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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A/A
AMENDMENT NO. 1
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ADVOCAT INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 62-1559667
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(State of Incorporation (I.R.S. Employer
or Organization) Identification Number)
277 Mallory Station Road
Suite 130, Franklin, TN 37067
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(Address of Principal Executive Offices) (Zip Code)
If this Form relates to the If this Form relates to the
registration of a class of debt registration of a class of debt
securities and is effective upon filing securities and is to become effective
pursuant to General simultaneously with the
Instruction A(c)(1) please check effectiveness of a concurrent
this box. [ ] registration statement under the
Securities Act of 1933 pursuant to
General Instruction A(c)(2) please
check the following box. [ ]
Securities to be registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None.
Exhibit Index on Page 2
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Item 1. Description of Registrant's Securities to be Registered.
Reference is hereby made to the Registration Statement on Form 8-A
filed with the Securities and Exchange Commission by Advocat, Inc. (the
"Company") on March 29, 1995 (the "Form 8-A"). The Form 8-A relates to the
Rights Agreement dated as of March 13, 1995 (the "Original Rights Agreement"),
by and between the Company and Third National Bank in Nashville, as Rights
Agent. The From 8-A is incorporated herein by reference.
On November 9, 1998, the Company's Board of Directors authorized an
amendment to the Original Rights Agreement (as amended and restated, the
"Amended and Restated Rights Agreement"), a copy of which is attached hereto as
Exhibit 1 and incorporated herein by reference.
In the Amended and Restated Rights Agreement, the Company has
eliminated the requirement that Continuing Directors (as defined in the Original
Rights Agreement) approve certain actions. The Company hereby amends Items 1 and
2 to the Form 8-A so as to eliminate the requirement that Continuing Directors
approve certain actions.
The foregoing discussion does not purport to be complete and is
qualified in its entirety by reference to Exhibit 1.
Item 2. Exhibits
Exhibit 1. Amended and Restated Rights Agreement, dated December 4, 1998, by and
between Advocat, Inc. and Third National Bank in Nashville as Rights Agent.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: December 7, 1998 ADVOCAT, INC.
By: /s/ Mary Margaret Hamlett
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Mary Margaret Hamlett
Executive Vice President and
Chief Financial Officer
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EXHIBIT 1
AMENDED AND RESTATED RIGHTS AGREEMENT
RIGHTS AGREEMENT, originally dated as of March 13, 1995 and amended and
restated as of December 7, 1998 ("the Agreement"), by and between Advocat Inc.,
a Delaware corporation (the "Company"), and Third National Bank in Nashville
(the "Rights Agent").
On March 13, 1995 (the "Rights Dividend Declaration Date"), the Board
of Directors of the Company authorized and declared a dividend distribution
payable on March 20, 1995 in one right (a "Right") for each share of common
stock, $.01 par value per share, of the Company (the "Common Stock") outstanding
as of the close of business on March 20, 1995 (the "Record Date"), each Right
representing the right to purchase one one-hundredth (.01) of a share of Series
A Junior Preferred Stock of the Company having the rights and preferences set
forth in the form of Articles of Amendment to Certificate of Incorporation of
the Company attached hereto as Exhibit A, upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock that shall become outstanding between the Record Date and the
earlier of the Redemption Date and the Expiration Date (as such terms are
hereinafter defined);
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or which, together
with all Affiliates and Associates (as such terms are hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 15% or more of the shares of Common Stock then outstanding; provided that, an
Acquiring Person shall not include (i) the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company or any Subsidiary of the Company for or pursuant to the terms of any
such benefit plan, (ii) any Person, together with all Affiliates and Associates
of such Person, who or which would be an Acquiring Person solely by reason of
(A) being the Beneficial Owner of Voting Shares (as such term is hereinafter
defined) of the Company, the Beneficial Ownership of which was acquired by such
Person pursuant to any action or transaction or series of related transactions
approved by the Board of Directors before such Person became an Acquiring Person
or (B) a reduction in the number of issued and outstanding shares of Voting
Shares of the Company pursuant to a transaction or a series of related
transactions approved by the Board of Directors, or (iii) any Person, together
with all Affiliates and Associates of such Person, who would otherwise be an
Acquiring Person, who provides a written proposal to the Board of Directors upon
becoming an Acquiring Person which contains the price and terms of a proposed
merger or consolidation, which price and terms are deemed acceptable by at least
a majority of the Board of Directors (a "Clause (iii) Person"); provided that in
the event such Person described in clause (ii) does not become an Acquiring
Person by reason of clauses (A) or (B) of clause (ii), such Person nonetheless
shall become an Acquiring Person in the event such Person thereafter acquires
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the Beneficial Ownership of additional Voting Shares of the Company, unless such
acquisition would not result in such Person becoming an Acquiring Person by
reason of clauses (A) or (B) of clause (ii); provided, further, that if the
Board of Directors within ten days of their receipt of the Acquiring Person's
proposal fails to accept the price and terms of such proposed transaction, the
Clause (iii) Person shall thereafter be deemed an Acquiring Person.
