occurred,
shall mail a notice thereof to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Exercise Price per share and the number
or kind or class of securities or property issuable upon exercise of the Rights
made in accordance with the provisions of this Agreement.
Section 23. REDEMPTION. (a) Prior to the Expiration Date, the
Board of Directors of the Company may, at its option, redeem all but not less
than all of the then-outstanding Rights at the Redemption Price at any time
prior to such time as any Person becomes an Acquiring Person. The redemption of
the Rights by the Board of Directors of
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the Company may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
(b) Immediately upon the effectiveness of 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 shall terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. Promptly after the action of its Board
of Directors ordering the redemption of the Rights, the Company shall publicly
announce such action, and, within 10 calendar days thereafter, the Company shall
give notice of such redemption to the holders of the then-outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
on the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Shares; PROVIDED,
HOWEVER, that the failure to give, or any defect in, any such notice shall not
affect the validity of the redemption of the Rights. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. The notice of redemption mailed to the holders of Rights
shall state the method by which the payment of the Redemption Price shall be
made. Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23 or in Section 24 or in connection
with the purchase of Common Shares prior to the Distribution Date.
Section 24. EXCHANGE. (a) The Board of Directors of the
Company may, at its option, at any time after such time as any Person becomes an
Acquiring 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 11(a)(ii)) for Common Shares at an
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exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "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 Shares for or pursuant to
the terms of any such plan), who or which, together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24, and, without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right with respect to
such Rights thereafter of the holder of such Rights shall be to receive that
number of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. Promptly after the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24, the Company shall publicly announce such
action, and, within 10 calendar days thereafter shall give notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear on the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares;
PROVIDED, HOWEVER, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. The notice of exchange
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mailed to the holders of the Rights shall state the method by which the exchange
of the Common Shares for Rights shall be effected and, in the event of any
partial exchange, the number of Rights which shall 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 11(a)(ii))
held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exercise
of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price (as defined in Section 11(d)) of one Preferred
Share multiplied by such number or fraction is equal to the current per share
market price of one Common Share as of the date of issuance of such Preferred
Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares otherwise would be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (d), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
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second sentence of Section 11(d)) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS. (a) In case, at any time
after the Distribution Date, the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of the Preferred Shares or to make
any other distribution to the holders of the Preferred Shares (other than a
regular periodic cash dividend), (ii) to offer to the holders of the Preferred
Shares rights, options or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares, (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing more than 50% of the assets and earning power of the
Company and its Subsidiaries, taken as a whole, to any other Person or Persons,
(v) to effect the liquidation, dissolution or winding up of the Company, or (vi)
to declare or pay any dividend on the Common Shares payable in Common Shares or
to effect a subdivision, combination or reclassification of the Common Shares
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend,
distribution or offering of rights, options or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares
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and/or Preferred Shares, if any such date is to be fixed, and such notice shall
be so given, in the case of any action covered by the foregoing clauses (i) or
(ii), at least 10 calendar days prior to the record date for determining holders
of the Preferred Shares for purposes of such action, and, in the case of any
such other action, at least 10 calendar days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) shall
occur, then the Company shall as soon as practicable thereafter give to the
Rights Agent and each holder of a Right Certificate, or, if prior to the
Distribution Date, each holder of Common Shares, in accordance with Section 26,
a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights.
Section 26. NOTICES. (a) Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Micro Warehouse, Inc.
535 Connecticut Avenue
Norwalk, CT 06854
Attention: Bruce L. Lev
(b) 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 Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
State Street Bank and Trust Company NA
45
<PAGE>
2 Heritage Drive
North Quincy, MA 02171
Attention: Vincent Quealy, Jr.
(c) Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of any Right
Certificate (or, if prior the Distribution Date, to the holder of any Common
Shares) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the
Distribution Date and subject to the last sentence of this Section 27, if the
Company so directs, the Company and the Rights Agent shall supplement or amend
any provision of this Agreement without the approval of any holders of Rights.
