SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) or 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PSINET INC.
(Exact name of registrant as specified in its charter)
New York 16-1353600
(State of incorporation (I.R.S. employer
or organization) identification no.)
510 Huntmar Park Drive
Herndon, Virginia 22070
(Address of principal (zip code)
executive offices)
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
None None
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Preferred Stock Purchase Rights
(Title of Class)
Exhibit Index Appears on Sequentially Numbered Page 9
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On May 8, 1996, the Board of Directors of PSINet Inc. (the "Company")
declared a dividend of one preferred share purchase right (a "Right") for
each outstanding share of common stock, par value $.01 per share, of the
Company (the "Common Stock"). The dividend is payable on June 5, 1996 (the
"Record Date"), or as soon as reasonably practicable thereafter, to the
shareholders of record on June 5, 1996. Each Right entitles the registered
holder to purchase from the Company one one-thousandth of a share of Series A
Junior Participating Class A Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of the Company at a price of $75.00 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement dated as of May 8, 1996, as the same by be amended from time to
time (the "Rights Agreement"), between the Company and First Chicago Trust
Company of New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following the first date of
a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") have acquired beneficial ownership of 20%
or more of the outstanding shares of Common Stock (except pursuant to a
Permitted Offer, as hereinafter defined) or such earlier date as a majority
of the Board of Directors shall have become aware of the existence of an
Acquiring Person, or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any
person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in
the beneficial ownership by a person or group of 20% or more of the
outstanding shares of Common Stock (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with respect to any
of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificate together with a copy of this Summary of Rights.
An Acquiring Person does not include (i) a person who acquires shares
of Common Stock pursuant to a tender offer or exchange offer which is for
all outstanding shares of Common Stock at a price and on terms which the
Board of Directors determines to be adequate and otherwise in the best
interests of the Company and its shareholders (other than the person on
whose basis the offer is being made and its affiliates and associates)
taking into account all factors that such directors may deem relevant (a
"Permitted Offer"), or (ii) a person who acquires 20% or more of the
outstanding shares of Common Stock directly from the Company, a
Grandfathered Person (as hereinafter defined) and certain other persons or
entities affiliated with the Company.
A "Grandfathered Person" means any one or more of the following persons,
either in his or its individual capacity or collectively with other of the
following persons: (i) William L. Schrader, Chairman of the Board of
Directors and Chief Executive Officer of the Company, who at May 8, 1996
owned approximately 14% of the outstanding shares of Common Stock, any
descendant of William L. Schrader, or any spouse, widow or widower of
William L. Schrader, or any such descendant (William L. Schrader, and any
such descendants, spouses, widows and widowers collectively defined as the
"Schrader Family Members"); (ii) any trust (including any voting trust)
which is in existence on the date of the Rights Agreement and which has
been established by one or more Schrader Family Members, any estate of, or
the executor or administrator of any estate of, or any guardian or
custodian for, a Schrader Family Member who died on or before the date of
the Rights Agreement (such trusts, estates, executors, administrators or
guardians or custodians collectively defined as the "Schrader Family
Entities"); (iii) any estate of, or the executor or administrator of any
estate of, or any guardian or custodian for, a Schrader Family Member, or
any trust established after the date of the Rights Agreement by one or more
Schrader Family Members or Schrader Family Entities, provided that one or
more Schrader Family Members or Schrader Family Entities, collectively, are
the beneficiaries of at least 50% of the actuarially-determined beneficial
interests in such estate or trust; (iv) any charitable organization which
qualifies as an exempt organization under Section 501(c) of the Internal
Revenue Code of 1986, as amended ("Charitable Organization"), which is
established by one or more Schrader Family Members or Schrader Family
Entities (a "Schrader Family Charitable Organization"); (v) any corporation
of which a majority of the voting power and a majority of the equity
interest is held, directly or indirectly, by or for the benefit of one or
more Schrader Family Members, Schrader Family Entities, estates, executors,
administrators, guardians or custodians or trusts described in clause (iii)
above or Schrader Family Charitable Organizations; and (vi) any general
partnership, limited partnership, organization or other entity or
arrangement of which a majority of the voting interest and a majority of
the economic interest is held, directly or indirectly, by or for the
benefit of one or more Grandfathered Persons; provided, however, that
William L. Schrader and each of the other Persons contemplated by this
paragraph shall not be a Grandfathered Person if William L. Schrader or any
of such Persons makes an acquisition of shares of Common Stock that would
increase the aggregate beneficial ownership of all Grandfathered Persons to
50% or more of the outstanding shares of Common Stock. Notwithstanding the
foregoing, William L. Schrader and each of the other Persons contemplated
by this paragraph shall not cease to be a Grandfathered Person either (x)
as a result of the acquisition of shares of Common Stock by the Company
which, by reducing the number of shares of Common Stock outstanding,
increases the proportional number of shares beneficially owned by William
L. Schrader or such other Persons, together with all Affiliates and
Associates thereof, unless (i) William L. Schrader and each of such other
Persons would cease to be a Grandfathered Person (but for the operation of
this subclause (x)) as a result of the acquisition of shares of Common
Stock by the Company and (ii) after such share acquisition by the Company,
William L. Schrader or any such other Person, or an Affiliate or Associate
thereof, becomes the beneficial owner of any additional shares of Common
Stock or (y) if within ten (10) Business Days after William L. Schrader and
such other Persons would otherwise have ceased to be Grandfathered Persons
(but for the operation of this subclause (y)) William L. Schrader or any
such other Person notifies the Board of Directors that the Grandfathered
Persons, together with all Affiliates and Associates thereof, are the
beneficial owners in the aggregate of less than 50% of the outstanding
shares of Common Stock.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Stock. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date (including, without limitation,
upon transfer or new issuances of Common Stock) will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for shares of Common Stock outstanding as of
the Record Date, even without such notation or a copy of this Summary of