Notwithstanding the foregoing, if the Board of Directors determines, in good
faith that a person who would otherwise be an Acquiring Person as defined
pursuant hereto has become an Acquiring Person inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares so that such
Person would no longer constitute an Acquiring Person as defined herein, then
such Person shall not be deemed an Acquiring Person for any purposes of this
Agreement.
(b) "ACT" shall mean the Securities Act of 1933, as amended.
(c) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as amended and as in effect on the date of this Agreement.
(d) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be
deemed to "BENEFICIALLY OWN", any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time or the fulfillment
of a condition or both) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise (other than these Rights);
provided, however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "Beneficially Own", securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy or
consent given in response to a proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations under the Exchange
Act, and (B) is not at the time reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
subparagraph (ii) of this paragraph (d)) or disposing of any voting securities
of the Company.
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Notwithstanding anything in this paragraph (d) to the contrary, a
Person shall not be deemed the "Beneficial Owner" of or to "Beneficially Own"
any security beneficially owned by another Person solely by reason of an
agreement, arrangement or understanding with such other Person for the purposes
of: (x) soliciting the Company's shareholders for the election of director
nominees or any other shareholder resolution, the formation of and membership of
any committee for the purpose of promoting or opposing any shareholder
resolution or for the election of a slate of nominees to the Board of Directors,
service on such slate of nominees, or agreement to a slate of nominees, provided
such other Person maintains at all times the right to withdraw as a nominee or
member of such committee, and to withhold or revoke any vote or proxy for or
against any such shareholder resolution or for such slate of nominees; or (y)
entering into revocable voting agreements or revocable proxies with respect to
any of the matters described in (x) or (y) for the sharing of expenses and the
indemnification against expenses and liabilities by any such other Person with
respect to expenses incurred or conduct occurring during the time such other
Person is a nominee or a member of any such committee described in the foregoing
clause (x). Notwithstanding anything in this paragraph (d) to the contrary, a
person engaged in the business of underwriting securities shall not be deemed to
be the "Beneficial Owner" of, or to "Beneficially Own", any securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of forty (40) days after the date of such
acquisition.
(e) "AGREEMENT" shall have the meaning set forth in the Recitals to
this Agreement.
(f) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
a day on which the Rights Agent is authorized or obligated by law or executive
order to close.
(g) A "CLAUSE (III) PERSON" shall have the meaning set forth in Section
1(a) hereof.
(h) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
Nashville, Tennessee time, on such date; provided, however, that if such date is
not a Business Day, "Close of Business" shall mean 5:00 P.M., Nashville,
Tennessee time, on the next succeeding Business Day.
(i) "COMMON STOCK" shall mean the Common Stock, $.01 par value per
share, of the Company. "Common Stock" when used with reference to any Person
other than the Company shall mean the capital stock or other equity security of
such Person with the greatest voting power. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest which shall represent the
right to participate in profits, losses, deductions and credits and which shall
be entitled to exercise the greatest voting power per unit of such Person.
(j) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in
Section 11(a) (iii) hereof.
(k) "COMPANY" shall have the meaning set forth in the Recitals to this
Agreement.
(l) "CURRENT VALUE" shall have the meaning set forth in Section 11(a)
(iii) hereof.
(m) "DISTRIBUTION DATE" shall have the meaning set forth in Section
3(b) hereof.
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(n) "EQUIVALENT PREFERRED STOCK" shall have the meaning set forth in
Section 11(b) hereof.
(o) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(p) "EXERCISE PRICE" shall have the meaning set forth in Section 7(b)
hereof.
(q) "EXPIRATION DATE" shall have the meaning set forth in Section 7(a)
hereof.
(r) "FAIR MARKET VALUE" shall mean the fair market value of property as
determined in accordance with Section 11(d) hereof.
(s) "PERSON" shall mean any individual, firm, corporation, partnership
or other entity and shall include any successor (by merger or otherwise) of such
entity.