From and after the Distribution Date and subject to the last sentence of this
Section 27, if the Company so directs, the Company and the Rights Agent shall
supplement or amend this Agreement without the approval of any holders of Rights
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, (c) to shorten or lengthen any time period hereunder, or (d)
to supplement or amend the provisions hereunder in any manner which the Company
may deem desirable, including, without limitation, the addition of other events
requiring adjustment to the Rights under Sections 11, 13 or 24 or procedures
relating to the redemption of the Rights, which supplement or amendment shall
not, in the good faith determination of the Board of Directors of the Company,
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon
the delivery of a certificate from an officer of the Company which states that
the proposed supplement or amendment is in
46
<PAGE>
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment; PROVIDED, HOWEVER, that the failure or refusal of
the Rights Agent to execute such supplement or amendment shall not affect the
validity of any supplement or amendment adopted by the Company, any of which
shall be effective in accordance with the terms thereof. Notwithstanding
anything in this Agreement to the contrary, no supplement or amendment shall be
made which decreases the stated Redemption Price or the period of time remaining
until the Final Expiration Date or which modifies a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable.
Section 28. SUCCESSORS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. 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 Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (or prior to the Distribution Date, the Common Shares).
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.
47
<PAGE>
Section 31. GOVERNING LAW. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
internal substantive laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the internal substantive laws of
such State applicable to contracts to be made and performed entirely within such
State.
Section 32. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
Attest: MICRO WAREHOUSE, INC.
By --------------------------------- By -----------------------------
Title: Title:
Attest: STATE STREET BANK AND TRUST
COMPANY NA
By --------------------------------- By -----------------------------
Title: Title:
48
<PAGE>
Exhibit A
---------
FORM
of
CERTIFICATE OF DESIGNATIONS
of
Series A Junior Participating Preferred Stock
of
MICRO WAREHOUSE, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
Micro Warehouse, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Corporation"), hereby certifies that the following resolution was adopted
by the Board of directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on June 17, 1996:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Corporation (hereinafter called the "Board of Directors") in
accordance with the provisions of the Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation"), the Board of Directors hereby
creates a series of Preferred Stock, par value $.01 per share (the "Preferred
Stock"), of the Corporation and hereby states the designation and number of
shares and fixes the powers, designations, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof, in addition to
those set forth in the Certificate of Incorporation, as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 10,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; PROVIDED, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding
A-1
<PAGE>
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS. (a) Subject to the
rights of the holders of any shares of any series of Preferred Stock (or any
similar stock) ranking prior and superior to the Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock, par value $.01 per share (the "Common
Stock"), of the Corporation, and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (i) $1.00 or (ii) subject to the
provision for adjustment hereinafter set forth, 1,000 times the aggregate per
share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
In the event the Corporation shall at any time (A) declare or pay any dividend
on the outstanding shares of Common Stock payable in shares of Common Stock or
(B) effect a subdivision, combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of dividends
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in each such case, the amount to which holders of shares of Series
A Preferred Stock would otherwise be entitled immediately prior to such event
under clause (ii) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); PROVIDED that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless (i) the
date of issue of such shares is
A-2
<PAGE>
prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of the first
issuance of a share of Series A Preferred Stock, or (ii) the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 calendar days prior to the
date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time (i) declare or pay
any dividend on the outstanding shares of Common Stock payable in shares of
Common Stock or (ii) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of dividends in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then, in each such case, the number of votes per
share to which holders of shares of Series A Preferred Stock would otherwise be
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(b) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
A-3
<PAGE>
4. CERTAIN RESTRICTIONS. (a) Whenever quarterly dividends or
other dividends or distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any
other distributions, on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire
for consideration any shares of Series A Preferred Stock, or
any shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon
A-4
<PAGE>
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the Certificate or
Incorporation, or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment; PROVIDED, HOWEVER, that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (b) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time (i) declare or pay any dividend on the outstanding shares of Common
Stock payable in shares of Common Stock or (ii) effect a subdivision,
combination or consolidation of the shares of Common Stock (by reclassification
or otherwise than by payment of dividends in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then, in each such case, the
aggregate amount to which each holder of shares of Series A Preferred Stock
would otherwise be entitled immediately prior to such event under the proviso in
clause (a) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then, in each such case, each
share of Series A Preferred Stock shall at the same time be similarly exchanged
or changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time (a) declare or pay any dividend
on the outstanding shares of Common Stock payable in shares of Common Stock or
(b) effect a subdivision, combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of dividends
in shares of Common Stock) into a greater or lesser number of
A-5
<PAGE>
shares of Common Stock, then, in each such case, the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable.
Section 9. RANK. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
Section 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single series.