Rights, will also constitute (except as otherwise provided in the Rights
Agreement) the transfer of the Rights associated with the shares of Common
Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as
of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on June 5, 2006 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Preferred
Stock, Common Stock or other securities or property issuable upon exercise
of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) upon the
grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities
convertible into Preferred Stock with a conversion price, less than the
then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness
or assets (excluding regular periodic cash dividends or dividends payable
in Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or
a stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled, when,
as and if declared, to an aggregate dividend of 1,000 times the dividend
declared per share of Common Stock. No dividend may be declared on the
Common Stock without the concurrent declaration of a dividend on the
Preferred Stock. In the event of liquidation, the holders of the
Preferred Stock will be entitled to a minimum preferential liquidation
payment of $1,000 per share (plus any accrued but unpaid dividends) but
will be entitled to an aggregate payment of 1,000 times the payment made
per share of Common Stock; thereafter, the holders of the Preferred Stock
and the holders of the Common Stock will share pari passu per share in the
remaining assets of the Company. Each share of Preferred Stock will have
1,000 votes, voting together with the Common Stock. Finally, in the event
of any merger, consolidation or other transaction in which shares of Common
Stock are converted or exchanged, each share of Preferred Stock will be
entitled to receive 1,000 times the amount received per share of Common
Stock. These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share
of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person (except pursuant to a Permitted Offer),
each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereupon become void), will thereafter have
the right (the "Flip-In Right") to receive, upon exercise of a Right at the
then current exercise price of the Right, that number of one
one-thousandths of a share of Preferred Stock or, in the discretion of the
Board of Directors, that number of shares of Common Stock (or, in certain
circumstances, other securities of the Company), having a market value of
two times the exercise price of the Right.
In the event that, after a person or group has become an Acquiring
Person, (i) the Company is acquired in a merger or other business
combination transaction or (ii) 50% or more of its consolidated assets or
earning power are sold or transferred, in either case with or to any
person, proper provision will be made so that each holder of a Right (other
than Rights beneficially owned by an Acquiring Person which will have
become void) will thereafter have the right (the "Flip-Over Right") to
receive, upon the exercise thereof at the then current exercise price of
the Right, that number of shares of common stock of the person with which
the Company has engaged in the foregoing transaction (or its parent), which
number of shares at the time of such transaction will have a market value
of two times the exercise price of the Right. The holder of a Right will
continue to have the Flip-Over Right whether or not such holder exercises
or surrenders the Flip-In Right. The Flip-Over Right provisions do not
apply to a merger or other business combination with a person who has
acquired shares of Common Stock pursuant to a Permitted Offer in which the
price per share is at least as great as the price (and is the same form of
consideration) paid in the Permitted Offer.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by such person or group
which will have become void), in whole or in part, at an exchange ratio of
one share of Common Stock, or one one-thousandth of a share of Preferred
Stock (or of a share of a class or series of the Company's preferred stock
having equivalent rights, preferences and privileges), per Right (subject
to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price. At the discretion of the Company, fractional
shares of Preferred Stock may not be issued (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary
receipts) and, if the Company elects not to issue fractional shares, an
adjustment in cash will be made in lieu thereof based on the market price
of the Preferred Stock on the last trading day prior to the date of
exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain
other circumstances, the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price") which
redemption shall be effective upon the action of the Board of Directors.
The Company may, at its option, pay the Redemption Price in shares of
Common Stock. Additionally, after the date that a person becomes an
Acquiring Person, the Company may redeem the then outstanding Rights in
whole, but not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business combination
transaction or series of transactions involving the Company in which all
holders of shares of Common Stock are treated alike and not involving an
Interested Shareholder (as hereinafter defined) or if and for so long as
the Acquiring Person's share in the Company is not 20% or more and at the
time of the redemption there are no other Acquiring Persons. Interested
Shareholder means any Acquiring Person (including affiliates and associates
thereof) or any person in which any such Acquiring Person, affiliate or
associate has an interest, or any other person acting on behalf of or in
concert with any Acquiring Person, affiliate or associate.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner.
After the Rights are no longer redeemable, the Company may, except with
respect to the redemption price, amend the Rights in any manner that does
not adversely affect the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the
Rights will not be taxable to shareholders of the Company, shareholders
may, depending upon the circumstances, recognize taxable income should the
Rights become exercisable or upon the occurrence of certain events
thereafter.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Company without conditioning the offer on (i) the Rights being redeemed,
(ii) a substantial number of Rights being acquired or (iii) the offer being
deemed a "Permitted Offer" under the Rights Agreement. However, the Rights
should not interfere with any merger or other business combination in
connection with a Permitted Offer or that is approved by the Company
because the Rights are redeemable under certain circumstances.
Attached hereto as Exhibit 1 and incorporated herein by reference are
a copy of the Rights Agreement, dated as of May 8, 1996, between the
Company and First Chicago Trust Company of New York, as Rights Agent,
specifying the terms of the Rights, and the exhibits thereto, as follows:
Exhibit A -- Certificate of Amendment; Exhibit B -- Form of Rights
Certificate; and Exhibit C -- Summary of Rights to Purchase Shares of
Preferred Stock. The foregoing description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement and the exhibits thereto.
ITEM 2. EXHIBITS.
1. Form of Rights Agreement, dated as of May 8, 1996, between PSINet Inc.
and First Chicago Trust Company of New York, as Rights Agent, which
includes as Exhibit A -- Certificate of Amendment; Exhibit B -- Form
of Rights Certificate; and Exhibit C -- Summary of Rights to Purchase
Shares of Preferred Stock.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: June 3, 1996
PSINET INC.
