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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): November 6, 1998
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RENEX CORP.
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(Exact name of registrant as specified in its charter)
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FLORIDA 0-23165 65-0422087
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(State or other jurisdiction (Commission File No.) (IRS Employer Identification No.)
of incorporation)
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2100 Ponce de Leon Boulevard, Suite 950, Coral Gables, Florida 33134
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(Address of principal executive office and Zip Code)
Registrant's telephone number, including area code: (305) 448-2044
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Exhibit Index on Page 5
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Item 5. Other Events.
On November 5, 1998, the Board of Directors of Renex Corp. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of common stock, $.001 par value (the "Common Stock"), of the Company to
shareholders of record at the close of business on November 6, 1998 (the "Record
Date") and authorized the issuance of one Right with respect to each share of
Common Stock that becomes outstanding between the Record Date and November 6,
2008 or such earlier time as the Rights are redeemed. Except as described below,
each Right, when exercisable, entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, $.001 par value (the "Preferred Stock"), at a price of $25 per
one one-hundredth of a share (the "Purchase Price"), subject to adjustment. The
terms of the Rights are set forth in a Rights Agreement (the "Rights Plan")
between the Company and Continental Stock Transfer and Trust Company, as Rights
Agent, included as an exhibit to this Current Report on Form 8-K. The
description of the Rights set forth below does not purport to be complete and is
qualified in its entirety by reference to the Rights Plan.
Initially, the Rights will be attached to all certificates
representing Common Stock then outstanding and no separate Rights Certificates
would be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of:
(a) ten (10) days following a public announcement that a person
or group of affiliated or associated persons (an "Acquiring Person"),has
acquired, or obtained the right to acquire, beneficial ownership of 20% or more
of the outstanding Common Shares, the date of such announcement being the "Share
Acquisition Date";
(b) ten (10) business days (or such later date as the Board shall
determine) following the commencement or announcement of an intention to make a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person of 20% or more of such outstanding Common
Shares; or
(c) a determination by the Board of Directors of the Company (the
"Board") that a person or group is an "Adverse Person."
The Rights Plan contains an exemption from the definition of
Acquiring Person for any issuance of Common Stock by the Company directly to any
person (for example, in a private placement or an acquisition by the Company in
which Common Stock is used as consideration), even if that person would become
the beneficial owner of 20% or more of the Common Stock, provided that such
person does not acquire any additional shares of Common Stock.
A person may be declared an Adverse Person upon (a) a
determination that such person, alone or together with its affiliates and
associates, has become, or has expressed an intention to become, the owner of an
amount of Common Shares which the Board determines to be substantial (which may
not be less than 10% of the Common Shares then outstanding) and (b) a
determination by at least a majority of the Board who are not officers of the
Company and are not representatives or associates of the Acquiring Person or
Adverse Persons ("Independent Directors") after reasonable inquiry and
investigation, that such ownership (i) is intended to cause the Company to
repurchase the Common Shares owned by such person or to cause the Company to
take actions or enter into transactions which are intended to provide such
person with a short term financial gain and which are
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not in the best long term interests of the Company and its stockholders or (ii)
is causing, or is reasonably likely to cause, a material adverse impact on the
Company.
Until the Distribution Date, (i) the Rights would be evidenced by
the Common Stock Certificates and would be transferred with and only with such
Common Stock Certificates, (ii) new Common Stock Certificates received after the
Record Date will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. Pursuant to the Rights Agreement,
the Company reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise of Rights, a number
of Rights be exercised so that only whole shares of Preferred Stock will be
issued.
Each whole share of Preferred Stock will have a minimum
preferential quarterly dividend rate equal to the greater of $100 per share or,
subject to anti-dilution adjustment, 100 times the dividend declared on the
Common Stock. In the event of liquidation, no distribution will be made to the
holders of Common Stock unless, prior thereto, the holders of the Preferred
Stock have received a liquidation preference of $100 per share, plus accrued and
unpaid dividends. Holders of the Preferred Stock will be entitled to notice of
and to vote at any meeting of the Company's shareholders. Each whole share of
Preferred Stock is entitled to one vote. Such shares do not have cumulative
voting rights. The Preferred Stock, together with the issued and outstanding
shares of the other preferred stocks of the Company, will be expressly entitled,
as one class, to elect a majority of directors (the Common Stock electing the
minority) whenever dividends on any of the preferred stocks shall be in default
in the amount of four quarterly payments and thereafter until all such dividends
in default shall have been paid. In the event of any merger, consolidation, or
other transaction in which shares of Common Stock are exchanged for or converted
into other securities and/or property, each whole share of Preferred Stock will
be entitled to receive, subject to anti-dilution adjustment, 100 times the
amount into which or for which each share of Common Stock is so exchanged or
converted. The shares of Preferred Stock are not redeemable by the Company.
The Rights are not exercisable until the Distribution Date and
will expire on November 6, 2008, unless earlier redeemed by the Company as
described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to all holders of record of Common Stock at the
close of business on the Distribution Date. Thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board, only Common Shares issued prior to the Distribution Date will be
issued with Rights.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends out of
retained earnings) or of subscription rights or warrants (other than those
referred to above. With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional shares will be issued and,
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in lieu thereof, cash payments will be made based on the market price of the
Preferred Stock on the last trading day prior to the date of exercise.
In the event:
(a) the Company is the surviving corporation in a merger with an
Acquiring Person or Adverse Person and its Common Shares are not changed or
exchanged,
(b) a Person becomes an Acquiring Person (except pursuant to an
offer for all outstanding Common Shares which a majority of the Independent
Directors determined to be fair to, and otherwise in the best interest of the
Company, and its Stockholders (a "Fair Offer"),
(c) an Acquiring Person or Adverse Person engages in one or more
"self dealing" transactions set forth in the Rights Agreement, or
(d) a Person is determined to be an Adverse Person,
(a "Triggering Event") then each holder of a Right will thereafter have the
Right to receive, upon exercise, Common Shares (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. Notwithstanding any of the foregoing,
following the occurrence of a Triggering Event set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were beneficially owned by an Acquiring Person or Adverse Person will
be null and void. Moreover, Rights are not exercisable following the occurrence
of either of the events set forth above until such time as the Rights are no
longer redeemable by the Company as set forth below.
For example, at an exercise price of $25.00 per Right, each Right
not owned by an Acquiring Person or Adverse Person (or certain related parties)
following an event set forth in the preceding paragraph could entitle the holder
to purchase $50.00 worth of Common Shares (or other consideration as noted
above) for the $25.00 Purchase Price. Assuming that the Common Shares have a per
share value of $10.00 at such time, the holder of each valid Right would be
entitled to purchase five (5) Common Shares for $25.00.
In the event that at any time after a Share Acquisition Date:
(a) the Company is acquired in a merger or other business
combination transaction (other than a merger described in the second preceding
paragraph or a merger which followed a Fair Offer); or
(b) more than 50% of its assets or earning power were sold or
transferred,
then each holder of a Right (except Rights which previously have been voided as
set forth above) shall thereafter have the right to receive, upon exercise, the
common stock, or the equivalent equity securities, of the acquiring company
which have a value equal to two times the exercise price of the Right. (The
events set forth in this paragraph and in the second preceding paragraph are
referred to as "Triggering Events").
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In general, the Company may redeem the Rights in whole, but not
in part, at any time until a determination that a person is an Adverse Person
and until ten (10) days following the Share Acquisition Date at a price of $.001
per Right (payable in cash, Common Shares or other consideration deemed
appropriate by the Board). Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority of
the Continuing Directors. Immediately upon the action of the Board, ordering the
Rights to be redeemed (with where specifically required, the concurrence of the
Continuing Directors), the Rights will terminate and the only right of the
holders of Rights will be to receive the $.001 Redemption Price.
The term "Continuing Directors" means any member of the Board who
was a member of the Board prior to the execution of the Rights Agreement, and
any person who is subsequently elected to the Board, if such person is
recommended or approved by a majority of the Continuing Directors, but shall not
include an Acquiring Person, Adverse Person or an Affiliate or Associate of the
Acquiring Person or Adverse Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company (other than such rights as a
holder of Common Shares), including, without limitation, the right to vote or to
receive dividends. While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights becomes
exercisable for Common Shares (or other consideration) of the Company or common
stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the Rights Agreement may be
amended by the Board prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended by the Board (in
certain circumstances, with the concurrence of the Continuing Directors) in
order to cure any ambiguity, to make changes which do not adversely affect the
interest of holders of Rights (excluding the interests of any Acquiring Person
or Adverse Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at any time as the Rights are not redeemable.
As of November 6, 1998, there were 6,977,372 shares of Common
Stock outstanding. Each share of Common Stock outstanding on and after November
6, 1998 will receive one Right. An aggregate of 200,000 shares of Preferred
Stock will be reserved for issuance in the event of exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company without conditioning the offer on the Rights being redeemed or a
substantial number of Rights being acquired, and under certain circumstances the
Rights beneficially owned by such a person or group may become void. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors because, if the Rights would become exercisable as a
result of such merger or business combination, the Board of Directors may, at
its option, at any time prior to the time that any Person becomes an Acquiring
Person, redeem all (but not less than all) of the then outstanding Rights at the
Redemption Price.
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Item 7. Financial Statements and Exhibits:
(a) Financial Statements
None
(b) Exhibits
4.1 Rights Agreement dated as of November 6, 1998 by and
between Renex Corp. and Continental Stock Transfer and
Trust Company, as Rights Agent.