(t) "PREFERRED STOCK" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value per share, of the Company, and, to
the extent that there are not a sufficient number of shares of Junior
Participating Series A Preferred Stock authorized to permit the full exercise of
the Rights, any other series of Junior Participating Preferred Stock, $.01 par
value per share, of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Stock.
(u) "PRINCIPAL PARTY" shall have the meaning set forth in Section 13(b)
hereof.
(v) "RECORD DATE" shall have the meaning set forth in the Recitals to
this Agreement.
(w) "REDEMPTION DATE" shall have the meaning set forth in Section 7(a).
(x) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a) hereof.
(y) "RIGHT" shall have the meaning set forth in the Recitals to this
Agreement.
(z) "RIGHTS AGENT" shall have the meaning set forth in the Recitals to
this Agreement.
(aa) "RIGHTS CERTIFICATE" shall have the meaning set forth in Section
3(b).
(bb) "SPREAD" shall have the meaning set forth in Section 11(a) (iii)
hereof.
(cc) "RIGHTS DIVIDEND DECLARATION DATE" shall have the meaning set
forth in the Recitals to this Agreement.
(dd) "STOCK ACQUISITION DATE" shall mean the first date on which there
shall be a public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become an Acquiring Person or such earlier date on which a majority of the Board
of Directors shall become aware of the existence of an Acquiring Person.
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(ee) "SUBSIDIARY" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(ff) "SUMMARY OF RIGHTS" shall have the meaning set forth in Section
3(a) hereof.
(gg) "TRADING DAY" shall have the meaning set forth in Section 11(d)
hereof.
(hh) "VOTING SHARES" shall mean (1) the Common Stock of the Company and
(2) any shares of capital stock of the Company entitled to vote together with
the Common Stock in respect of any merger, consolidation, share exchange, sale
of all or substantially all of the Company's assets, liquidation, dissolution or
winding up.
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 in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) On the Record Date (or as soon thereafter as is practicable), the
Company or the Rights Agent shall send a copy of the Summary of Rights, in
substantially the form of Exhibit B attached hereto (the "Summary of Rights") to
each holder of record of the Common Stock as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for the Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common Stock
shall also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date, the Redemption Date or the Expiration Date, the
transfer of any certificates representing shares of Common Stock in respect of
which Rights have been issued shall also constitute the transfer of the Rights
associated with such shares of Common Stock.
(b) Until the earlier of (i) the Close of Business on the tenth
business day (or such later date as the Board of Directors shall determine after
the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition
Date occurs before the Record Date, the Close of Business on the Record Date),
or (ii) the Close of Business on the tenth business day (or such later date as
the Board of Directors shall determine) after the date of the commencement by
any Person of, or the first public announcement of the intent of any Person to
commence, a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such plan) together with its Affiliates and Associates, upon
the successful consummation of which such Person would be the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding (irrespective of
whether any shares are actually purchased pursuant to the offer) (the earlier of
(i) and
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(ii) being herein referred to as the "Distribution Date"), (iii) the Rights
shall be evidenced (subject to the provisions of this Section 3) by the
certificates for Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate Right Certificates, and (iv) each
of the Rights shall be transferable only in connection with and simultaneously
with the transfer of the underlying shares of Common Stock (subject to
adjustment as hereinafter provided). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock at the address of such
holder shown on the records of the Company as of the Close of Business on the
Distribution Date, one or more right certificates, in substantially the form of
Exhibit C hereto (the "Rights Certificates"), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11(i) hereof, at the time of distribution of the
Right Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates.
(c) Rights shall be issued in respect of all shares of Common Stock
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, the
Redemption Date or the Expiration Date. Certificates representing such shares of
Common Stock shall also deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights (subject to adjustment) as set forth in the
Rights Agreement between Advocat Inc. (the "Company") and
Third National Bank in Nashville (the "Rights Agent") dated as
of March 13, 1995 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the Company.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge after receipt of a written
request therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, or
beneficially owned by any Person who is, was or becomes an
Acquiring Person or any Affiliates or Associates thereof (as
such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any
subsequent holder, shall be null and void and may not be
transferred to any Person.