By: /s/ David N. Kunkel
David N. Kunkel
Vice President, General Counsel
and Secretary
EXHIBIT INDEX
Exhibit Sequentially
Number Exhibit Numbered Page
1. Form of Rights Agreement, dated as Filed herewith
of May 8, 1996, between PSINet Inc.
and First Chicago Trust Company of
New York, as Rights Agent, which
includes as Exhibit A -- Certificate
of Amendment; Exhibit B -- Form of
Rights Certificate; and Exhibit C
-- Summary of Rights to Purchase
Shares of Preferred Stock.
____________________________________
PSINET INC.
AND
FIRST CHICAGO TRUST COMPANY
OF NEW YORK,
Rights Agent
RIGHTS AGREEMENT
DATED AS OF MAY 8, 1996
____________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . 8
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . . 8
Section 4. Form of Right Certificates. . . . . . . . . . . . . . . . . . 10
Section 5. Countersignature and Registration . . . . . . . . . . . . . . 10
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8. Cancellation and Destruction of Right Certificates. . . . . . 13
Section 9. Reservation and Availability of Shares of Preferred Stock . . 13
Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . 14
Section 11. Adjustment of Purchase Price, Number of Shares and
Number of Rights. . . . . . . . . . . . . . . . . . . . . . . 15
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earnings Power. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . 28
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . 29
Section 16. Agreement of Right Holders. . . . . . . . . . . . . . . . . . 29
Section 17. Right Certificate Holder Not Deemed a Stockholder . . . . . . 30
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . 30
Section 19. Merger or Consolidation or Change of Name of Rights
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . 31
Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . 34
Section 22. Issuance of New Right Certificates. . . . . . . . . . . . . . 34
Section 23. Redemption and Termination. . . . . . . . . . . . . . . . . . 35
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . 37
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 27. Supplements and Amendments. . . . . . . . . . . . . . . . . . 39
Section 28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 29. Benefits of this Agreement. . . . . . . . . . . . . . . . . . 39
Section 30. Determinations and Actions by the Board of Directors. . . . . 40
Section 31. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 34. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . 41
EXHIBITS
Exhibit A Form of Certificate of Amendment
Exhibit B Form of Right Certificate
Exhibit C Summary of Rights to Purchase Shares of Preferred Stock
<PAGE>
RIGHTS AGREEMENT
Agreement, dated as of May 8, 1996, between PSINET INC., a New York
corporation (the "Company"), and FIRST CHICAGO TRUST COMPANY OF NEW YORK, a
New York corporation (the "Rights Agent").
PREAMBLE
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each share
of Common Stock (as hereinafter defined) of the Company outstanding as of the
Close of Business (as defined below) on June 5, 1996 (the "Record Date"),
each Right representing the right to purchase one one-thousandth (subject to
adjustment) of a share of Preferred Stock (as hereinafter defined), upon the
terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right (subject to adjustment as
provided herein) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earlier of the Distribution Date
and the Expiration Date (as such terms are hereinafter defined); provided,
however, that Rights may be issued with respect to shares of Common Stock
that shall become outstanding after the Distribution Date and prior to the
Expiration Date in accordance with Section 22.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties, intending to be legally bound, hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this Agreement, in
addition to other terms defined elsewhere herein, the following terms have
the meaning indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter
defined) who or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner (as hereinafter defined) of 20% or more
of the shares of Common Stock then outstanding (other than as a result of a
Permitted Offer (as hereinafter defined)), or was such a Beneficial Owner at
any time after the date hereof, whether or not such Person continues to be
the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding, but shall not include an Exempt Person (as hereinafter defined);
provided, however, that if the Board of Directors of the Company determines
in good faith that a Person who would otherwise be an "Acquiring Person" has
become such inadvertently (including, without limitation, because such Person
was unaware that it beneficially owned a percentage of Common Stock that
would otherwise cause such Person to be a "Acquiring Person") and without any
intention of changing or influencing control of the Company, and such Person,
as promptly as practicable after being advised of such determination, divests
himself or itself of Beneficial Ownership of a sufficient number of shares of
Common Stock so that such Person would no longer be an Acquiring Person, then
such Person shall not be deemed to be or to have become an "Acquiring Person"
for any purposes of this Agreement. Notwithstanding the foregoing, no Person
shall become an "Acquiring Person" as the result of an acquisition of shares
of Common Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned
by such Person to 20% or more of the shares of Common Stock then outstanding,
provided, however, that if a Person shall become the Beneficial Owner of 20%
or more of the shares of Common Stock then outstanding by reason of such
share acquisitions by the Company and thereafter such Person shall become the
Beneficial Owner of any additional shares of Common Stock, then such Person
shall be deemed to be an "Acquiring Person" (i) unless upon the consummation
of the acquisition of such additional shares of Common Stock such Person does
not beneficially own 20% or more of the shares of Common Stock then
outstanding or (ii) the proviso to the first sentence of this Section 1(a) is
applicable. The phrase "then outstanding", when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, shall be
deemed to have "Beneficial Ownership" of and shall be deemed to "beneficially
own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates is deemed to beneficially own, directly or
indirectly, within the meaning of Rule 13d-3 of the General
Rules and Regulations under the Exchange Act as in effect on
the date of this Agreement;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect to
a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (x) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (y)
securities which such Person has a right to acquire on the
exercise of Rights at any time prior to the time a Person
becomes an Acquiring Person or (z) securities issuable upon
exercise of Rights from and after the time a Person becomes an
Acquiring Person if such Rights were acquired by such Person
or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22
hereof ("original Rights") or pursuant to Section 11(i) or
Section 11(n) with respect to an adjustment to original
Rights; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to
beneficially own, any security by reason of such agreement,
arrangement or understanding if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to
a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then
reportable 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 with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B)) or
disposing of any securities of the Company;
provided, however, that no Person who is an officer, director,
partner or employee of an Exempt Person shall be deemed,
solely by reason of such Person's status or authority as such,
to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are
"beneficially owned" (as defined in this Section 1(c)),
including, without limitation, in a fiduciary capacity, by an
Exempt Person or by any other such officer, director or
employee of an Exempt Person.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
New York City time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall
mean the common stock, presently par value $0.01 per share, of the Company.