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its Vice President this ------- day
of June, 1996.
By: ----------------------------------
Bruce L. Lev
Vice President
A-6
<PAGE>
Exhibit B
---------
Form of Right Certificate
Certificate No. R- ---------- Rights
NOT EXERCISABLE AFTER JUNE 27, 2006 OR EARLIER IF REDEEMED OR
EXCHANGED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $0.001 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) MAY BECOME NULL AND VOID.
Right Certificate
MICRO WAREHOUSE, INC.
This certifies that ----------------, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of June 17, 1996 (the "Rights Agreement"), by and
between Micro Warehouse, Inc., a Delaware corporation (the "Company"), and State
Street Bank and Trust Company NA, a Massachusetts Trust Company (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 p.m.
(Boston, Massachusetts time) on June 27, 2006 at the principal office or offices
of the Rights Agent designated for such purpose, one one-thousandths of a fully
paid nonassessable share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Shares"), of the Company, at a purchase
price of $110.00 per one one-thousandths of a Preferred Share (the "Exercise
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase and related Certificate duly executed. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Right Certificate or Right
B-1
<PAGE>
Certificates for the number of whole Rights not exercised. The number of Rights
evidenced by this Right Certificate (and the number of one one-thousandths of a
Preferred Share which may be purchased upon exercise thereof) set forth above,
and the Exercise Price set forth above, are the number and Exercise Price as of
June 17, 1996, based on the Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Exercise Price and
the number and kind of securities issuable upon the exercise of the Rights
evidenced by this Right Certificate are subject to adjustment upon the happening
of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
the Rights under the circumstances specified in the Rights Agreement. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent.
Pursuant to the Rights Agreement, from and after the later of
the Distribution Date and the date that any person or group of affiliated or
associated persons becomes as an Acquiring Person, (i) any Rights that are or
were acquired or beneficially owned by any Acquiring Person (or any Affiliate or
Associate of such Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
the Rights Agreement, (ii) no Right Certificate shall be issued pursuant to the
Rights Agreement that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof, (iii) no Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person or
any Affiliate or Associate thereof or to any nominee of such Acquiring Person or
Affiliate or Associate thereof, and (iv) any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person or any Affiliate or Associate
thereof shall be cancelled.
This Right Certificate, with or without other Right
Certificates, may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the holder to purchase a like
number of one one-thousandths of a Preferred Share (or other securities, as the
case may be) as the Right Certificate or Right Certificates surrendered shall
have entitled such holder (or former holder in the case of a transfer) to
purchase, upon presentation and surrender hereof at the principal office of the
Rights Agent designated for such purpose, with the Form of Assignment (if
appropriate) and the related Certificate duly executed.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.001 per Right. The Rights Agreement may be supplemented
and amended by the Company, as provided therein.
B-2
<PAGE>
The Company is not required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandths
of a Preferred Share, which may, at the option of the Company, be evidenced by
depositary receipts) or other securities issuable upon the exercise of any Right
or Rights evidenced hereby. In lieu of issuing such fractional Preferred Shares
or other securities, the Company may make a cash payment, as provided in the
Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
the Preferred Shares or of any other securities of the Company which may at any
time be issuable upon the exercise of the Right or Rights represented hereby,
nor shall anything contained herein or in the Rights Agreement be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised in
accordance with the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of -------------------.
ATTEST: MICRO WAREHOUSE, INC.
- --------------------------------- By: -------------------------------
Secretary Title:
Countersigned:
STATE STREET BANK AND
TRUST COMPANY NA
By ----------------------------------
Authorized Signature
B-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED, ------------------------------ hereby sells,
assigns and transfers unto -----------------------
- ------------------------------------------------
(Please print name and address of transferee)
- ------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint -----------------------Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ---------------------
--------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ---------------------
--------------------------------
Signature
B-4
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
To MICRO WAREHOUSE, INC.:
The undersigned hereby irrevocably elects to exercise ----------------
Rights represented by this Right Certificate to purchase the one one-thousandths
of a Preferred Share or other securities issuable upon the exercise of such
Rights and requests that certificates for such securities be issued in the
name of:
Please insert social security
or other identifying number: --------------------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:--------------------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
Dated: ------------------
------------------------------------
Signature
Signature Guaranteed:
B-5
<PAGE>
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined pursuant
to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ---------------
------------------------------------
Signature
NOTICE
------
Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates must correspond to the name as written
upon the face of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
B-6
<PAGE>
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Board of Directors of Micro Warehouse, Inc. (the
"Company") has declared a dividend distribution of one right (a "Right") for
each outstanding share of Common Stock, par value $.01 per share (the "Common
Shares"), of the Company. The distribution is payable on June 27, 1996 (the
"Record Date") to the stockholders of record as of the close of business on the
Record Date. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Shares"), of the Company at a
price of $110.00 per one one-thousandth of a Preferred Share (the "Exercise
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of June 17, 1996 (the "Rights Agreement"),
between the Company and State Street Bank and Trust Company NA, as Rights Agent
(the "Rights Agent").