With respect to such certificates containing the foregoing legend,
until the earlier of the Distribution Date, the Redemption Date, or the
Expiration Date, the Rights associated with the
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Common Stock represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificates. As of and after the
Distribution Date, the Rights shall be evidenced by Rights Certificates and may
be transferred by the transfer of the Rights Certificates as permitted hereby,
separately and apart from any transfer of one or more shares of Common Stock.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof), when as and if issued, shall
be substantially in the form set forth in Exhibit C hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Rights Certificates evidencing Rights,
whenever distributed, shall be dated as of the date of issuance of the Rights
they represent and, subject to adjustment from time to time, on their face shall
entitle the holders thereof to purchase such number of shares of Preferred Stock
as shall be set forth therein at the price payable upon exercise of a Right
provided by Section 7(b) hereof as the same may be adjusted from time to time.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company
by its President or any Vice President, 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 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. Any
Rights Certificates may be signed on behalf of the Company by any person who, on
the date of the execution of such Rights Certificate, shall be a proper officer
of the Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the 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.
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SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 7(f) 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 Redemption Date or the Expiration
Date, any Rights Certificates may be transferred, split-up, combined or
exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of shares of Preferred Stock as the
Rights Certificate or Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split-up, combine or
exchange any Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split-up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reserve side of such
Rights Certificate duly endorsed, duly executed by the registered holder thereof
or his/her attorney duly authorized in writing, and with such signature duly
guaranteed and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Sections 7(e), 7(f) and 14 hereof, countersign and deliver to
the Person entitled thereto a Rights Certificate as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split-up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including without limitation, the restrictions on exercisability set forth in
Section 7(e) hereof). Except as otherwise provided, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby, in whole or in
part, at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed (with signatures duly guaranteed), to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Exercise Price for each
Right exercised, subject to adjustment as hereinafter provided, at or prior to
the earlier of (i) the Close of Business on
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March 20, 2005 (the "Expiration Date"), or (ii) the date on which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date").
(b) The Exercise Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $50.00,
and shall be subject to adjustment from time to time as provided in Sections 11
and 13(a) hereof (the "Exercise Price") and shall be payable in accordance with
paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Rights
Certificate representing exercisable Rights, with the form of election to
purchase and the certificate contained therein duly executed, accompanied by
payment by certified check, cashier's check, bank draft or money order payable
to the Company, with respect to each Right so exercised, of the Exercise Price
for the Preferred Stock (or other shares, securities, cash or other assets, as
the case may be) to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of the Rights Certificate, the Rights
Agent shall thereupon promptly (i) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) one or more certificates representing the shares
of Preferred Stock to be purchased, and the Company hereby authorizes each
transfer agent to comply with all such requests, (ii) cause cash to be paid in
lieu of fractional shares in accordance with Section 14 hereof, and (iii) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. Notwithstanding the foregoing
provisions, the Company may suspend the exercisability of the Rights for a
period not in excess of ninety (90) days, during which the Company seeks to
register under the Act and any applicable securities laws of any other
jurisdiction, the shares of Preferred Stock to be issued pursuant to the Rights.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to or upon the order of the registered holder
of such Rights Certificates, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a person becoming an Acquiring Person, any
Rights beneficially owned by (i) such Acquiring Person (or an Associate or
Affiliate of an Acquiring Person), (ii) a transferee of such Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes an Acquiring Person, or (iii) a transferee of an
Acquiring Person (or of any an Acquiring Person Associate or Affiliate) who
becomes a transferee prior to or concurrently with the time of the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clauses (ii) and (iii)
above, shall be null and void without any further action and no holder of such
Rights shall thereafter have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable
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efforts to ensure that the provisions of this Section 7(e) are complied with,
but shall have no liability to any holder of Rights Certificates or any other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
No Rights Certificates shall be issued pursuant to Section 3 hereof
that represent Rights beneficially owned by an Acquiring Person whose Rights
would be void pursuant to the provisions of this Section 7(e) or any Associate
or Affiliate thereof. No Rights Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the provisions of this Section 7(e) or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate. Any
Rights Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the provisions of this Section
7(e) shall be cancelled.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise,
split-up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
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 Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES 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 shares of Preferred Stock
or out of its authorized and issued shares of Preferred Stock held in its
treasury, the number of shares of Preferred Stock as will from time to time be
sufficient to permit the exercise in full of all outstanding Rights and, after
the occurrence of an event described in Section 11(a)(ii) or Section 13(a),
shall, to the extent reasonably practicable, so reserve and keep available a
sufficient number of shares of Common Stock which may be required to permit the
exercise in full of all outstanding Rights.
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<PAGE> 11
(b) If the shares of Preferred Stock (and, following the occurrence of
an event described in Section 11(a)(ii) or Section 13(a), Common Stock and/or
other securities) issuable and deliverable upon the exercise of the Rights are
listed on any national securities exchange or included for quotation on any
transaction reporting system, then so long as such securities are listed on such
exchange or included for quotation, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable (but only to
the extent that it is reasonably likely that the Rights will be exercised), all
shares reserved for such issuance to be listed on such exchange or included for
quotation on any such transaction reporting system upon official notice of
issuance upon such exercise.