"Common Stock" when used with reference to any Person other than the Company
shall mean the capital stock (or, in the case of an unincorporated entity,
the equivalent equity interest) with the greatest voting power of such other
Person or, if such other Person is a subsidiary of another Person, the Person
or Persons which ultimately control such first-mentioned Person.
(g) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(h) "Current Per Share Market Price" shall have the meaning set
forth in Section 11(d)(i) hereof.
(i) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(j) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(k) "Equivalent Preferred Shares" shall have the meaning set forth
in Section 11(b) hereof.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(m) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(n) "Exempt Person" shall mean the (i) Company, (ii) any
Subsidiary (as hereinafter defined) of the Company, (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company, (iv) any
Person or trustee holding Common Stock for or pursuant to the terms of any
such plan or for the purpose of funding any such plan or funding other
employee benefits for employees of the Company or of any Subsidiary of the
Company, (v) any Person, who or which, together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 20% or more of the
shares of Common Stock then outstanding as a result of the acquisition of
shares of Common Stock directly from the Company, or (vi) any Grandfathered
Person (as hereinafter defined).
(o) "Expiration Date" shall have the meaning set forth in Section
7 hereof.
(p) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(q) "Grandfathered Person" shall mean at any time any one or more
of the following Persons, either in his or its individual capacity or
collectively with other Grandfathered Persons:
(i) William L. Schrader, who is at the date hereof, the Beneficial
Owner of approximately 14% of the outstanding shares of Common Stock,
any descendant of William L. Schrader, or any spouse, widow or widower
of William L. Schrader or any such descendant (William L. Schrader, and
any such descendants, spouses, widows and widowers collectively defined
as the "Schrader Family Members");
(ii) any trust (including any voting trust) which is in existence
on the date of this Agreement and which has been established by one or
more Schrader Family Members, any estate of, or the executor or
administrator of any estate of, or any guardian or custodian for, a
Schrader Family Member who died on or before the date of this Agreement
(such trusts, estates, executors, administrators or guardians or
custodians collectively defined as the "Schrader Family Entities");
(iii) any estate of, or the executor or administrator of any
estate of, or any guardian or custodian for, a Schrader Family Member,
or any trust established after the date of this Agreement by one or more
Schrader Family Members or Schrader Family Entities, provided that one
or more Schrader Family Members or Schrader Family Entities,
collectively, are the beneficiaries of at least 50% of the
actuarially-determined beneficial interests in such estate or trust;
(iv) any charitable organization which qualifies as an exempt
organization under Section 501(c) of the Internal Revenue Code of 1986,
as amended ("Charitable Organization"), which is established by one or
more Schrader Family Members or Schrader Family Entities (a "Schrader
Family Charitable Organization");
(v) any corporation of which a majority of the voting power and a
majority of the equity interest is held, directly or indirectly, by or
for the benefit of one or more Schrader Family Members, Schrader Family
Entities, estates, executors, administrators, guardians or custodians or
trusts described in clause (iii) above or Schrader Family Charitable
Organizations; and
(vi) any general partnership, limited partnership, organization
or other entity or arrangement of which a majority of the voting interest
and a majority of the economic interest is held, directly or indirectly,
by or for the benefit of one or more Grandfathered Persons;
provided, however, that William L. Schrader and each of the other
Persons contemplated by this Section 1(q) shall not be a Grandfathered
Person if William L. Schrader or any of such Persons makes an
acquisition of shares of Common Stock that would increase the aggregate
beneficial ownership of all Grandfathered Persons to 50% or more of the
shares of Common Stock then outstanding. Notwithstanding the foregoing,
William L. Schrader and each of the other Persons contemplated by this
Section 1(q) shall not cease to be a Grandfathered Person either (x) as
a result of the acquisition of shares of Common Stock by the Company
which, by reducing the number of shares of Common Stock outstanding,
increases the proportional number of shares beneficially owned by
William L. Schrader or such other Persons, together with all Affiliates
and Associates thereof, unless (i) William L. Schrader and each of such
other Persons would cease to be a Grandfathered Person (but for the
operation of this subclause (x)) as a result of such acquisition of
shares of Common Stock by the Company and (ii) after such share
acquisition by the Company, William L. Schrader or any such other
Person, or an Affiliate or Associate thereof, becomes the Beneficial
Owner of any additional shares of Common Stock, or (y) if within ten
(10) Business Days after William L. Schrader and such other Persons
would otherwise have ceased to be Grandfathered Persons (but for the
operation of this subclause (y)) William L. Schrader or any such other
Person notifies the Board of Directors that the Grandfathered Persons,
together with all Affiliates and Associates thereof, are the Beneficial
Owners in the aggregate of less than 50% of the shares of Common Stock
then outstanding.
(r) "Interested Stockholder" shall mean any Acquiring Person or
any Affiliate or Associate of an Acquiring Person or any other Person in
which any such Acquiring Person, Affiliate or Associate has an interest, or
any other Person acting directly or indirectly on behalf of or in concert
with any such Acquiring Person, Affiliate or Associate.