99.1 Text of Press Release relating to the declaration of the
Rights dated November 5, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
RENEX CORP., a Florida corporation
DATE: November 6, 1998 By: /s/ James P. Shea
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JAMES P. SHEA
President/Chief Executive Officer
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EXHIBIT LIST
Exhibit
No. Description
4.1 Agreement, dated as of November 6, 1998, between Renex Corp. and
Continental Stock Transfer Company, as Rights Agent, including the
form of Certificate of Designation, Preferences and Rights of Series
a Junior Participating Preferred Stock as Exhibit A, the form of
Right Certificate as Exhibit B and the Summary of Rights to Purchase
Preferred Stock as Exhibit C.
99.1 Text of Press Release relating to the declaration of the Rights
dated November 5, 1998.
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EXHIBIT 4.1
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RENEX CORP.
AND
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF NOVEMBER 6, 1998
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TABLE OF CONTENTS
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SECTION PAGE
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1. Definitions...............................................................................................1
2. Appointment of Rights Agent...............................................................................4
3. Issuance of Rights Certificates...........................................................................5
4. Form of Rights Certificates...............................................................................6
5. Countersignature and Registration. ......................................................................7
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates...................................................8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.............................................8
8. Cancellation and Destruction of Right Certificates.......................................................10
9. Reservation and Availability of Preferred Stock..........................................................10
10. Preferred Stock Record Date..............................................................................12
11. Adjustment of Purchase Price; Number of Shares or Number of Rights.......................................12
12. Certificate of Adjusted Purchase Price or Number of Shares...............................................21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.....................................22
14. Fractional Rights and Fractional Shares..................................................................24
15. Rights of Action.........................................................................................25
16. Agreement of Rights Holders..............................................................................25
17. Rights Certificate Holder Not Deemed a Stockholder.......................................................26
18. Matters Concerning the Rights Agent......................................................................26
19. Merger or Consolidation or Change of Name of Rights Agent................................................26
20. Duties of Rights Agent...................................................................................27
21. Change of Rights Agent...................................................................................28
22. Issuance of New Rights Certificates......................................................................29
23. Redemption...............................................................................................30
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24. Notice of Certain Events.................................................................................31
25. Notices..................................................................................................31
26. Supplements and Amendments...............................................................................32
27. Successors...............................................................................................33
28. Benefits of this Agreement...............................................................................33
29. Determinations and Actions by the Board..................................................................33
30. Severability.............................................................................................33
31. Governing Law............................................................................................33
32. Counterparts.............................................................................................34
33. Descriptive Headings.....................................................................................34
EXHIBITS
EXHIBIT
Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock...........................................................A
Form of Rights Certificate.....................................................................................B
Summary of Rights Plan........................................................................................ C
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RIGHTS AGREEMENT
THIS AGREEMENT, dated as of November 6, 1998, between RENEX CORP., a
Florida corporation (the "Company"), and CONTINENTAL STOCK TRANSFER AND TRUST
COMPANY, a _____________ corporation (the "Rights Agent").
R E C I T A L S:
A. On November 5, 1998, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each Common Share (as defined herein) outstanding at the close of
business on the Record Date (as hereinafter defined).
B. The Company has authorized the issuance of one Right with respect to
each Common Share that shall become outstanding between the Record Date (whether
originally issued or delivered from the Company's treasury) and the earlier of
the Distribution Date and the Expiration Date (as such terms are hereinafter
defined), each Right representing the right to purchase one one-hundredth
(1/100) of a share of Preferred Stock (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. DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of Common Shares then outstanding
entitling such person to cast twenty (20%) percent or more of the votes that may
be cast generally in an election of Directors of the Company. However, the term
AAcquiring Person@ shall not include (i) the Company; (ii) any Subsidiary of the
Company; (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company; (iv) an entity holding Common Shares for or pursuant to the terms
of any such plan; (v) any Person who becomes an Acquiring Person solely as a
result of a reduction in the number of Common Shares outstanding due to a
repurchase of Voting Securities by the Company; and (vi) any Person who acquires
newly issued Common Shares directly from the Company (it being understood that a
purchase from a underwriter or other intermediary is not a purchase from the
Company); provided, however, that if a Person shall become the Beneficial Owner
of 20% or more of the Common Shares of the Company then outstanding by reason of
share purchases by the Company or the receipt of newly issued Common Shares
directly from the Company and shall, after such share purchases or direct
issuance by the Company, become the Beneficial Owner of any additional Common
Shares, then such Person shall thereafter be deemed an AAcquiring Person,@
provided further, however that any transferee from such Person who becomes a
Beneficial Owner of 20% or more of the Shares then outstanding shall
nevertheless be deemed to be an AAcquiring Person@.
(b) "ACT" shall mean the Securities Act of 1933, as amended.
(c) "ADJUSTMENT SHARES" shall have the meaning as set forth in
Section 11(a) hereof.
(d) "ADVERSE PERSON" shall mean any person declared to be an
adverse person by the Board of Directors upon determination that the criteria
set forth in Section 11(a)(ii)(c) applies to such person.
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(e) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
(f) "AGREEMENT" means this Rights Agreement as originally
executed or as it may from time to time be supplemented or amended pursuant to
the applicable provisions hereof.
(g) A Person shall be deemed the "BENEFICIAL OWNER" of, and
shall be deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates may Beneficially Own, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise;
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own:
(A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase,
(B) securities issued upon exercise of
Rights at any time prior to the occurrence of a Triggering
Event, or
(C) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event or
securities issued pursuant to Section 11(a)(ii) hereof in
connection with an adjustment made with respect to any
Original Rights;
(iii) which such Person or any of such Person's
Affiliates or Associates directly or indirectly has the right to vote
or dispose of or has Beneficial Ownership pursuant to Rule 13d-3 of the
Exchange Act, including pursuant to any agreement, arrangement or
understanding, whether or not in writing; PROVIDED, HOWEVER, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to
vote such security:
(A) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations 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
(iv) which are Beneficially Owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing) for the purpose of acquiring, holding, voting (except
to the extent permitted by section (iii)(B) of this paragraph (g) or
disposing of any securities of the Company; PROVIDED, HOWEVER, that
nothing in this paragraph shall cause a person engaged in the business
as an underwriter of securities to be the Beneficial Owner of or to
Beneficially Own securities acquired through such
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person's participation in good faith in a firm commitment underwriting,
until the expiration of forty days after the date of such acquisition.
(h) "BOARD" shall mean the Board of Directors of the Company.
(i) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State in which the Rights
Agent is located are authorized, or obligated, by law or executive order to
close.
(j) "CLOSE OF BUSINESS" on any given date shall mean 5:00
P.M., New York City time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(k) "COMMON SHARES" when used with reference to the Company
shall mean the shares of common stock, par value $.001 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 interest) with the greatest
voting power of such other Person or, if such Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such first mentioned
Person.
(l) "COMMON STOCK EQUIVALENT" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(m) "COMPANY" shall mean Renex Corp., a Florida corporation
until a successor corporation shall have become such, or until a Principal Party
shall assume, and thereafter be liable for, all obligations and duties of the
Company hereunder, pursuant to the applicable provisions of this Agreement, and
thereafter "Company" shall mean such successor corporation or Principal Party.
(n) "CONTINUING DIRECTOR" shall mean (i) any member of the
Board, while such Person is a member of the Board, who is not an Acquiring
Person, or Adverse Person or an Affiliate or Associate of an Acquiring Person or
Adverse Person or a representative of an Acquiring Person or Adverse Person of
any such Affiliate or Associate, and was a member of the Board prior to the date
of this Agreement or (ii) any Person who subsequently becomes a member of the
Board, while such person is a member of the Board, who is not an Acquiring
Person, Adverse Person, an Affiliate or Associate of an Acquiring Person or
Adverse Person or a representative of an Acquiring Person, Adverse Person or an
Affiliate or Associate of such, if such Person's nomination for election, or
election to the Board is recommended or approved by a majority of the Continuing
Directors.
(o) "CURRENT MARKET PRICE" shall have the meaning set forth in
Section 11(d) hereof.
(p) "CURRENT VALUE" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(q) "DISTRIBUTION DATE" shall have the meaning set forth in
Section 3(a) hereof.
(r) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended and in effect on the date of this Agreement.
(s) "EXPIRATION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(t) "FINAL EXPIRATION DATE" shall mean the close of business
on November 6, 2008.
(u) "ORIGINAL RIGHTS" shall mean the Rights acquired by such
person or any of such Person=s Affiliates or Associates prior to the
Distribution Date or pursuant to Sections 3(a) or 22 hereof.
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(v) "PERSON" shall mean any individual, firm, corporation or
other entity, and shall include without limitation an unincorporated group of
persons who, by formal or informal agreement have embarked on a common purpose
or act, and shall also include any successor (by merger or otherwise) of such
entity.
(w) "PREFERRED STOCK" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value of the Company, designated the
"Junior Series A" Preferred Stock and having the rights, and preferences set
forth in the Form of Certificate of Resolution Fixing Terms of Series A Junior
Participating Preferred Stock attached to this Agreement as Exhibit "A".
(x) "PRINCIPAL PARTY" shall have the meaning set forth in
Section 13(b) hereof.
(y) "PURCHASE PRICE" shall have the meaning set forth in
Section 4(a) hereof.
(z) "RECORD DATE" shall mean November 6, 1998.
(aa) "REDEMPTION PRICE" shall have the meaning set forth in
Section 23(a) hereof.
(bb) "RIGHTS" shall have the meaning set forth in Recital B at
the beginning of this Agreement.
(cc) "RIGHTS AGENT" shall mean the Continental Stock Transfer
and Trust Company, until a successor Rights Agent shall be appointed pursuant to
the applicable provisions hereof and thereafter Rights Agent shall mean such
successor Rights Agent.