(c) The Company covenants and agrees that it will take all said action
as may be necessary to ensure that all shares of Preferred Stock delivered upon
exercise of the Rights (or, following the occurrence of an event described in
Section 11(a)(ii) or Section 13(a), shares of Common Stock and/or other
securities) shall, at the time of delivery of the certificates of such shares of
other securities (subject to payment of the Exercise Price in respect thereof),
be duly and validly authorized and issued and fully paid and nonassessable.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of an event
described in Section 11(a)(ii) or as soon as is required by law after the
Distribution Date, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of: (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days, the
exercisability of the Rights in order to prepare and file such registration
statement under the Act and permit it to become effective. 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 unless the requisite qualification
in such jurisdiction shall have been obtained and a registration statement under
the Act shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be, following the occurrence of an event described
in Section 11(a)(ii) or Section 13(a)) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be, following the
occurrence of an event described in Section 11(a)(ii) or Section 13(a)) in
respect of a name other than that of the registered holder of the Rights
Certificates, and the Company shall not be required to issue
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<PAGE> 12
or deliver a Rights Certificate for Preferred Stock (or, following the
occurrence of an event described in Section 11(a)(ii) or Section 13(a), Common
Stock and/or other securities) to a Person other than such registered holder
until any such transfer tax shall have been paid (any such transfer 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
transfer tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE.
Each Person in whose name any certificate for a number of one
one-hundredths of a share of Preferred Stock (or shares of Common Stock 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 as of,
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
applicable transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Stock for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
SECTION 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS.
The Exercise Price, the number and kind of shares which may be
purchased upon exercise of a Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock 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, merger
or share exchange in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Exercise
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Exercise Price then in effect, the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, the holder would have owned upon
such exercise and would have been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided
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<PAGE> 13
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event that any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such plan) alone or together with its Affiliates and
Associates, shall become an Acquiring Person, then, except as otherwise provided
in this Section 11, each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive upon exercise of such Right
at a price equal to the then current Exercise Price multiplied by the number of
one one-hundredths of a share of Preferred Stock for which a Right is then
exercisable, in lieu of Preferred Stock, such number of shares of Common Stock
of the Company as shall equal the result obtained by (x) multiplying the then
current Exercise Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable and dividing that product
by (y) 50% of the Fair Market Value of the Company's Common Stock on the date of
the occurrence of such event; provided, however, that if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13, then only Section 13 shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii). From and after the occurrence
of such event, any Rights that are or were acquired or beneficially owned by any
Acquiring Person (or any Associate or Affiliate of any Acquiring Person) shall
be void and any holder of such Rights shall thereafter have no right to exercise
such Rights under any provision of this Agreement. No Right Certificate shall be
issued pursuant to Section 3 that represents Rights beneficially owned by an
Acquiring Person, or any Associate or Affiliate thereof, whose Rights would be
void pursuant to the preceding sentence; no Right Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring Person (or its
nominee), or any Associate or Affiliate thereof, whose Rights would be void
pursuant to the preceding sentence; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person, or any Associate or Affiliate
thereof, whose Rights would be void pursuant to the preceding sentence shall be
cancelled. In the event that any person shall become an Acquiring Person and any
Rights shall then be outstanding, the Company shall not take any action that
would eliminate or diminish the benefits intended to be afforded by the Rights.
(iii) In lieu of issuing Common Stock in accordance with Section
11(a)(ii) hereof, in the event that the number of shares of Common Stock which
are authorized by the Company's Charter, as the same may be amended from time to
time, but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are 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 Common Stock
issuable upon the exercise of a Right (the "Current Value"), over (2) the
Exercise Price (such excess being referred to as the "Spread") and (B) with
respect to each Right, make adequate provision to substitute for such Common
Stock, upon the exercise of a Right and payment of the applicable Exercise
Price, (1) cash, (2) a reduction in the Exercise Price, (3) other equity
securities of the Company (including, without limitation, shares or units of
shares, of any series of preferred stock which the Board has deemed to have
essentially the same value or economic rights as shares of Common Stock (such
shares of preferred stock 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
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<PAGE> 14
to the Spread (less the amount of any reduction in the Exercise Price), where
such aggregate value has been determined by the Board; provided, however, that
if the Company shall not have made adequate provision to deliver value pursuant
to clause (B) above within thirty (30) days following the occurrence of an event
described in Section 11(a)(ii), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of the
Exercise Price, shares of Common Stock (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 determines in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days after the
occurrence of an event described in Section 11(a)(ii), in order that the Company
may seek shareholder approval for the authorization of such additional shares.