(s) "Invalidation Time" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(t) "New York Stock Exchange" shall mean the New York Stock
Exchange, Inc.
(u) "Permitted Offer" shall mean a tender or exchange offer for
all outstanding shares of Common Stock which is at a price and on terms
determined, prior to the purchase of shares under such tender or exchange
offer, by at least a majority of the members of the Board of Directors who
are not Acquiring Persons or Transaction Persons (as hereinafter defined) or
Affiliates, Associates, nominees or representatives of an Acquiring Person or
a Transaction Person, to be adequate (taking into account all factors that
such directors deem relevant including, without limitation, prices that could
reasonably be achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value) and is otherwise in the best
interests of the Company and its stockholders (other than the Person or any
Affiliate or Associate thereof on whose behalf the offer is being made)
taking into account all factors that such directors may deem relevant,
including, without limitation, those factors described in Section 717(b) of
the New York Business Corporation Law.
(v) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
(w) "Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company having the rights
and preferences set forth in the Form of Certificate of Amendment attached to
this Agreement as Exhibit A.
(x) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(y) "Purchase Price" shall have the meaning set forth in Section
4 hereof.
(z) "Record Date" shall have the meaning set forth in the Preamble
hereof.
(aa) "Redemption Date" shall have the meaning set forth in Section
7 hereof.
(ab) "Right" shall have the meaning set forth in the Preamble
hereof.
(ac) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(ad) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(ae) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(af) "Section 13 Event" shall mean any event described in clause
(i), (ii) or (iii) of Section 13(a) hereof.
(ag) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(ah) "Security" shall have the meaning set forth in Section
11(d)(i) hereof.
(ai) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(aj) "Stock Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such
or such earlier date as a majority of the Board of Directors shall become
aware of the existence of an Acquiring Person.
(ak) "Subsidiary" of any Person shall mean any corporation or
other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or
other persons performing similar functions are beneficially owned, directly
or indirectly, by such Person, and any corporation or other entity that is
otherwise controlled by such Person.
(al) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(am) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(an) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
(ao) "Transaction" shall mean any merger, consolidation or sale of
assets described in Section 13(a) hereof or any acquisition of shares of
Common Stock of the Company which would result in a Person becoming a
Transaction Person.
(ap) "Transaction Person" with respect to a Transaction shall mean
(x) any Person who (i) is or will become an Acquiring Person if the
Transaction were to be consummated, and (ii) directly or indirectly proposed
or nominated a director of the Company which director is in office at the
time of consideration of the Transaction, or (y) an Affiliate or Associate of
such a Person.
(aq) "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of Common Stock) 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 Right Certificates. (a) Until the earlier of
(i) the tenth day after the Stock Acquisition Date or (ii) the tenth Business
Day (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than an Exempt Person) of,
or of the first public announcement of the intention of such Person (other
than an Exempt Person) to commence (which intention to commence remains in
effect for more than five (5) Business Days after such announcement), a
tender or exchange offer the consummation of which would result in any Person
becoming an Acquiring Person (including, in the case of both (i) and (ii),
any such date which is after the date of this Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Stock
registered in the names of the holders thereof and not by separate Right
Certificates, and (y) the Rights will be transferable only in connection with
the transfer of Common Stock (including a transfer to the Company); provided,
however, that if a tender offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such
tender offer. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if
requested, send) by first-class, insured, postage-prepaid mail to each record
holder of Common Stock as of the Close of Business on the Distribution Date
(other than any Acquiring Person or any Associate or Affiliate of an
Acquiring Person), at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B hereto
(a "Right Certificate"), evidencing one Right (subject to adjustment as
provided herein) for each share of Common Stock so held. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Shares of
Preferred Stock, in substantially the form of Exhibit C hereto (the "Summary
of Rights"), by first-class, postage-prepaid mail to each record holder of
Common Stock as of the Close of Business on the Record Date (other than any
Acquiring Person or any Associate or Affiliate of any Acquiring Person), at
the address of such holder shown on the records of the Company. With
respect to certificates for Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with the
Summary of Rights. Until the Distribution Date (or, if earlier, the
Expiration Date), the surrender for transfer of any certificate for Common
Stock outstanding as of the Record Date, with or without a copy of the
Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby.
(c) Certificates issued for Common Stock (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between PSINet
Inc. and First Chicago Trust Company of New York, as Rights Agent,
dated as of May 8, 1996, as the same may be amended from time to
time (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at
the principal executive offices of PSINet Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. PSINet Inc. will mail to the holder
of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights owned
by or transferred to any Person who becomes an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights
Agreement) and certain transferees thereof will become null and
void and will no longer be transferable.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate, except as
otherwise provided herein, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby. In the event that the
Company purchases or otherwise acquires any Common Stock after the Record
Date but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Stock which
are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall
not affect the enforceability of any part of this Agreement or the rights of
any holder of the Rights.
Section 4. Form of Right Certificates. (a) The Right Certificates
(and the forms of election to purchase shares and of assignment to be
printed on the reverse thereof) shall be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or any quotation system on which
the Rights may from time to time be listed, or to conform to usage. Subject
to the provisions of Sections 11 and 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one one-thousandths of
a share of Preferred Stock as shall be set forth therein at the price per one
one-thousandth of a share of Preferred Stock set forth therein (the "Purchase
Price"), but the number of such one one-thousandths of a share of Preferred
Stock and the Purchase Price shall be subject to adjustment as provided
herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights which are null and void pursuant to
Section 11(a)(ii) of this Agreement and any Right Certificate issued pursuant
to Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement). Accordingly, this
Right Certificate and the Rights represented hereby are null and
void.