(dd) "RIGHTS CERTIFICATE" shall have the meaning set forth in
Section 3(a) herein.
(ee) "RIGHTS DIVIDEND DECLARATION DATE" shall mean November 6,
1998.
(ff) "SHARE ACQUISITION DATE" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(gg) "SUBSIDIARY" of any Person shall mean any corporation or
other entities of which a majority of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such Person.
(hh) "TRIGGERING EVENT" shall mean any event described in
Section 11(a)(ii) or Section 13(a) hereafter
(ii) "VOTING SECURITIES" shall mean any securities of the
Company entitling the holder thereof to vote generally in the election of the
Directors of the Company.
Any determination or interpretation required in connection with any of the
definitions contained in this Section 2 shall be made by the Board in its good
faith judgment, which determination shall be final and binding on the Rights
Agent and the holders of Rights.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall, prior to the Distribution Date, also
be the holders of the 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.
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Section 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the earlier of:
(i) the Close of Business on the tenth day after the
Share Acquisition Date;
or
(ii) the Close of Business on the tenth day after the
date of the commencement of, or first public announcement of the intent
of any Person (other than the Company, any wholly-owned Subsidiary of
the Company or any employee benefit 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) to commence, a tender or
exchange offer the consummation of which would result in beneficial
ownership by a Person of 20% or more of the outstanding Common Stock or
any Voting Securities (including any such date which is after the date
of this Agreement and prior to the issuance of the Right); or
(iii) a determination by the Board pursuant to the
criteria set forth in Section 11(a)(ii)(c) hereof that a Person is an
Adverse Person (the earliest of (i), (ii) or (iii) being herein
referred to as the "Distribution Date"),
then:
(A) the Rights will be evidenced (subject to
the provisions of paragraph (b) of this Section (3)) by the
certificates for Common Shares registered in the names of the
holders of the Common Shares (which certificates for Common
Shares shall also be deemed to be Rights Certificates) and not
by separate Rights Certificates, and,
(B) The Rights will be transferable only in
connection with the transfer of Common Shares (including a
transfer to the Company).
As soon as practicable after the Distribution Date, the Rights Agent will send,
by first-class, insured, postage prepaid mail, to each record holder of 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, one or more Rights
Certificates, in substantially the form of Exhibit "B" hereto, evidencing one
Right for each Common Share so held subject to adjustment as provided herein. In
the event that an adjustment in the number of Rights per Common Share has been
made pursuant to Section 11(p) hereof, at the time of distribution of Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights Plan, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of Common Shares as of the Close of Business
on the Record Date at the address of such holder shown on the records of the
Company. With respect to certificates for Common Shares outstanding as of the
Record Date until the Distribution Date, the Rights will be evidenced by such
certificates for Common Shares and the registered holders of the Common Shares
shall also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date, the Expiration Date or Final Expiration Date, the
surrender for transfer of any certificate for Common Shares with respect to
which Rights have been issued shall also constitute the transfer of the Rights
associated with the Common Shares.
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<PAGE> 9
(c) Rights shall be issued in respect of all Common Shares
which are issued (whether originally issued or from the Company's treasury)
after the Record Date, but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates for Common Shares issued after the Record Date,
but prior to the earlier of the Distribution Date or the Expiration Date, shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Renex Corp. (the "Company") and Continental Stock Transfer and
Trust Company (the "Rights Agreement"), dated as of November
6, 1998 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is
on file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge upon
receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued
to or held by any Person who is, was or becomes an Acquiring
Person, Adverse Person or an Affiliate or Associate thereof
(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
earlier of:
(i) the Distribution Date, or
(ii) the Expiration Date,
the Rights associated with the Common Shares represented by such certificates
shall be evidenced by such certificates alone, and the surrender for transfer of
any such certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. In the event that the Company
purchases or acquires any Common Stock after the Record Date, but prior to the
Distribution Date, any Rights associated with such Common Shares shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares which are no longer outstanding.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Sections 11
and 22 hereof, the Rights Certificates, whenever issued, shall be dated as of
the Record Date, and on their face shall entitle the holders thereof to purchase
such number of one one-hundredth (1/00) of a share of Preferred Stock as shall
be set forth therein at the price per one one-hundredth (1/100) of a share set
forth therein (the "Purchase Price"), but the number of such shares and the
Purchase Price shall be subject to adjustment as provided herein.
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<PAGE> 10
(b) Any Rights Certificates issued pursuant to Sections 3(a)
or Section 22 hereof, that represents Rights which are Beneficially Owned by:
(i) an Acquiring Person, an Adverse Person or any
Affiliate or Associate of such Acquiring Person or Adverse Person,
(ii) a transferee of an Acquiring Person or an
Adverse Person (or of any Affiliate or Associate) who becomes a
transferee after the Acquiring Person or Adverse Person becomes such or
(iii) a transferee of an Acquiring Person or an
Adverse Person (or of any of their Affiliates or Associates) who
becomes a transferee prior to or concurrently with the Acquiring Person
or the Adverse Person becoming such and receives such Rights pursuant
to either:
(A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person to
holders of equity interests in such Acquiring Person or the
Adverse Person or to any Person with whom such Acquiring
Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights
or
(B) a transfer which the Board has
determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section
7(e) hereof, and any Rights Certificate issued pursuant to
Sections 6 or 11 hereof,
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this Section 4(b), shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person, an Adverse Person or an Affiliate or Associate of an
Acquiring Person or Adverse Person (as such terms are defined
in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void
under the circumstances specified in Section 7(e) of the
Rights Agreement.
The provisions of Section 7(e) shall apply whether or not a Rights Certificate
actually contains the foregoing legend.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be
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<PAGE> 11
countersigned by the Rights Agent, and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal offices designated as the appropriate
place for surrender (by execution or transfer) of Rights Certificates, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Expiration Date or the
Final Expiration Date, any Rights Certificates may be transferred, split up,
combined or exchanged for another Rights Certificates, entitling the registered
holder to purchase a like number of Shares of Preferred Stock (or following a
Triggering Event, Common Shares or other securities or property, as the case may
be) as the Rights Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Rights Certificates, to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificates until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner as the Company shall reasonably request.
Thereupon, the Rights Agent shall subject to Section 4 and Section 7 thereof,
countersign and deliver to the person entitled thereto a Rights Certificates, 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.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will make and
deliver a new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e) herein, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including without limitation, the restriction on
exercisability set forth in Sections 9(c), 11(a)(ii) and 23(a) herein) in whole,
or in part, at any time after the Distribution Date, upon surrender of the
Rights Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each one one-hundredth (1/100) of a
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<PAGE> 12
share of Preferred Stock (or Common Shares, or other securities or property as
the case may be) as to which such surrendered Rights are then exercisable, at or
prior to the earlier of:
(i) the Final Expiration Date, or
(ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the ARedemption Date@) (such earlier
time in (i) and (ii) being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each one one-hundredth (1/100) of a
share of Preferred Stock pursuant to the exercise of a Right shall initially be
$25.00, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph 7(c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price to be purchased and an amount equal
to any applicable transfer tax in cash, or by certified check or Company draft
payable to the order of the Company, the Rights Agent shall thereupon promptly:
(i) requisition from any transfer agent of the
Preferred Stock (or make available, if the Rights Agent is the transfer
agent) certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests;
(ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14;
(iii) promptly after receipt of such certificates,
cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as
may be designated by such holder; and
(iv) when appropriate, after receipt promptly deliver
such cash to or upon the order of the registered holder of such Rights
Certificate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Triggering Event, any Rights
beneficially owned by:
(i) an Acquiring Person, Adverse Person or an
Affiliate or Associate of an Acquiring Person or Adverse Person,
(ii) a transferee of any such Acquiring Person or
Adverse Person (or of any such Affiliate or Associate) who becomes a
transferee after such Acquiring Person or Adverse Person becomes such,
or
(iii) a transferee of any such Acquiring Person or
Adverse Person (or of any such Affiliate or Associate) who becomes a
transferee prior to or concurrently with such
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<PAGE> 13
Acquiring Person or Adverse Person becoming such and receives such
Rights pursuant to either
(A) a transfer (whether or not for
consideration) from such Acquiring Person or Adverse Person to
holders of equity interests in such Acquiring Person or
Adverse Person or to any person with whom such Acquiring
Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights
or
(B) a transfer which the Board has
determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this
Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights under this
Agreement or otherwise from and after the occurrence of a Triggering Event. The
Company shall use reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but the Company and the
Rights Agent shall have no liability to any holder of Rights Certificates or
other Person as a result of the Company's failure to make any determinations
with respect to an Acquiring Person or Adverse Person or any of their
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent, nor the Company, shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7, unless such registered
holder shall have:
(i) completed and signed the certificate contained in
the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise,
(ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof, as the Company reasonably requests,
and
(iii) paid the Purchase Price in the form and amount
as required pursuant to this Agreement.
Section 8 CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or ex-change shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof, except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9 RESERVATION AND AVAILABILITY OF PREFERRED STOCK
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Stock
(and following the occurrence of a Triggering Event, Common Shares and/or other
securities), the number of shares of Preferred Stock
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<PAGE> 14
(and following the occurrences of a Triggering Event, Common Shares and/or other
securities) that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the Preferred Stock (and following the
occurrence of a Triggering Event, Common Shares and/or other securities)
issuable and deliverable upon the exercise of Rights may be listed on any
national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts to:
(i) file, as soon as practicable following the
earliest date after the first occurrence of a Section 11(a)(iii) Event
on which the consideration to be delivered by the Company upon exercise
of the Rights has been delivered in accordance with Section 11(a)(iii)
herein, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an appropriate
form,
(ii) cause such registration statement to become
effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of:
(A) the date as of which the Rights are no
longer exercisable for such securities, and
(B) the Expiration Date of the Rights.
The Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or Blue Sky laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the Company shall
determine that a registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not
be permitted under applicable law or a registration statement shall not have
been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and following a Triggering Event, Common Shares and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable, any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates or of any shares of Preferred Stock (or Common Shares or other
securities) as the case may be upon the exercise of Rights. The Company shall
not,
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<PAGE> 15
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Rights Certificates to a person other than, or the
issuance or delivery of certificates for the Preferred Stock (or Common Shares
or other securities as the case may be), in a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for Common Shares upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10 PREFERRED STOCK RECORD DATE. Each person in whose name any
certificate for Preferred Stock (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such securities represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Shares and/or other securities) transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next succeeding
business day on which the Preferred Stock (or Common Shares and/or other
securities) transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, holders of Rights Certificates shall not be entitled
to any rights of a stockholder of the Company with respect to Preferred Stock
(or Common Shares and/or other 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 PURCHASE PRICE; NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number of shares of Preferred Stock covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement:
(A) declare a dividend on the Preferred
Stock payable in Preferred Stock;
(B) subdivide the outstanding Preferred
Stock;
(C) combine the outstanding Preferred Stock
into a smaller number of shares, or
(D) issue any shares of its capital stock in
a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a) and Section 7(e) herein,
the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, split,
combination or reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be
entitled to receive 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 Stock transfer books of the
Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require
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<PAGE> 16
an adjustment under both Section 11(a)(i) and Section 11(a)(ii),
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) In the event:
(A) any Acquiring Person, Adverse
Person or any Associate or Affiliate of any Acquiring
Person or Adverse Person, at any time after the date of
this Agreement, directly or indirectly,
(1) shall merge into the
Company or otherwise combine with the Company
and the Company shall be the continuing or
surviving corporation of such merger or
combination and the Common Shares of the Company
shall remain outstanding and unchanged,
(2) shall, in one transaction
or a series of transactions, transfer any assets
to the Company or any of its Subsidiaries in
exchange (in whole or in part) for shares of any
class of capital stock of the Company or any of
its Subsidiaries or for securities exercisable
for or convertible into shares of any class of
capital stock of the Company (Common Shares or
otherwise) or otherwise obtain from the Company
(with or without consideration), any additional
shares of any class of capital stock of the
Company or securities exercisable for or
convertible into shares of any class of capital
stock of the Company (other than pursuant to a
pro rata distribution to all holders of Common
Shares),
(3) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of (in one
transaction or a series of transactions), to,
from or with (as the case may be), the Company
or any of its Subsidiaries, assets, on terms and
conditions less favorable to the Company than
the Company would be able to obtain in
arm's-length negotiation with an unaffiliated
third party other than pursuant to a transaction
set forth in Section 13(a) hereof,
(4) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of in one
transaction or a series of transactions to, from
or with (as the case may be) the Company or any
of its Subsidiaries (other than incidental lines
of business if any, engaged in as of the date
hereof between the Company and such Acquiring
Person, Adverse Person or Affiliate or
Associate) assets having an aggregate fair
market value of more than $1,000,000 other than
pursuant to a transaction set forth in Section
13(a) hereof,
(5) shall receive any
compensation from the Company or any of its
Subsidiaries other than compensation for
full-time employment as a regular employee at
rates in accordance with the Company's (or its
Subsidiaries') past practices, or
(6) shall receive the benefit,
directly or indirectly (except proportionately
as a stockholder and except if resulting from a
requirement of law or governmental regulation),
of any loans, advances, guarantees,
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<PAGE> 17
pledges or other financial assistance or any tax
credits or other tax advantage provided by the
Company or any of its Subsidiaries, or
(B) Any Person (other than the Company,
any Company Subsidiary, any employee benefit plan of the
Company or of its Subsidiaries or any Person, or entity
organized, appointed or established by the Company for or
pursuant to the terms of any such plan), shall at any
time after the Rights Dividend Declaration Date, become
an Acquiring Person, unless the event causing such person
to become an Acquiring Person is
(1) a transaction set forth in
Section 13(a) hereof, or
(2) the acquisition of Common
Shares pursuant to a tender offer or an exchange
offer for all outstanding Common Shares at a
price and on terms determined by at least a
majority of the members of the Board who are not
officers of the Company and who are not
representatives, nominees, Affiliates or
Associates of an Acquiring Person, or Adverse
Person, after receiving advice from one or more
investment banking firms, to be:
(x) at a price which
is fair to stockholders (taking into
account all factors which such members
of the Board deem relevant including
without limitation, prices which could
reasonably be achieved if the Company
or its assets were sold on an orderly
basis designed to realize maximum
value), and
(y) otherwise in the
best interests of the Company and its
stockholders; or
(C) The Board shall declare any Person
to be an Adverse Person, upon:
(1) a determination that such
Person, alone or together with its Affiliates
and Associates has, at any time after the Rights
Dividend Declaration Date, become or has
expressed an intention, privately or publicly,
to become the Beneficial Owner of an amount of
Common Shares which the Board determines to be
substantial (which amount shall in any event be
no less than 10% of the Common Shares then
outstanding); and
(2) a determination by at
least a majority of the Board who are not
officers of the Company and who are not
representatives, nominees, Affiliates or
Associates of an Acquiring Person or any Adverse
Person, after reasonable inquiry and
investigation, including consultation with such
persons as such directors shall deem
appropriate, that:
(x) such Beneficial
Ownership by such Person is intended to
cause the Company to repurchase the
Common Shares beneficially owned by
such Person or to cause pressure on the
Company to take action or enter into a
transaction or series of transactions
intended to provide such Person with
short-term financial gain under
circumstances where the Board
determines that the best long-term
interest of the Company and its
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<PAGE> 18
shareholders would not be served by taking such action or entering into such
transactions or series of transactions at that time, or
(y) such Beneficial
Ownership is causing or is reasonably
likely to cause, a material adverse
impact (including, but not limited to,
impairment of the Company's ability to
maintain its competitive position or
impairment of the Company's business
reputation or ability to deal with
government agencies) or the business or
prospects of the Company (it being
understood that a finding of
qualification, suitability or the like
by any regulatory body shall not
preclude the Board from declaring such
Person to be an Adverse Person,
then, promptly following five (5) days after the date of
occurrence of an event described in Section 11(a)(ii)(B) and
promptly following the occurrence of an event described in
Section 11(a)(ii)(A) or 11(a)(ii)(C) hereof, proper provision
shall be made so that each holder of a Right, except as provided
below and in Section 7(e) hereof, shall thereafter have a right
to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of
a number of one one-hundredth (1/100) of a share of Preferred
Stock, such number of Common Shares as shall equal the result
obtained by:
(x) multiplying the
then current Purchase Price by the then
number of one one-hundredth (1/100) of
a share of Preferred Stock for which a
Right was exercisable immediately prior
to the first occurrence of a Triggering
Event and dividing that product (which
following such first occurrence of a
Triggering Event shall thereafter be
referred to as the "Purchase Price" for
each Right and for all purposes of this
Agreement) by
(y) 50% of the Current
Market Price per Common Share on the
date of such first occurrence (such
number of shares being referred to as
the "Adjustment Shares").
(iii) In the event that the number of Common
Shares which are authorized by the Company's Articles of
Incorporation, but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights, is not
sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall;
(A) Determine the excess of
(1) the value of the
Adjustment Shares issuable upon the exercise of
a Right (the "Current Value") over
(2) the Purchase Price (such
excess being referred to as the "Spread"), and
(B) with respect to each Right, make
adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price,
the following:
(1) cash,
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<PAGE> 19
(2) a reduction in the
Purchase Price,
(3) Common Shares or other
equity securities of the Company (including,
without limitation, shares, or units of shares,
or preferred stock which the Board has deemed to
have the same value as shares of common Stock
(such shares being referred to as "Common Stock
Equivalents")),
(4) debt securities of the
Company,
(5) other assets, or
(6) any combination of the
foregoing, having an aggregate value equal to
the Current Value, where such aggregate value
has been determined by the Board based upon the
advice of a nationally recognized investment
Banking firm selected by the Board;
PROVIDED, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of:
(x) the first
occurrence of a Triggering Event and
(y) the date on which
the Company's right of redemption
pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to
herein as the "Section 11(a)(ii)
Trigger Date"),
then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment
of the Purchase Price, Common Shares (to the extent available)
and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board shall determine
in good faith that it is likely that sufficient additional Common
Share could be authorized for issuance upon exercise in full of
the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90)
days after the Triggering Event, in order that the Company may
seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended being
referred to herein as the "Substitution Period"). To the extent
that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company
(x) shall provide,
subject to Section 7(e) hereof, that
such action shall apply uniformly to
all outstanding Rights, and
(y) may suspend the
exercisability of the Rights until the
Expiration of the Substitution Period
in order to seek any authorization of
additional shares and/or to decide the
appropriate form of distribution to be
made pursuant to such first sentence
and to determine the value thereof.