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 Stock shall be the Fair Market Value per share of the Common Stock on the
date of the occurrence of one of the events described in Section 11(a)(ii) and
the per share value of any Common Stock Equivalent shall be deemed to equal the
same value as the Common Stock on such date.
(b) In case the Company shall, after the Record Date, fix a record date
for the issuance of rights, options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a period expiring within
45 days after such record date) Preferred Stock (or shares having the same
rights, privileges and preferences 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 Fair Market Value (as determined pursuant to Section 11(d) hereof) per
share of Preferred Stock on such record date, the Exercise Price to be in effect
after such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
Equivalent 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 Fair Market Value, 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 Equivalent Preferred Stock
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). 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 Exercise Price shall be adjusted
to be the Exercise Price which would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a Record Date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation, merger or share exchange in which the Company
is the continuing or surviving corporation) of evidences of indebtedness, cash
(other than a regular cash dividend out of the earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend
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<PAGE> 15
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Exercise Price to be
in effect after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Fair Market Value (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
Fair Market Value of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
the Fair Market Value (as determined pursuant to Section 11(d) hereof) per share
of 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 Exercise Price shall be adjusted to be the Exercise Price which would have
been in effect if such record date had not been fixed.
(d) For the purpose of this Agreement, the "Fair Market Value" of any
share of Preferred Stock, Common Stock or any other property on any date shall
be determined as provided in this Section 11(d). In the case of publicly traded
securities, Fair Market Value on any date shall be deemed to be the average of
the daily closing prices per share of such stock for the thirty (30) consecutive
Trading Days immediately prior to such date; provided, however, that in the
event the Fair Market Value per share of any security is determined during a
period which includes any date that is within 30 Trading Days after the
announcement by the issuer of such security of (A) a dividend or distribution
payable in shares of such securities or securities convertible into shares of
such securities (other than the Rights), or (B) any subdivision, combination or
reclassification of such securities, then, and in each such case, the Fair
Market Value shall be properly adjusted to take into account ex-dividend or
post-effective date trading. The closing price for each day shall be the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc., Automated Quotation System or such other system
then in use, or, if on any such date such securities 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 such securities selected by the
Board or, if the securities are listed or admitted to trading on the New York
Stock Exchange, 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 or, if such securities 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 such securities are listed or admitted to trading.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of such security are listed or admitted
to trading is open for the transaction of business or, if the shares of such
security are not listed or admitted to trading on any national securities
exchange, a Business Day. If the security is not publicly held or not so listed
or traded, Fair Market Value per share shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one-hundredth (.01) of a share, as the case may be.
Anything herein to the contrary notwithstanding, no adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Exercise Price; provided, however,
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<PAGE> 16
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. Notwithstanding the second sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three (3) years from the date of the transaction which mandates such
adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Exercise Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), (l), and (o) and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-hundredths 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 Exercise Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of one one-hundredths of a
share of Preferred Stock obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment, by (y) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price, and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-hundredths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-hundredths 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 obtained by dividing the
Exercise Price in effect immediately prior to adjustment of the Exercise Price
by the Exercise Price in effect immediately after adjustment of the Exercise
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Exercise Price is adjusted or any day thereafter, but,
if the 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
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<PAGE> 17
to be distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders of record prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Rights Certificates to be so distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or
the number of one one-hundredths 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 Exercise Price and the number of shares to be
issued upon exercise of the Rights as in the initial Rights Certificates issued
hereunder but, nevertheless, shall represent the Rights as so adjusted.
(k) Before taking any action that would cause an adjustment reducing
the Exercise Price below the then par value, if any, of the number of one
one-hundredths of a share of 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 such number of one one-hundredths of a share
of Preferred Stock at such adjusted Exercise Price.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that (i) any combination or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any shares of Preferred Stock at less than the
current market price, (iii) issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are convertible into or exchangeable
for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock, shall not be taxable to such
shareholders.