The provisions of Section 11(a)(ii) of this Rights Agreement shall
be operative whether or not the foregoing legend is contained on any such
Right Certificate.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by the Chairman of
the Board of Directors, the President or a Vice President, and by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of
the Company, in each case either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof. The
Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as though
the Person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of
the Company by any Person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this 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 an office or agency designated for such purpose, books
for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of
the Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Sections 7(e), 11(a)(ii) and 14 hereof, at any
time after the Close of Business on the Distribution Date and prior to the
Close of Business on the Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a share of Preferred Stock
(or, following a Triggering Event, other Securities, as the case may be) as
the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office or agency of the Rights Agent designated
for such purpose. Thereupon the Rights Agent shall countersign and deliver
to the Person entitled thereto a Right Certificate or Right Certificates, as
the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof, at any
time after the Distribution Date and prior to the Close of Business on the
Expiration Date, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights. (a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or
in part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at
the office or agency of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-thousandth of a
share of Preferred Stock as to which the Rights are exercised, at any time
which is both after the Distribution Date and prior to the time (the
"Expiration Date") that is the earliest of (i) the Close of Business on June
5, 2006 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"), (iii) the
time at which such Rights are exchanged as provided in Section 24 hereof or
(iv) the consummation of a transaction contemplated by Section 13(f) hereof.
(b) The Purchase Price shall be initially $75.00 for each one
one-thousandths of a share of Preferred Stock purchasable upon the exercise
of a Right. The Purchase Price and the number of one one-thousandths of a
share of Preferred Stock or other securities or property to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) of this Section
7.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase
Price for the shares of Preferred Stock to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such
Right Certificate in accordance with Section 9 hereof, in cash or by
certified check, cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A) requisition from
any transfer agent of the Preferred Stock certificates for the number of
shares of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B)
requisition from the depositary agent depositary receipts representing
interests in such number of one one-thousandths of a share of Preferred Stock
as are to be purchased (in which case certificates for the Preferred Stock
represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the depositary agent to
comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order
of the registered holder of such Right Certificate. In the event that the
Company is obligated to issue other securities (including shares of Common
Stock) of the Company pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities are available for
distribution by the Rights Agent, if and when appropriate.
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii), the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) of the
Rights Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii).
(d) Except as otherwise provided herein, in case the registered
holder of any Right Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights equivalent to
the exercisable Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights upon the occurrence of
any purported transfer or exercise of Rights pursuant to Section 6 hereof or
this Section 7 unless such registered holder shall have (i) completed and
signed the certificate contained in the form of assignment or election to
purchase set forth on the reverse side of the Right Certificate surrendered
for such transfer or 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 Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Right Certificates to
the Company, or shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. 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 any shares of Preferred Stock held in its treasury, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, to the extent
necessary, following the time that a Person becomes an Acquiring Person,
shares of Common Stock and/or other securities) issuable upon the exercise of
Rights may be listed or admitted to trading on any national securities
exchange or quotation system, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed or admitted to trading on such
national securities exchange or quotation system upon official notice of
issuance upon such exercise.
(c) From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance
of shares of Preferred Stock (and, to the extent necessary, following the
time that a Person first becomes an Acquiring Person, shares of Common Stock
and/or other securities) upon the exercise of Rights, to register and qualify
such shares of Preferred Stock (and, to the extent necessary, following the
time that a Person first becomes an Acquiring Person, shares of Common Stock
and/or other securities) under the Securities Act and any applicable state
securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration
and qualifications effective until the earlier of the date as of which the
Rights are no longer exercisable for such securities and the Expiration Date.
The Company may temporarily suspend, for a period of time not to exceed 90
days, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall
have been obtained and until a registration statement under the Securities
Act (if required) shall have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and,
to the extent necessary, following the time that a Person becomes an
Acquiring Person, shares of Common Stock and/or other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates
therefor (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares, subject to
Section 630 of the New York Business Corporation Law.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Preferred Stock (or, to the extent
necessary, shares of Common Stock and/or other securities) upon the exercise
of Rights. The Company shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock (or, to the
extent necessary, shares of Common Stock or other securities) in a name other
than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or deliver any certificates or
depositary receipts for Preferred Stock (or, to the extent necessary, shares
of Common Stock or other securities) upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by that holder
of such Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name
any certificate for Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record
of the shares of Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preferred Stock transfer
books of the Company are closed, such Person shall be deemed to have become
the record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Stock 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 or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares and Number of
Rights. The Purchase Price, the number of shares of Preferred Stock or
other securities or property purchasable upon exercise of each Right
and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.
(a) (i) In the event 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 of Preferred Stock or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive 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 been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of one Right. If
an event occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement and except as
otherwise provided in this Section 11(a)(ii), in the event any Person
becomes an Acquiring Person, each holder of a Right shall have the right
to receive, upon exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-thousandths of a
share of Preferred Stock for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock otherwise issuable upon exercise of such Right, such
number of one one-thousandths of shares of Preferred Stock (or in the
discretion of the Board of Directors of the Company, such number of
shares of Common Stock) as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the time that any Person first became
an Acquiring Person (as subsequently adjusted thereafter pursuant to
Section 11(a)(i), 11(b), 11(c) and 11(i) hereof) and dividing that
product by (y) 50% of the then Current Per Share Market Price of the
Company's Common Stock (determined pursuant to Section 11(d) hereof) on
the date of the occurrence of such event. For purposes of this
provision, all determinations shall be made as of the date of occurrence
of such event. Notwithstanding anything in this Agreement to the
contrary, however, from and after the time (the "Invalidation Time")
when any Person first becomes an Acquiring Person, any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (y) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee
after the Invalidation Time or (z) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the Invalidation Time pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities
or to any Person with whom it has any continuing agreement, arrangement
or understanding regarding the transferred Rights or (II) 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 paragraph, and subsequent transferees of such
Persons, shall be void without any further action and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such
Rights under any provision of this Agreement. The Company shall use all
reasonable efforts to ensure that the provisions of this Section
11(a)(ii) are complied with, but shall have no liability to any holder
of Right Certificates or 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. From and after the
Invalidation Time, no Right Certificate shall be issued pursuant to
Section 3 or Section 6 hereof that represents Rights that are or have
become void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that
are or have become void pursuant to the provisions of this paragraph
shall be cancelled. From and after the occurrence of a Section 13
Event, any Rights that theretofore have not been exercised pursuant to
this Section 11(a)(ii) shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this Section 11(a)(ii).