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value of the
Common Shares shall be the Current Market Price per share of the Common Shares
on the
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<PAGE> 20
Section 11(a)(ii) Trigger Date and the value of any Common Stock Equivalent
shall be deemed to have the same value as the Common Shares on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options
or warrants to all holders of Preferred Stock entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Preferred Stock (or shares having the same rights, privileges and
preference as the shares of Preferred Stock ("Equivalent Preferred Stock") or
securities convertible into Preferred Stock or Equivalent Preferred Stock at a
price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price per share of the Preferred Stock on such record date) the Purchase Price
to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of Preferred Stock which the
aggregate offering price of the total number of Preferred Stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such Current Market Price and the denominator
of which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
Preferred Stock Equivalents to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of Rights. Shares of Preferred Stock owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or cash (other than a regular periodic cash dividend paid out of the earnings or
retained earnings of the Company or a dividend payable in Preferred Stock), or
assets or subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Current
Market Price per share of Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Preferred Stock and the denominator of which shall be such Current Market
Price per share of the Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the
"Current Market Price" per share 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 (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the Current Market Price
per share of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible into such Common Shares; or (B) any subdivision,
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<PAGE> 21
combination or reclassification of such Common Shares, 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 Market Price" shall
be appropriately adjusted to take into account ex dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Shares 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 Common Shares
are listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the Closing Sale Price
as reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") National Market System or the NASDAQ Small Cap
Market as the case may be or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. or such other system then in use, or, if
on any such date the Common Shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Shares selected by the Board of
Directors of the Company. If on any such date no market maker is making a market
in the Common Shares, the fair value of such shares on such date as determined
in good faith by the Board of Directors of the Company shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Common Shares are listed or admitted to trading is open
for the transaction of business or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which Banking institutions in the State of New
York are not authorized or obligated by law or executive order to close. If the
Common Shares are not publicly held or not so listed or traded, "Current Market
Price" per share shall mean the fair value per share as determined in good faith
by the Board of the Company, whose determination shall be described in a
statement filed with the Rights Agent.
(ii) For the purpose of any computation
hereunder, the "Current Market Price" of the Preferred Stock shall be determined
in accordance with the method set forth in Section 11(d)(i). If the shares of
Preferred Stock are not publicly traded, the "Current Market Value" of the
Preferred Stock shall be conclusively deemed to be the Current Market Value of
the Common Shares as determined pursuant to Section 11(d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one hundred. If neither the
Common Shares or Preferred Stock are publicly held or so listed or traded,
Current Market Value shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a statement to the
Rights Agent.
(e) Notwithstanding anything hereunto the contrary, no
adjustment in the Purchase 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 ten-thousandth of a share as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of:
(i) three years from the date of the transaction
which requires such adjustment, or
(ii) the date of the expiration of the right to
exercise any Rights.
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<PAGE> 22
(f) If as a result of an adjustment made pursuant to
Sections 11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Stock (or Common Shares as the case may be), thereafter the
number of such other shares 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 shares contained
in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), inclusive,
and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock (or Common Shares as the case may be) shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of one
one-hundredth (1/100) of a share of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-hundredth (1/100) of a share of Preferred Stock (calculated to the nearest
one one-millionth of a share of Preferred Stock) obtained by:
(i) multiplying
(A) the number of one one-hundredth
(1/100) of a share covered by a Right immediately prior
to this adjustment, by
(B) the Purchase Price in effect
immediately prior to such adjustment of the Purchase
Price, and
(ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-hundredth (1/100) of a share of Preferred
Stock 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-hundredth (1/100) of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date, Rights
Certificates evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the 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
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<PAGE> 23
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
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredth (1/100) of a share of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
Preferred Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such record
date the Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the
contrary, the Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this Section 11,
as and to the extent that it in its sole discretion shall determine to be
advisable in order that:
(i) any consolidation or subdivision of the
Preferred Stock,
(ii) an issuance wholly for cash of any of the
Preferred Stock at less than the Current Market Price,
(iii) an issuance wholly for cash of Preferred
Stock or securities which by their terms are convertible into or
exchangeable for Common Shares,
(iv) stock dividends, or
(v) issuance of rights, options or warrants
referred to herein above in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that it shall not,
at any time after the Distribution Date:
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<PAGE> 24
(i) consolidate with any other Person (other
than a Company subsidiary in a transaction which complies with
Section II(o) hereof,
(ii) merge with or into any other Person (other
than a Company subsidiary in a transaction which complies with
Section II(o) hereof, or
(iii) sell or transfer (or permit any Company
subsidiary to sell or transfer) in one transaction or in a series
of related transactions, assets or earning power aggregating more
than 50% of its assets or earning power to any other Person or
Persons if:
(A) at the time of or immediately after
such consolidation, merger or sale, there are any rights,
warrants, or other instruments or securities outstanding
or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to
be afforded by the Rights, or
(B) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the
stockholder of the Person who constitutes, or would
constitute the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its affiliates
or associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections 23 or 26 hereof,
take (or permit any of its subsidiaries to take), any action if at the time such
action is taken, it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights;
(p) Notwithstanding anything in this Agreement to the
contrary, in the event that the Company shall at any time after the Rights
Dividend Distribution Date and prior to the Distribution Date:
(i) declare a dividend in the outstanding Common
Shares payable in Common Shares,
(ii) subdivide the outstanding Common Shares, or
(iii) combine the outstanding Common Shares into
a smaller number of shares, the number of Rights associated with
each Common Share following any such event shall equal the result
obtained by multiplying the number of Rights associated with each
Common Shares immediately prior to such event by the fraction,
the numerator of which should 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.
(q) The failure by the Board of Directors to declare a
Person to be an Adverse Person following such Person becoming or expressing an
intention to become the beneficial owner of 10% or more of the outstanding
Common Shares shall not imply that such Person is not an Adverse Person, or
limit the Board's right at any time in the future to declare such Person to be
an Adverse Person.
Section 12 CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall:
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<PAGE> 25
(a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each
transfer agent for the Preferred Stock or Common Shares a copy of such
certificate and
(c) mail a brief summary thereof to each holder of a
Rights Certificate in accordance with Section 25 hereof.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained.
Section 13 CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER.
(a) In the event that following the Share Acquisition
Date, directly or indirectly:
(i) the Company shall consolidate with, or merge
with and into, any other Person (other than a Company Subsidiary)
and the Company shall not be the continuing or surviving
corporation,
(ii) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall
be the continuing or surviving corporation of such merger and, in
connection with such consolidation or merger, 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 aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person,
then, and in each such case (except as may be contemplated by Section 13(d)
hereof), proper provision shall be made so that:
(A) each holder of a Right (except as
otherwise provided in Section 7(e) herein) shall
thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of validly
authorized and issued, fully paid, non-assessable and
fully tradeable Common Shares of the Principal Party, not
subject to any liens, encumbrances, rights of first
refusal or other adverse matters as shall be equal to the
result obtained by:
(1) multiplying the then current
Purchase Price by the number of one
one-hundredth of a share of Preferred Stock for
which a Right is then exercisable (or, if such
Right is not then exercisable for a number of
one one-hundredth of a share of Preferred Stock,
the number of such fractional shares for which
it was exercisable immediately prior to an event
described under Section 11(a)(ii) hereof) and
dividing that product by
(2) 50% of the then Current Market
Price of the Common Stock of such Principal
Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such
consolidation, merger, sale or transfer;
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<PAGE> 26
(B) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, or otherwise,
all the obligations and duties of the Company pursuant to
this Agreement;
(C) the term "Company" shall thereafter be
deemed to refer to such Principal Party it being
specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following
the first occurrence of a Section 13 Event; and
(D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of its shares of Common Stock in
connection with the consummation of any such transaction
as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights.
(E) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of
and Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (A) or (B) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which Common
Shares are converted in such merger or consolidation, and if no
securities are issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in
Clause (C) of the first sentence of Section 13(a) the Person that
is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions;
PROVIDED, HOWEVER, that in any such case:
(A) if the Common Shares of such Person
is not at such time, and has not been continuously over
the proceeding twelve (12) months registered, under
Section 12 of the Exchange Act, and such Person is a
direct or indirect subsidiary of another Person, the
Common Shares of which is and has been so registered,
Principal Party shall refer to such other Person; and
(B) in case such Person is a
Subsidiary, directly or indirectly, of more than one
Person, and have been so registered, Principal Party
shall refer to whichever of such Persons is the issuer of
the common stock with the greatest aggregate market
value.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized Common Shares which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraph (a) and (b) of Section
13 and further providing that as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will:
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<PAGE> 27
(i) prepare and file a registration statement
under the Act, with respect to the Rights and securities
purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration
statement to
(A) become effective as soon as
practicable after such filing; and
(B) remain effective (with a prospectus
at all times meeting the requirements of the Act) until
the Expiration Date; and
(ii) will deliver to holders of the Rights
historical financial statements for the Principal Party, and each
of its affiliates, which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
The provision of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions
of Rights or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Rights Certificates with regard to which such fractional Rights would
other wise be issuable, an amount in cash equal to the same fraction of the
Current Market Value of a whole Right. For the purpose of this Section 14(a),
the Current Market Value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national securities
exchange, the Closing Sale Price as reported on the NASDAQ National Market
System or the NASDAQ Small Cap Market as the case may be 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 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 the Company shall be used.