Until the earliest to occur of (i) the close of business on
the tenth calendar day after the first date of public announcement that a person
or group of affiliated or associated persons has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding Common Shares
(an "Acquiring Person") and (ii) the close of business on the tenth business day
(or such later date as may be specified by the Board of Directors of the Company
prior to such time as any person or group of affiliated or associated persons
becomes an Acquiring Person) after the date of the commencement of a tender
offer or exchange offer by a person or group of affiliated or associated
persons, the consummation of which would result in beneficial ownership by such
person or group of 20% or more of the outstanding Common Shares (the earlier of
such dates being hereinafter called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificates.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Shares. Until
the Distribution Date (or earlier redemption or expiration of the Rights),
Common Share certificates issued upon issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares in respect of which Rights have
been issued will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificates. As soon as practicable
following the Distribution Date, separate
C-1
<PAGE>
certificates evidencing the Rights (the "Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date and such separate Right Certificates alone will evidence
the Rights.
No Right is exercisable at any time prior to the Distribution
Date. The Rights will expire on June 27, 2006 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company as described below. 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 Exercise Price payable, and the number of Preferred Shares
or other securities issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
cash (excluding regular periodic cash dividends), assets, stock (excluding
dividends payable in Preferred Shares) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock dividend on the Common Shares
payable in Common Shares or subdivision, combination or reclassification of the
Common Shares occurring, in any such case, prior to the Distribution Date.
Preferred Shares issuable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of (i) $1.00 per share and (ii)
an amount equal to 1,000 times the aggregate dividends declared per Common Share
during the related quarter. In the event of liquidation, the holders of the
Preferred Shares will be entitled to a preferential liquidation payment equal to
the greater of (a) $1,000 per share and (b) an amount equal to 1,000 times the
liquidation payment made per Common Share. Each Preferred Share will have 1,000
votes, voting together with the Common Shares. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares are exchanged,
each Preferred Share will be entitled to receive 1,000 times the amount received
per Common Share. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Shares' dividend,
voting and liquidation rights, the value of the one one-thousandth interest in a
Preferred Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
C-2
<PAGE>
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision shall be made
so that each holder of a Right, other than Rights that are or were owned
beneficially by the Acquiring Person (which, from and after the later of the
Distribution Date and the date of the earliest of any such events, will be
void), will thereafter have the right to receive, upon exercise thereof at the
then current exercise price of the Right, that number of Common Shares (or,
under certain circumstances, an economically equivalent security or securities
of the Company) having a market value of two times the exercise price of the
Right.
To illustrate the operation of such an adjustment, at an
Exercise Price of $110, assuming the current market price (as determined
pursuant to the provisions of the Rights Agreement) per Common Share were
$35.00, each Right not owned beneficially by an Acquiring Person at or after the
time of such an occurrence would entitle its holder to purchase (after the
Distribution Date) from the Company 6.29 Common Shares (having a market value of
$220.00) for $110.
In the event that, at any time after a person or group of
affiliated or associated persons has become an Acquiring Person, (i) the Company
merges with or into any person and the Company is not the surviving corporation,
(ii) any person merges with or into the Company and the Company is the surviving
corporation, but its Common Shares are changed or exchanged, or (iii) 50% or
more of the Company's assets or earning power, including without limitation
securities creating obligations of the Company, are sold, proper provision shall
be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock (or, under certain circumstances,
an economically equivalent security or securities) of such other person which at
the time of such transaction would have a market value of two times the exercise
price of the Right.