(iii) The Company may in the discretion of the Board of
Directors substitute for one one-thousandths of shares of Preferred
Stock issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii) such number or fractions of shares of Common
Stock having an aggregate current market value equal to the Current Per
Share Market Price of one one-thousandth of a share of Preferred Stock.
In the event that there shall not be sufficient shares of Preferred
Stock issued but not outstanding or authorized but unissued to permit
the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) (and the Board of Directors has not elected to make
the Rights exercisable into shares (or fractions of shares) of Common
Stock pursuant to the preceding sentence), the Board of Directors shall,
to the extent permitted by applicable law and any material agreements
then in effect to which the Company is a party (A) determine the excess
of (1) the value of the one one-thousandth of a share of Preferred Stock
issuable upon the exercise of a Right in accordance with the foregoing
subparagraph (ii) (the "Current Value") over (2) the then current
Purchase Price multiplied by the number of one one-thousandths of shares
of Preferred Stock for which a Right was exercisable immediately prior
to the time that the Acquiring Person became such (such excess, the
"Spread"), and (B) with respect to each Right (other than Rights which
have become void pursuant to Section 11(a)(ii)), make adequate provision
to substitute for the one one-thousandths of shares of Preferred Stock
issuable in accordance with subparagraph (ii) upon exercise of the Right
and payment of the applicable Purchase Price, (1) a reduction in the
Purchase Price, (2) shares or fractions of shares of Common Stock or
other equity securities of the Company (including, without limitation,
shares or fractions of shares of preferred stock which, by virtue of
having dividend, voting and liquidation rights substantially comparable
to those of the shares of Preferred Stock, are deemed in good faith by
the Board of Directors to have substantially the same value as the
shares of Preferred Stock (such shares or fractions of shares of Common
Stock and shares or fractions of shares of preferred stock are
hereinafter referred to as "Common Stock Equivalents")), (3) debt
securities of the Company, (4) other assets, or (5) any combination of
the foregoing, having a value which, when added to the value of the one
one-thousandths of shares of Preferred Stock actually issued upon
exercise of such Right, shall have an aggregate value equal to the
Current Value (less the amount of any reduction in the Purchase Price),
where such aggregate value has been determined in good faith by the
Board of Directors whose determination shall be described in a statement
filed with the Rights Agent; provided, however, if the Company shall not
make adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the date that the Acquiring Person
became such (the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, to the extent permitted by applicable law
and any material agreements then in effect to which the Company is a
party, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, such number of one one-thousandths of a
share of Preferred Stock (to the extent available), and then, if
necessary, such number or fractions of shares of Common Stock (to the
extent available) which shares have an aggregate value equal to the
Spread. If, upon the date any Person becomes an Acquiring Person, the
Board of Directors shall determine in good faith that it is likely that
sufficient additional shares of Preferred Stock could be authorized for
issuance upon exercise in full of the Rights, then, if the Board of
Directors so elects, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such additional
shares (such thirty (30) day period, as it may be extended, is herein
called the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the second and/or
third sentence of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 11(a)(ii) hereof and the last sentence of
this Section 11(a)(iii), that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form
of distribution to be made pursuant to such second sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the one
one-thousandths of shares of Preferred Stock shall be the Current Per
Share Market Price (as determined pursuant to Section 11(d)(i)) on the
Section 11(a)(ii) Trigger Date and the per share or fractional value of
any Common Stock Equivalent shall be deemed to equal the Current Per
Share Market Price of the one one-thousandths of a share of the
Preferred Stock. The Board of Directors of the Company may, but shall
not be required to, establish procedures to allocate the right to
receive one one-thousandths of a share of Preferred Stock upon the
exercise of the Rights among holders of Rights pursuant to this Section
11(a)(iii).
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Stock (or shares having the same
rights, privileges and preferences as the Preferred Stock ("Equivalent
Preferred Shares")) or securities convertible into Preferred Stock or
Equivalent Preferred Shares at a price per share of Preferred Stock or
Equivalent Preferred Shares (or having a conversion price per share, if a
security convertible into shares of Preferred Stock or Equivalent Preferred
Shares) less than the then Current Per Share Market Price of the Preferred
Stock (determined pursuant to Section 11(d) hereof) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock and Equivalent Preferred Shares outstanding on such record
date plus the number of shares of Preferred Stock and Equivalent Preferred
Shares which the aggregate offering price of the total number of shares of
Preferred Stock and/or Equivalent Preferred Shares so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the denominator of
which shall be the number of shares of Preferred Stock and Equivalent
Preferred Shares outstanding on such record date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent. Shares of
Preferred Stock and Equivalent Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such
a record date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then Current Per Share Market Price of
the Preferred Stock (determined pursuant to Section 11(d) hereof) on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company whose determination shall be described in
a statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to one share of Preferred Stock, and the denominator
of which shall be such Current Per Share Market Price (determined pursuant to
Section 11(d) hereof) of the Preferred Stock; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted
to be the Purchase Price which would then be in effect if such record date
had not been fixed.