(m) The Company shall not, at any time after the Distribution Date, (i)
effect a share exchange with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(n) hereof), (ii) merge
with or into any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(n) hereof), or (iii) sell or transfer
(or permit any Subsidiary to sell or transfer), in one transaction, or a series
of transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(n) hereof),
if (x) at the time of or immediately after such share exchange, merger or sale
there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such share exchange, merger or sale,
the Person which constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have distributed or otherwise transferred
to its shareholders or other persons holding an equity interest in such Person
Rights previously owned by such Person or any of its Affiliates and Associates;
provided, however, this Section 11(m) shall not affect the ability of any
Subsidiary of the
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<PAGE> 18
Company to effect a share exchange with, merge with or into, or sell or transfer
assets or earning power to, any other Subsidiary of the Company.
(n) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 26 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare or pay a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted
so that (A) the number of one one-hundredths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (B) each
share of Common Stock outstanding immediately after such event shall have issued
with respect to it that number of Rights which each share of Common Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(o) shall be made successively
whenever such a dividend is declared or paid or such a subdivision or
combination is effected.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate in accordance with
Section 25 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to make such a certification or give such notice shall not affect the
validity of or the force or effect of the requirement for such adjustment. Any
adjustment shall be effective as of the date of the event giving rise to such
adjustment. 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 Distribution Date (x) the Company
shall consolidate with, merge with or into, or enter into a statutory share
exchange with any other Person and the Company shall not be the continuing or
surviving corporation of such consolidation, merger or share exchange, (y) any
Person shall consolidate with, merge with or into, or enter into a statutory
share exchange with the Company, and the Company shall be the continuing or
surviving corporation of
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such consolidation, merger or share exchange and, in connection with such
consolidation, merger or share exchange, all or part of the outstanding shares
of Common Stock shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (z) the Company (and not
any lending institution acting to enforce its rights as a holder of a lien on
the Company's assets or any Subsidiaries assets) shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries taken as a whole to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(n) hereof), then, on the first occurrence of any such
event, proper provision shall be made so that: (i) each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then current Exercise Price in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid, non-assessable and freely tradeable shares of Common
Stock of the Principal Party (as such term is hereinafter defined), not subject
to any liens, encumbrances, rights of first refusal or other adverse claims, as
shall, based on the Fair Market Value of the Common Stock of the Principal Party
on the date of such consolidation, merger, share exchange, sale or transfer,
equal twice the Exercise Price; (ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such consolidation, merger, share
exchange, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with the provisions of Section 9
hereof) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any event described in clause (x), (y) or (z) above of this Section 13(a).
The provisions of this Section 13 shall similarly apply to successive mergers,
consolidations, share exchanges or sales or other transfer.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a): (A) the Person that is the issuer of
any securities into which shares of Common Stock of the Company are converted in
such merger, share exchange or consolidation, or, if there is more than one such
issuer, the issuer of the Common Stock of which has the greatest market value,
or (B) if no securities are so issued (x) the Person that is the other party to
the merger or consolidation and that survives such merger, consolidation or
share exchange, or, if there is more than one such Person, the Person the Common
Stock of which has the greatest market value or (y) if the Person that is the
other party to the merger, consolidation or share exchange does not survive the
merger, consolidation or share exchange, the Person that does survive the
merger, consolidation or share exchange (including the Company if it survives);
and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so
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transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever is the issuer of Common Stock
having the greatest market value of shares outstanding;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
(2) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest market value of shares
outstanding; and (3) if the Common Stock of such Person is not registered Common
Stock or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and none of such other Persons
have registered Common Stock outstanding, "Principal Party" shall refer to
whichever ultimate parent entity is the corporation having the greatest
stockholders equity or, if no such ultimate parent entity is a corporation,
shall refer to whichever ultimate parent entity is the entity having the
greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
share exchange, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraph (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger, share exchange or sale of assets
mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date of the Rights and similarly
comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on The Nasdaq Stock Market; and
(iii) 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 (or any
successor form) under the Exchange Act.
In the event that any transaction described in Section 13 shall occur at any
time after the occurrence of any transaction described in Section 11(a)(ii), the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
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(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction to acquire all outstanding shares
of Common Stock is consummated with a Clause (iii) Person, (ii) the price per
share of Common Stock offered in such transaction is approved by the majority of
the Board of Directors, and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the
same as the form of consideration paid pursuant to such transaction. Upon
consummation of any such transaction contemplated by this Section 13(d), all
such Rights shall otherwise expire.
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 otherwise
be issuable, an amount in cash equal to the same fraction of the Fair Market
Value of a whole Right.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of
one-hundredths (.01) of a share of Preferred Stock) upon exercise of the Rights
or to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one-hundredths (.01)
of a share of Preferred Stock). In lieu of fractional shares of Preferred Stock
that are not integral multiples of one-hundredths (.01) of a share of Preferred
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the Fair Market Value of a share of Preferred Stock.