At any time after the first date of public announcement that
an Acquiring Person has become such and prior to the acquisition by any person
or group of affiliated or associated persons of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than any Rights which have become void), in whole or in part, at an
exchange ratio of one Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Exercise Price
will be required until cumulative adjustments require an adjustment in the
Exercise Price of at least 1%. The Company is not required to issue fractional
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share, which may, at the option of the Company, be
evidenced by depositary receipts) or fractional Common Shares or other
securities issuable upon the exercise of Rights. In lieu of issuing such
securities, the Company may make a cash payment, as provided in the Rights
Agreement.
C-3
<PAGE>
The Company may redeem the Rights in whole, but not in part,
at a price of $0.001 per Right (the "Redemption Price"), at any time prior to
such time as a person or group of affiliated or associated persons becomes an
Acquiring Person. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The Rights Agreement may be amended by the Company without the
approval of any holders of Right Certificates, including amendments which add
other events requiring adjustment to the purchase price payable and the number
of Preferred Shares or other securities issuable upon the exercise of the Rights
or which modify procedures relating to the redemption of the Rights, provided
that no amendment may be made which decreases the stated Redemption Price or the
period of time remaining until the Final Expiration Date or which modifies a
time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by this reference.
C-4
EXHIBIT 5
---------
[MWHS LETTERHEAD]
June __, 1996
To Our Stockholders:
After extensive study, the Board of Directors of Micro
Warehouse, Inc. has adopted a stockholder rights plan designed to insure that
all of the Company's stockholders receive fair and equal treatment in the event
of any proposal to acquire the Company. The plan is intended to protect the
interests of our stockholders in the event of abusive or unfair takeover
tactics. It is not designed to prevent the acquisition of the Company on terms
beneficial to all stockholders.
Terms of the plan are contained in the Summary of Rights To
Purchase Preferred Shares which is attached to this letter. This letter is for
informational purposes only, and no action is required of you at this time.
Under the stockholder rights plan, rights to purchase a unit
consisting of one one-thousandth of a share of a new Series A Junior
Participating Preferred Stock at an exercise price of $110.00 have been
distributed as a dividend at the rate of one right for each share of the
Company's Common Stock effective June 27, 1996. The terms of the Preferred Stock
have been designed so that each one one-thousandth of a share of Preferred Stock
will approximate the same economic value of one share of the Company's Common
Stock. The rights are implicitly attached to all shares of the Company's Common
Stock. Because the rights are not currently exercisable and have no current
value, certificates representing the rights will not be issued at this time; the
rights will trade with and be represented by your Common Stock certificate.
The rights become exercisable only following the acquisition
by a person or group, without the prior consent of the Micro Warehouse Board, of
20% or more of the Company's voting stock, or following the announcement of a
tender offer or exchange offer to acquire an interest of 20% or more. After the
rights become exercisable, they will be adjusted upon the occurrence of certain
events relating to an attempted acquisition of the Company so as to entitle all
holders, except the takeover bidder, to purchase stock in the Company or the
prospective acquiror's company, as the case may be, at a bargain price. The
effect of the plan is to encourage a prospective acquiror to negotiate with the
Board a transaction that is fair to all stockholders.
<PAGE>
The Company currently has no stockholder with an interest of
20% or more, and the Board is not aware of any current attempt to take control
of the Company. We have a great deal of confidence in the future of Micro
Warehouse and the rights plan helps to insure that our stockholders will have
every opportunity to receive the benefits of the Company's success.
Sincerely,
Peter Godfrey
Chairman, President,
and Chief Executive Officer
<PAGE>
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Board of Directors of Micro Warehouse, Inc. (the
"Company") has declared a dividend distribution of one right (a "Right") for
each outstanding share of Common Stock, par value $.01 per share (the "Common
Shares"), of the Company. The distribution is payable on June 27, 1996 (the
"Record Date") to the stockholders of record as of the close of business on the
Record Date. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Shares"), of the Company at a
price of $110.00 per one one-thousandth of a Preferred Share (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of June 17, 1996 (the "Rights Agreement"),
between the Company and State Street Bank and Trust Company NA, as Rights Agent
(the "Rights Agent").