(b) The Company shall not be required to issue fractions
of a share of Preferred Stock (other than fractions which are integral multiples
of the one one-hundredth (1/100) of a share of Preferred Stock) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred
Stock. In lieu of fractional shares, fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth (1/100) of a share of Preferred
Stock, the Company may 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 one-hundredth (1/100) of a
share of Preferred Stock. For purposes of this Section 14(b), the Current Market
Value of one one-hundredth (1/100) of a share of Preferred Stock shall be one
one-hundredth (1/100) of the closing price
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of a Preferred Stock (as determined pursuant to the second sentence of Section
11(d) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of a Common Share upon exercise
of the Rights or to distribute certificates which evidence fractional Common
Shares. In lieu of fractional Common Shares, the Company may 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 Common Share. For purposes of this Section 14(c), the
Current Market Value of one Common Share shall be the closing price of one
Common Share (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a
Right by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) Subject to Sections 6(a) and 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notation of ownership or writing on the
Rights Certificates or the associated Common Shares certificate made by anyone
other than Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent (subject to the last sentence of Section 7(e)
hereof shall be required to be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary
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or permanent injunction or other order, decree or rule making issued by a court
of competent jurisdiction or by a governmental regulatory or administrative
agency or commission or any statute, rule, regulation, or executive order
promulgated or enacted by any governmental authority prohibiting or otherwise
restraining performance of such obligation; provided, however, the Company shall
use its best efforts to have any such order, decree or ruling lifted, or
otherwise overturned, as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. MATTERS 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, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the Premises.
(b) The Rights Agent shall be protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such
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<PAGE> 30
Rights Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (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 Chairman of the Board, the
President, a Vice President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for
its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Sections 11 or 13 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after actual notice of any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Common
Shares to be issued pursuant to this Agreement or any Rights Certificate or as
to whether any Common Shares will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
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<PAGE> 31
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided however reasonable care was
exercised in the selection and continued employment thereof.
(j) no provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be has either not been completed or indicated an affirmative response to
clause (1) and/or (2) thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' written notice mailed to the Company and to
each transfer agent of the Common Shares by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' written
notice, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the
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Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of any other state of the United States:
(a) so long as such corporation is authorized to do
business as a Transfer Agent under the Exchange Act; or
(b) so long as such corporation is authorized to do
business as a banking institution which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000; or
(c) an affiliate of a corporation described in Clauses
(a) or (b) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares, and mail
a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company:
(a) shall, with respect to Common Shares so issued or
sold pursuant to the exercise of stock options whether or not under any employee
plan or arrangement, granted or awarded as of the Distribution Date, or upon the
exercise, conversion or exchange of securities hereinafter issues by the
Company, and
(b) may in any other case it deems necessary or
appropriate by the Board, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or role; provided, however,
that:
(i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to
whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued
if, and to the extent that appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
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Section 23. REDEMPTION.
(a) The Board of the Company may, at its option, at any
time prior to the earlier of:
(i) the Close of Business on the tenth day
following the Share Acquisition Date (or if the Share Acquisition
Date shall have accrued prior to the Record Date, the close of
business on the tenth day following the Record Date;
(ii) a determination by the Board that a Person
is an Adverse Person; or
(iii) the Final Expiration Date,
direct the Company to, and if so directed, the Company shall redeem, all but not
less than all the then outstanding Rights at a redemption price of $.001 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); provided, however, if the
Board authorizes redemption of the Rights in either of the circumstances set
forth in clauses (A) or (B) below, then there must be Continuing Directors then
in office and such authorization shall require the concurrence of a majority of
the Continuing Directors:
(A) if such authorization occurs on or
after the time a Person become an Acquiring Person; or
(B) if such authorization occurs in or
after the date of a change (resulting from a proxy or
consent solicitation) in a majority of the directors in
office at the commencement of such solicitation if any
person who is a participant in such solicitation has
stated (or if upon the commencement of such solicitation
a majority of the Board has determined in good faith)
that such Person (or any of its Affiliates and
Associates) intends to take, or may consider taking, any
action which would result in such Person becoming an
Acquiring Person or an Adverse Person, or which would
cause the occurrence of a Triggering Event unless,
concurrent with such solicitation, such Person (or one or
more of its Affiliates or Associates) is making a cash
tender offer pursuant to a Schedule 14D-1 (or any
successor form) filed with the Securities and Exchange
Commission for all outstanding Common Shares not
beneficially owned by such Person (or its Affiliates or
Associates). Notwithstanding anything in this Agreement
to the contrary, the Rights shall not be exercisable
after the first occurrence of a Triggering Event until
such time as the Company's right of redemption hereunder
has expired. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based on the
Current Market Value of the Common Shares at the time of
redemption), or any other form of consideration deemed
appropriate by the Board.
(b) Immediately upon the action of the Board ordering the
redemption of the Rights, evidence of which shall have been filed with the
Rights Agent and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. Promptly after the action of
the Board ordering the redemption of the Rights, 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 upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Shares. Any notice which is
mailed in the manner herein
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provided shall be deemed given, whether or not the older receives the notice.
Each such notice of redemption shall state the method by which the payment of
the Redemption Price will be made.
Section 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose at any time after
the Distribution Date:
(i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a
regular periodic cash dividend out of earnings or retained
earnings of the Company);
(ii) to offer to the holders of Preferred Stock,
rights or warrants to subscribe for or to purchase any additional
Preferred Stock or shares of stock of any class or any other
securities, rights or options;
(iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the
subdivision of outstanding Preferred Stock);
(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 more than 50% of the
assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person; or
(v) to effect the liquidation, dissolution or
winding up of the Company,
then, in each such case, the Company shall give to each holder of a Rights
Certificate, in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least 20 days prior to the record date for determining
holders of the Preferred Stock for purposes of such action and in the case of
any such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Preferred Stock, whichever shall be the earlier.
(b) In case any of the events set forth in Section
11(a)(ii) of this Agreement shall occur, then, in any such case, the Company
shall, as soon as practicable thereafter, give to each holder of a Rights
Certificate, to the extent feasible, and in accordance with Section 25 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof.
Section 25. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Renex Corp.
2100 Ponce de Leon Boulevard, Suite 950
Coral Gables, Florida 33134
Attention: President
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<PAGE> 35
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Continental Stock Transfer and Trust Company
2 Broadway
New York, New York 10004
Attention: _____________________
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date and subject to the pertinent sentences of this Section 26, the Company and
the Rights Agent shall, if the Board so directs, supplement or amend any
provision of this Agreement without the approval of any holders of Rights
Certificates; provided, however, such supplement or Amendment shall be effective
only if there are Continuing Directors and shall require the concurrence of a
majority of such Continuing Directors from and after the Distribution Date and
subject to the pertinent sentence of this Section 26, the Company and the Rights
Agent shall if the Board so directs or amends this Agreement without the
approval of the holders of Rights Certificates in order:
(a) to cure any ambiguity,
(b) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other Person,
(c) to shorten or lengthen any time period hereunder
(which shortening or lengthening shall be effective only if there are Continuing
Directors and shall require the concurrence of a majority of the Continuing
Directors, or
(d) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holder of Rights Certificates (other than
an Acquiring Person, Adverse Person or other affiliates and associates provided
however, this Agreement may not be supplemented or amended to lengthen, pursuant
to clause (c) of this sentence:
(i) a term period relating to when the Rights
may be redeemed at such time as the Rights are not then
redeemable, or
(ii) any other time periods unless such
lengthening is for the purpose of protecting, enhancing or
clarifying the rights of and/or the benefits to holders of
Rights. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement
or amendment is in compliance with this Section 26, the Rights
Agent shall execute such supplement or amendment. Notwithstanding
anything in this Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price, the
Expiration Date, the Purchase Price or the number of Common
Shares for which a Right is exercisable. Prior to the
Distribution Date, the intent of the holders of Rights shall be
deemed coincident with the rest of the holders of Common Shares.
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Section 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Rights 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 Rights Certificates.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD. For all
purposes of this Agreement, any calculation of the number of Preferred Stock,
Common Stock or Voting Securities outstanding at any particular time, including
for purposes of determining the particular percentages of such outstanding
Common Shares or Voting Securities of which any person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board (and where
specifically required herein, the concurrence of the Continuing Directors) shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board (and where
specifically required herein, the concurrence of the Continuing Directors) or to
the Company or as may be necessary or advisable in the administration of this
Agreement, including without limitation, the right and power to
(a) interpret the provisions of this Agreement; and
(b) make all the determinations deemed necessary or
advisable for the administration of this Agreement (including a determination to
redeem or not redeem the rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations (including
for purposes of clause (ii) below, all omissions with respect to the foregoing)
which are done or made by the Board (and where specifically required herein, the
concurrence of the Continuing Directors) in good faith shall:
(i) be final, conclusive and binding on the
Company the Rights Agent, the holders of the Rights and all other
parties; and
(ii) not subject the Board or the Continuing
Directors to any liability to the holders of the Rights.
Section 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in good faith that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of such
determination by the Board.
Section 31. GOVERNING LAW. This Agreement and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Florida and for all
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purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
Section 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 and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
RENEX CORP., a Florida corporation
By:
--------------------------------------
JAMES P. SHEA, President
Attest:
----------------------------------
Assistant Secretary
CONTINENTAL STOCK TRANSFER AND
TRANSFER COMPANY
By: By:
-------------------------- --------------------------------------
Assistant Secretary Name:
------------------------------------
Title:
-----------------------------------
-34-
<PAGE> 38
EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
RENEX CORP.