(c) Following the occurrence of an event described in Section 11(a)(ii)
or Section 13(a), the Company shall not be required to issue fractions of shares
of Common Stock or Common Stock equivalents upon exercise of the Fair Market
Value Rights or to distribute certificates which evidence fractional shares of
Common Stock or Common Stock equivalents. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the Fair Market Value of one share of Common Stock.
(d) The holder of a Right by the acceptance of the Rights expressly
waives the right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his/her own behalf or for his/her own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the
Company
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to enforce, or otherwise act in respect of, his/her right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the Common Stock certificates, which certificates shall also constitute
certificates for Rights, and not by separate Rights Certificates, and the Rights
will be transferable only simultaneously and together with the transfer of
Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be required to be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as promptly as practicable.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the number of
one one-hundredths of a share 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
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shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 24 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement and its performance hereunder, including,
without limitation, the costs and expenses of defending against any claim of
liability relating to the Rights or this Agreement, and will promptly reimburse
the Rights Agent.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
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(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the 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 have not 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
specified herein) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, or the Secretary of the Company and delivered to the
Rights Agent. Any 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 gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), 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 or legality 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 legality or execution of any Rights Certificate (except its
countersignature thereof), nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof or responsible for the
manner, method or amount of any such adjustment, 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
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<PAGE> 25
reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of Common Stock or Preferred Stock will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable to the
Company, the holder of any Rights certificate, or any shareholder 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 shareholder, 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) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail. The Company may remove the
Rights Agent or any successor Rights Agent (with or without cause) upon thirty
(30) days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. In no event shall the
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resignation or removal of a Rights Agent be effective until the successor Rights
Agent shall have been appointed and have accepted such appointment. 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/her Rights Certificate for inspection by the Company), then any registered
holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of any state thereof in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed, but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Exercise 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 shares of
Common Stock following the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date, the Company (a) shall with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities, notes or debentures issued by the Company
and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) the Company shall not be obligated to issue any such Right
Certificates if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right Certificate would
be issued and (ii) no Right 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 Directors of the Company may, at its option, redeem
all but not less than all of the then outstanding Rights, at any time prior to
the earlier of (i) the Close of Business on the tenth day following the Stock
Acquisition Date (subject to extension by the Company as provided in Section
3(b) hereof), or (ii) the Expiration Date, at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
(b) Immediately upon the action of the Board of Directors of the
Company 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 for
each Right so held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Each notice of redemption shall state the method by which the payment of the
Redemption Price shall be made.
SECTION 24. NOTICE OF PROPOSED ACTIONS.
(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 quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation,
share exchange or merger into or with any other Person or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions, of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, share exchange, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of 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 ten (10) days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of
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any such other action, at least ten (10) days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
shares of Preferred Stock whichever shall be the earlier. The failure to give
notice required by this Section 24 or any other defect therein shall not affect
the legality or validity of the actions taken by the Company or the vote upon
any such action.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
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:
Advocat Inc.
7108 Crossroads Blvd.
Suite 313
Brentwood, Tennessee 37027
Attention: Charles W. Birkett, M.D., Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Third National Bank in Nashville
Post Office Box 305110
Nashville, Tennessee 37230-5110
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage 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.
For as long as the Rights are then redeemable and except as provided in
the last sentence of this Section 26, the Company may in its sole and absolute
discretion, and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of the
Rights so long as the duties, liabilities and indemnification of the Rights
Agent are
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not affected. At any time when the Rights are not then redeemable and except as
provided in the last sentence of this Section 26, the Company may, and the
Rights Agent shall if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein or (iii) to
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable, provided that no such supplement or amendment
pursuant to this clause (iii) shall materially adversely affect the interest of
the holders of Rights Certificates. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Rights Agreement to the contrary, supplements or amendments may be made
only upon approval by a majority of the Board of Directors.
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. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS.
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board, or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith and
with the approval of a majority of the Board of Directors then in office in
accordance with the preceding sentence, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties and (y) not subject any director to any liability to the holders
of the Rights.
SECTION 29. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common Stock).
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SECTION 30. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors.
SECTION 31. GOVERNING LAW.
This Agreement, each Right and every Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts made and to be performed
entirely within such State.
SECTION 32. 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.
ADVOCAT INC.
By:
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Name:
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Title:
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THIRD NATIONAL BANK IN NASHVILLE
By:
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Name:
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Title:
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