Until the earliest to occur of (i) the close of business on
the tenth calendar day after the first date of public announcement that a person
or group of affiliated or associated persons has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding Common Shares
(an "Acquiring Person") and (ii) the close of business on the tenth business day
(or such later date as may be specified by the Board of Directors of the Company
prior to such time as any person or group of affiliated or associated persons
becomes an Acquiring Person) after the date of the commencement of a tender
offer or exchange offer by a person or group of affiliated or associated
persons, the consummation of which would result in beneficial ownership by such
person or group of 20% or more of the outstanding Common Shares (the earlier of
such dates being hereinafter called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificates.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Shares. Until
the Distribution Date (or earlier redemption or expiration of the Rights),
Common Share certificates issued upon issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares in respect of which Rights have
been issued will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificates. As soon as practicable following
the Distribution Date, separate
<PAGE>
certificates evidencing the Rights (the "Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date and such separate Right Certificates alone will evidence
the Rights.
No Right is exercisable at any time prior to the Distribution
Date. The Rights will expire on June 27, 2006 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company as described below. 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 Purchase Price payable, and the number of Preferred Shares
or other securities issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
cash (excluding regular periodic cash dividends), assets, stock (excluding
dividends payable in Preferred Shares) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock dividend on the Common Shares
payable in Common Shares or subdivision, combination or reclassification of the
Common Shares occurring, in any such case, prior to the Distribution Date.
Preferred Shares issuable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of (i) $1.00 per share and (ii)
an amount equal to 1,000 times the aggregate dividends declared per Common Share
during the related quarter. In the event of liquidation, the holders of the
Preferred Shares will be entitled to a preferential liquidation payment equal to
the greater of (a) $1,000 per share and (b) an amount equal to 1,000 times the
liquidation payment made per Common Share. Each Preferred Share will have 1,000
votes, voting together with the Common Shares. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares are exchanged,
each Preferred Share will be entitled to receive 1,000 times the amount received
per Common Share. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Shares' dividend,
voting and liquidation rights, the value of the one one-thousandth interest in a
Preferred Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
<PAGE>
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision shall be made
so that each holder of a Right, other than Rights that are or were owned
beneficially by the Acquiring Person (which, from and after the later of the
Distribution Date and the date of the earliest of any such events, will be
void), will thereafter have the right to receive, upon exercise thereof at the
then current exercise price of the Right, that number of Common Shares (or,
under certain circumstances, an economically equivalent security or securities
of the Company) having a market value of two times the exercise price of the
Right.
To illustrate the operation of such an adjustment, at a
Purchase Price of $110, assuming the current market price (as determined
pursuant to the provisions of the Rights Agreement) per Common Share were
$35.00, each Right not owned beneficially by an Acquiring Person at or after the
time of such an occurrence would entitle its holder to purchase (after the
Distribution Date) from the Company 6.29 Common Shares (having a market value of
$220) for $110.
In the event that, at any time after a person or group of
affiliated or associated persons has become an Acquiring Person, (i) the Company
merges with or into any person and the Company is not the surviving corporation,
(ii) any person merges with or into the Company and the Company is the surviving
corporation, but its Common Shares are changed or exchanged, or (iii) 50% or
more of the Company's assets or earning power, including without limitation
securities creating obligations of the Company, are sold, proper provision shall
be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock (or, under certain circumstances,
an economically equivalent security or securities) of such other person which at
the time of such transaction would have a market value of two times the exercise
price of the Right.
At any time after the first date of public announcement that
an Acquiring Person has become such and prior to the acquisition by any person
or group of affiliated or associated persons of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than any Rights which have become void), in whole or in part, at an
exchange ratio of one Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment in the
Purchase Price of at least 1%. The Company is not required to issue fractional
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share, which may, at the option of the Company, be
evidenced by depositary receipts) or fractional Common Shares or other
securities issuable upon the exercise of Rights. In lieu of issuing such
securities, the Company may make a cash payment, as provided in the Rights
Agreement.
<PAGE>
The Company may redeem the Rights in whole, but not in part,
at a price of $0.001 per Right (the "Redemption Price"), at any time prior to
such time as a person or group of affiliated or associated persons becomes an
Acquiring Person. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The Rights Agreement may be amended by the Company without the
approval of any holders of Right Certificates, including amendments which add
other events requiring adjustment to the purchase price payable and the number
of Preferred Shares or other securities issuable upon the exercise of the Rights
or which modify procedures relating to the redemption of the Rights, provided
that no amendment may be made which decreases the stated Redemption Price or the
period of time remaining until the Final Expiration Date or which modifies a
time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by this reference.