RENEX CORP., a corporation organized and existing under the law
of the State of Florida, in accordance with the provisions of Section 607.0602
of the Florida Statutes, hereby certifies:
That pursuant to the authority conferred upon the Board of
Directors by the Articles of Incorporation of the Corporation, the Corporation=s
Board of Directors on November 5, 1998, adopted the following resolution
creating a series of 200,000 shares of Preferred Stock designated as Series A
Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Articles
of Incorporation, a series of Preferred Stock of the Corporation be and it
hereby is created, and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
SECTION 1. DESIGNATION AND AMOUNT. There is hereby created a
series of Preferred Stock which shall be designated as the "Series A Junior
Participating Preferred Stock" (the "Series A Stock") and the number of shares
constituting such series shall be 200,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors and by the filing
of a certificate pursuant to the provisions of the Florida Statutes stating that
such increase or decrease has been so authorized, provided however, that no
decrease shall reduce the number of shares of Series A Stock to a number less
than that of the shares then outstanding, plus the number of shares of Series A
Stock issuable upon exercise of outstanding rights, options of warrants or upon
conversion of outstanding securities issued by the Company.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Stock with respect to dividends, the holders of shares of
Series A 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 last 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 Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$10.00 or (b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $.001 per share, of the
Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Stock. In the event the Corporation shall at any time after November 6, 1998
(the "Rights Declaration Date") (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount to which holders of shares of Series A Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event
<PAGE> 39
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 Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); 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 $10.00 per share on the Series A 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 Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Stock, unless the
date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A 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 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 Stock entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
be no more than 30 days prior to the date fixed for the payment thereof.
SECTION 3. VOTING RIGHTS. The holders of shares of Series A Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A 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 Stock outstanding
shall have been paid in full, the Corporation shall not:
-2-
<PAGE> 40
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Stock;
(ii) declare or pay dividends on 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 Stock, except dividends paid ratably on the
Series A 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 on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity
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 Stock;
(iv) purchase or otherwise acquire for consideration any
shares of Series A Stock, or any shares of stock ranking on a
parity with the Series A 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 Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Stock unless, prior thereto, the
holders of shares of Series A Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Series A Liquidation
Preference").
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares in proportion to
their respective liquidation preferences.
-3-
<PAGE> 41
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
SECTION 8. NO REDEMPTION. The shares of Series A Stock shall not
be redeemable by the Corporation. The preceding sentence shall not limit the
ability of the Corporation to purchase or otherwise deal in such shares of stock
to the extent permitted by law.
SECTION 9. RANKING. The Series A Stock shall rank junior to all
other series of the Corporation's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such series shall
provide otherwise.
SECTION 10. AMENDMENT. The Articles of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A Stock
so as to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series A Stock, voting separately
as a class.
SECTION 11. FRACTIONAL SHARES. Series A Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holders fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties' of perjury
this ____ day of November 6, 1998.
--------------------------------------
President
Attest:
--------------------------------------
Assistant Secretary
-4-
<PAGE> 42
EXHIBIT "B"
[Form of Right Certificate]
Certificate No. R- RIGHTS
---- ----
NOT EXERCISABLE AFTER NOVEMBER 6, 2008 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN BY THE COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. IF THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE
OR WERE ISSUED TO A PERSON WHO OR BECAME WAS AN ACQUIRING PERSON
OR AN ADVERSE PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING
PERSON OR AN ADVERSE PERSON (AS SUCH TERMS WERE DEFINED IN THE
RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(E) OF THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
RENEX CORP.
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 November 6, 1998 (the "Rights Agreement") between RENEX CORP., a
Florida corporation (the "Company"), and CONTINENTAL STOCK TRANSFER AND TRUST
COMPANY (the ARights 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. (New York City time) on November 6, 2008 the principal office of the
Rights Agent, or its successors as Rights Agent, one one-hundredth (1/100) of a
fully paid, non-assessable share of the Series A Junior Participating Preferred
Stock (the "Preferred Stock@) of the Company, at a purchase price of $25.00 per
one one-hundredth (1/100) of a share of Preferred Stock (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of November 6, 1998, based on the Preferred
Stock as constituted at such date.
Upon the occurrence of a Triggering Event (as such time is
defined in the Rights Agreement) if the Rights evidenced by this Rights
Certificates are Beneficially Owned by:
-5-
<PAGE> 43
(i) an Acquiring Person or an Adverse Person or
an Affiliate or Associate of any such Person;
(ii) a transferee of any such Acquiring Person,
Adverse Person, Associate or Affiliate who becomes a transferee
after such Acquiring Person, Adverse Person or Affiliate or
Associate becomes such; or
(iii) under certain circumstances specified in
the Rights Agreement a transfer of any such Acquiring Person,
Adverse Person, Affiliate or Associate who becomes a transferee
prior to or concurrently with such Acquiring Person or Adverse
Person becoming such;
such Rights shall become null and void and no Acquiring Person, Adverse Person,
Affiliate or Associate thereof holder hereof shall have any rights with respect
to such Rights from and after the occurrence of such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and the
number of shares of Preferred Stock which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office of the Rights Agent, may be
exchanged for another Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Rights Certificate(s) surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate(s) for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right at any time prior to the earlier of the
close of business on:
(a) the tenth day following the Share Acquisition Date
(as such time period may be extended pursuant to the Rights Agreement),
(b) a determination by the Board that a Person is an
Adverse Person, or
(c) the Final Expiration Date.
Under certain circumstance set forth in the Rights Agreement the decision to
redeem shall require the concurrence of a majority of the Continuing Directors.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock), but in
lieu thereof a cash payment will be made, as provided in the Rights Agreement.
-6-
<PAGE> 44
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of _________________________.
Attest: RENEX CORP.
By: By:
------------------------------- --------------------------------------
Secretary JAMES P. SHEA, President
Countersigned:
CONTINENTAL STOCK TRANSFER AND
TRANSFER COMPANY
By:
-------------------------------------
Authorized Signature
-7-
<PAGE> 45
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the RIGHTS CERTIFICATES.)
FOR VALUE RECEIVED _________________hereby sells, assigns and transfers
unto____________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint_________________Attorney, to
transfer the within Rights Certificate on the books of the within named Company,
with full power of substitution.
Dated:______________________ _______________________________
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies, by checking the appropriate
boxes, that:
(a) This Rights Certificate 9 is 9 is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person,
Adverse Person or an Affiliate or Associate of any such Person (as such terms
are defined in the Rights Agreement);
(b) After due inquiry and to the best knowledge of the
undersigned it 9 did 9 did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person, Adverse Person or an Affiliate or Associate of any such Person.
Dated:______________________ _______________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 46
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the RIGHTS CERTIFICATE)
To: RENEX CORP.
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Rights Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of such Rights and requests
that certificates for such shares be issued in the name of:
Please insert social security or other identifying number:______________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance 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 must conform in all
respects to name of holder as
specified on the face of this RIGHTS
CERTIFICATE)
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(a) This Rights Certificate 9 is 9 is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person,
Adverse Person or an Affiliate or Associate of any such Person (as such terms
are defined in the Rights Agreement);
(b) After due inquiry and to the best knowledge of the
undersigned it 9 did 9 did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person, Adverse Person or an Affiliate or Associate of any such Person.
Dated:_________________________ ____________________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 47
EXHIBIT "C"
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On November 5, 1998, the Board of Directors of RENEX CORP (the
"Company") declared a dividend distribution of one ARight@ for each outstanding
share of the Company=s common stock, par value $.001 per share (the "Common
Stock") to stockholders of record at the close of business on November 6, 1998
(the "Record Date") and authorized the issuance of one Right with respect to
each share of Common Stock that becomes outstanding between the Record Date and
November 6, 2008 or such earlier time as the Rights are redeemed. Except as
described below, each Right, when exercisable, entitles the registered holder to
purchase from the Company one one-hundredth (1/100) of a share of Series A
Junior Participating Preferred Stock, $.01 par value (the "Preferred Stock"), at
a price of $25.00 per one one-hundredth (1/100) share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and Continental
Stock Transfer and Trust Company, as Rights Agent.
Initially, the Rights will be attached to all certificates
representing Common Stock then outstanding and no separate Rights Certificates
would be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of:
(c) ten (10) days following a public announcement that a person
or group of affiliated or associated persons (an "Acquiring Person"),has
acquired, or obtained the right to acquire, beneficial ownership of 20% or more
of the outstanding Common Shares, the date of such announcement being the "Share
Acquisition Date";
(d) ten (10) business days (or such later date as the Board shall
determine) following the commencement or announcement of an intention to make a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person of 20% or more of such outstanding Common
Shares; or
(e) a determination by the Board of Directors of the Company (the
"Board") that a person or group is an "Adverse Person."
The Rights Plan contains an exemption from the definition of
Acquiring Person for any issuance of Common Stock by the Company directly to any
person (for example, in a private placement or an acquisition by the Company in
which Common Stock is used as consideration), even if that person would become
the beneficial owner of 20% or more of the Common Stock, provided that such
person does not acquire any additional shares of Common Stock.
A person may be declared an Adverse Person upon (a) a
determination that such person, alone or together with its affiliates and
associates, has become, or has expressed an intention to become, the owner of an
amount of Common Shares which the Board determines to be substantial (which may
not be less than 10% of the Common Shares then outstanding) and (b) a
determination by at least a majority of the Board who are not officers of the
Company and are not representatives or associates of the Acquiring Person or
Adverse Persons ("Independent Directors") after reasonable inquiry and
investigation, that such ownership (i) is intended to cause the Company to
repurchase the Common Shares owned by such person or to cause the Company to
take actions or enter into transactions which are intended to provide such
person with a short term financial gain and which are not in the best long term
interests of the Company and its stockholders or (ii) is causing, or is
reasonably likely to cause, a material adverse impact on the Company.
Until the Distribution Date, (i) the Rights would be evidenced by
the Common Stock Certificates and would be transferred with and only with such
Common Stock Certificates, (ii) new Common Stock Certificates received after the
Record Date will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Common
Stock
<PAGE> 48
outstanding will constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. Pursuant to the Rights Agreement,
the Company reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise of Rights, a number
of Rights be exercised so that only whole shares of Preferred Stock will be
issued.
The Rights are not exercisable until the Distribution Date and
will expire on November 6, 2008, unless earlier redeemed by the Company as
described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to all holders of record of Common Stock at the
close of business on the Distribution Date. Thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board, only Common Shares issued prior to the Distribution Date will be
issued with Rights.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends out of
retained earnings) or of subscription rights or warrants (other than those
referred to above. With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional shares will be issued and, in lieu thereof, cash
payments will be made based on the market price of the Preferred Stock on the
last trading day prior to the date of exercise.
In the event:
(a) the Company is the surviving corporation in a merger with an
Acquiring Person or Adverse Person and its Common Shares are not changed or
exchanged,
(b) a Person becomes an Acquiring Person (except pursuant to an
offer for all outstanding Common Shares which a majority of the Independent
Directors determined to be fair to, and otherwise in the best interest of the
Company, and its Stockholders (a "Fair Offer"),
(c) an Acquiring Person or Adverse Person engages in one or more
"self dealing" transactions set forth in the Rights Agreement, or
(d) a Person is determined to be an Adverse Person,
(a "Triggering Event") then each holder of a Right will thereafter have the
Right to receive, upon exercise, Common Shares (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. Notwithstanding any of the foregoing,
following the occurrence of a Triggering Event set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were beneficially owned by an Acquiring Person or Adverse Person will
be null and void. Moreover, Rights are not exercisable following the occurrence
of either of the events set forth above until such time as the Rights are no
longer redeemable by the Company as set forth below.
For example, at an exercise price of $25.00 per Right, each Right
not owned by an Acquiring Person or Adverse Person (or certain related parties)
following an event set forth in the preceding paragraph could entitle the holder
to purchase $50.00 worth of Common Shares (or other consideration as noted
above) for the $25.00 Purchase Price. Assuming that the Common Shares have
-2-
<PAGE> 49
a per share value of $10.00 at such time, the holder of each valid Right would
be entitled to purchase five (5) Common Shares for $25.00.
In the event that at any time after a Share Acquisition Date:
(a) the Company is acquired in a merger or other business
combination transaction (other than a merger described in the second preceding
paragraph or a merger which followed a Fair Offer); or
(b) more than 50% of its assets or earning power were sold or
transferred,
then each holder of a Right (except Rights which previously have been voided as
set forth above) shall thereafter have the right to receive, upon exercise, the
common stock, or the equivalent equity securities, of the acquiring company
which have a value equal to two times the exercise price of the Right. (The
events set forth in this paragraph and in the second preceding paragraph are
referred to as "Triggering Events").
In general, the Company may redeem the Rights in whole, but not
in part, at any time until a determination that a person is an Adverse Person
and until ten (10) days following the Share Acquisition Date at a price of $.001
per Right (payable in cash, Common Shares or other consideration deemed
appropriate by the Board). Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority of
the Continuing Directors. Immediately upon the action of the Board, ordering the
Rights to be redeemed (with where specifically required, the concurrence of the
Continuing Directors), the Rights will terminate and the only right of the
holders of Rights will be to receive the $.001 Redemption Price.
The term "Continuing Directors" means any member of the Board who
was a member of the Board prior to the execution of the Rights Agreement, and
any person who is subsequently elected to the Board, if such person is
recommended or approved by a majority of the Continuing Directors, but shall not
include an Acquiring Person, Adverse Person or an Affiliate or Associate of the
Acquiring Person or Adverse Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company (other than such rights as a
holder of Common Shares), including, without limitation, the right to vote or to
receive dividends. While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights becomes
exercisable for Common Shares (or other consideration) of the Company or common
stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the Rights Agreement may be
amended by the Board prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended by the Board (in
certain circumstances, with the concurrence of the Continuing Directors) in
order to cure any ambiguity, to make changes which do not adversely affect the
interest of holders of Rights (excluding the interests of any Acquiring Person
or Adverse Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at any time as the Rights are not redeemable.
As of the Record Date, there were ______________ shares of Common
Stock outstanding. Each share of Common Stock outstanding on and after the
Record Date, will receive one Right. An aggregate of 200,000 shares of Preferred
Stock will be reserved for issuance in the event of exercise of the Rights.
-3-
<PAGE> 50
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company without conditioning the offer on the Rights being redeemed or a
substantial number of Rights being acquired, and under certain circumstances the
Rights beneficially owned by such a person or group may become void. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors because, if the Rights would become exercisable as a
result of such merger or business combination, the Board of Directors may, at
its option, at any time prior to the time that any Person becomes an Acquiring
Person, redeem all (but not less than all) of the then outstanding Rights at the
Redemption Price.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an exhibit to a Registration Statement on Form 8-A
dated November 6, 1998. A copy of the Rights Agreement is available free of
charge from the Company or the Rights Agent. This Summary Description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.
-4-
<PAGE> 1
CONTACT:
RENEX CORP. -or- INVESTOR RELATIONS COUNSEL
James P. Shea, President & CEO The Equity Group Inc.
Orestes L. Lugo, VP & CFO Linda Latman (212) 836-9609
(305) 448-2044 Loren Goldstein (212) 836-9604
FOR IMMEDIATE RELEASE
RENEX CORP. ANNOUNCES SHARE REPURCHASE PROGRAM AND
SHAREHOLDER RIGHTS PLAN
COMPANY TO BUY BACK UP TO 500,000 SHARES OF COMMON STOCK
CORAL GABLES, FL -- November 5, 1998 -- Renex Corp. (Nasdaq National
Market:RENX) today announced that its Board of Directors has authorized the
repurchase of up to 500,000 shares of Renex common stock. The shares may be
purchased from time to time in open market transactions, depending on price,
availability and the Company's cash position. The shares will be held in
treasury for use in conjunction with the Company's Employee Stock Option Plan
and other general corporate purposes. At November 4, 1998, there were
approximately 7 million shares of Renex common stock outstanding.
James P. Shea, President and Chief Executive Officer of Renex, stated "Our Board
decided to take this action because they believe that our shares represent
excellent value at current price levels. As insiders currently own approximately
33% of outstanding shares, we, along with our public shareholders, stand to
benefit from reduced share dilution stemming from this buy back."
In addition, the Board of Directors of the Company has approved a dividend
distribution of one Preferred Stock Purchase Right for each outstanding share of
Renex Corp. common stock. Under the plan, in specified circumstances when the
rights can be exercised, each Right will entitle shareholders to purchase one
one-hundredth of a share of the Company's new Series A Junior Participating
Preferred Stock at an exercise price of $25.00. The Rights will be exercisable
only if a person or group acquires 20% or more of the Company's common stock,
announces a tender offer for 20% or more of the common stock ("an Acquiring
Person"), or the Board makes a determination that a person is an "Adverse
Person." The Company will be entitled to redeem the Rights at $.001 per Right at
any time before a 20% position has been actually acquired.
If (1) the Company is the surviving corporation in a merger or other business
combination with an Acquiring Person or Adverse Person, (2) a person or group
acquires 20% or more of the Company's Common Stock, or (3) the Board determines
such a person or group is an Adverse
<PAGE> 2
Renex Corp. News Release Page 2
November 5, 1998
Person (as defined in the Plan), each Right will entitle its holder to purchase
at the Right's then current exercise price, a number of shares of the Company's
common stock having a market value at that time of twice the Right's exercise
price.
If the Company is acquired in a merger or other business combination
transaction, each Right will entitle its holder to purchase, at the Right's then
current exercise price, a number of the acquiring company's common shares having
a market value at that time of twice the Right's exercise price. The Rights also
provide for protection against self-dealing transactions by a control
shareholder.
The Rights are not being granted in response to any effort by a third party to
acquire control of the Company and the Board is not aware of any such effort.
The Rights are designed to assure that all Renex Corp. shareholders receive fair
and equal treatment in the event of any proposed takeover of the Company and to
guard against partial tender offers and other abusive tactics to gain control of
the Company without paying all shareholders a control premium.
Mr. Shea stated, "The Rights are intended to enable all Renex Corp. shareholders
to realize the long-term value of their investment in Renex Corp. They do not
prevent a takeover, but should encourage anyone seeking to acquire the Company
to negotiate with the Board prior to attempting a takeover."
The dividend distribution will be made on November 9, 1998, payable to
shareholders of record on November 6, 1998. The Rights will expire, if not
previously exercised, ten years later, on November 6, 2008. The Rights
distribution is not taxable to shareholders.
Details of the Rights distribution are contained in a summary that will be
mailed to all Renex Corp. shareholders and will also be included in a
registration statement on Form 8-K to be filed with the Securities and Exchange
Commission on November 6, 1998.
Renex Corp. provides dialysis and ancillary services to approximately 1,100
patients suffering from chronic kidney failure, generally referred to as end
stage renal disease. The Company provides dialysis services through 20
outpatient facilities and one staff assisted home dialysis program.
Additionally, the Company provides in-patient acute dialysis services at 14
hospitals.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS, WHICH INHERENTLY INVOLVE
RISKS AND UNCERTAINTIES, WHICH MAY CAUSE ACTUAL RESULTS TO BE MATERIALLY
DIFFERENT FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. RENEX CORP.
WILL NOT UNDERTAKE AND SPECIFICALLY DECLINES ANY OBLIGATION TO PUBLICLY RELEASE
THE RESULT OF ANY REVISIONS WHICH MAY BE MADE TO ANY FORWARD-LOOKING STATEMENTS
TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS OR TO
REFLECT THE OCCURRENCE OF ANTICIPATED OR UNANTICIPATED EVENTS.
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