(d) (i) Except as otherwise provided herein, for the purpose of
any computation hereunder, the "Current Per Share Market Price" of any
security (a "Security" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the Current Per Share Market Price of
the Security is determined during a period following the announcement by
the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible
into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Per Share
Market Price shall be appropriately adjusted to reflect the current
market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported by the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted
to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then
in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Security, the fair value
of the Security on such date as determined in good faith by the Board of
Directors shall be used. The term "Trading Day" shall mean a day on
which the principal national securities exchange or quotation system on
which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange or quotation system, a
Business Day.
(ii) For the purpose of any computation hereunder, if the Preferred
Stock is publicly traded, the "Current Per Share Market Price" of the
Preferred Stock shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Stock is not publicly
traded but the Common Stock is publicly traded, the "Current Per Share
Market Price" of the Preferred Stock shall be conclusively deemed to be
the Current Per Share Market Price of the Common Stock as determined
pursuant to Section 11(d)(i) multiplied by one thousand (appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof). If neither the Common
Stock nor the Preferred Stock is publicly traded, "Current Per Share
Market Price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
hundred-thousandth of a share of Preferred Stock or one ten-thousandth of a
share of Common Stock or other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which requires such adjustment
or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than the Preferred
Stock, thereafter the number of such other shares so receivable upon exercise
of a Right shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect
to the Preferred Stock contained in Sections 11(a), 11(b), 11(c), 11(e),
11(h), 11(i) and 11(m), 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 Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths
of a share of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-thousandths of a share of Preferred Stock (calculated
to the nearest one hundred-thousandth of a share of Preferred Stock) obtained
by (i) multiplying (x) the number of one one-thousandths of a share covered
by a Right immediately prior to such adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-thousandths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one hundred-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date
of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company may, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-thousandths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number
of one one-thousandths of a share of Preferred Stock which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
Preferred Stock or other shares of capital stock issuable upon exercise of
the Rights, the Company shall use its best efforts to take any corporate
action which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and nonassessable shares
of Preferred Stock (subject to Section 630 of the New York Business
Corporation Law) or other such shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
of the Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder
a due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as
and to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance wholly for cash of any shares of Preferred Stock at less than
the current market price, issuance wholly for cash or Preferred Stock or
securities which by their terms are convertible into or exchangeable for
Preferred Stock, dividends on Preferred Stock payable in shares of Preferred
Stock or issuance of rights, options or warrants referred to hereinabove in
Section 11(b), hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such shareholders.
(n) Anything in this Agreement to the contrary notwithstanding, in
the event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Stock payable in Common Stock or (ii) effect a subdivision,
combination or consolidation of the Common Stock (by reclassification or
otherwise than by payment of a dividend payable in Common Stock) into a
greater or lesser number of Common Stock, then in any such case, the number
of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each share of Common Stock immediately prior
to such event by a fraction the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of such event.
(o) The Company covenants and agrees that it will not, at any time
after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which does not violate
Section 11(p) hereof), (ii) merge with or into any other Person (other than
a Subsidiary of the Company in a transaction which does not violate Section
11(p) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which does not violate Section 11(p) hereof), if (x) at
the time of or immediately after such consolidation, merger, sale or transfer
there are any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect or other
actions taken, which would materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale,
the stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of (and as hereinafter defined in) Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (z) the form or nature
or organization of the Principal Party would preclude or limit the
exercisability of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(o).
(p) The Company agrees that, after the earlier of the Distribution
Date or the Stock Acquisition Date, it will not, except as permitted by
Sections 23, 24 or 27 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 eliminate the benefits intended to
be afforded by the Rights.
(q) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights represented by the Rights
under this Rights Agreement, including the rights represented by Section 13
hereof.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Stock or the Preferred Stock a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof (if so required under Section 25 hereof).
The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained and shall not be deemed to have
knowledge of any such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earnings Power. (a) In the event that, directly or indirectly, at any
time after any Person has become an Acquiring Person, (i) the Company shall
consolidate with, or merge with and into, any other Person, (ii) the Company
shall consolidate with, or merge with, any Person, and the Company shall be
the continuing or surviving corporation of such consolidation or merger
(other than, in the case of any transaction described in (i) or (ii), a
merger or consolidation which would result in all of the securities generally
entitled to vote in the election of directors ("voting securities") of the
Company outstanding immediately prior thereto, continuing to represent
(either by remaining outstanding or by being converted into securities of the
surviving entity) a majority of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation),
or (iii) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any other
Person (other than the Company or one or more of its wholly-owned
Subsidiaries), then upon the first occurrence of such event, proper provision
shall be made so that: (A) each holder of record of a Right (other than
Rights which have become void pursuant to Section 11(a)(ii)) shall thereafter
have the right to receive, upon the exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one one-thousandths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to the time that any Person first became an Acquiring Person (as
subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c)
and 11(i)) hereof, in accordance with the terms of this Agreement and in lieu
of Preferred Stock, such number of validly issued, fully paid and
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as defined herein) not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the time that any Person first became an
Acquiring Person (as subsequently adjusted thereafter pursuant to Sections
11(a)(i), 11(b), 11(c) and 11(i) hereof) and (2) dividing that product by 50%
of the then Current Per Share Market Price of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such Section 13 Event; provided that the Purchase Price and
the number of shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in Section 11(f)
of this Agreement to reflect any events occurring in respect of such
Principal Party after the occurrence of such Section 13 Event; (B) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (C) the term "Company" shall thereafter be deemed
to refer to such Principal Party; and (D) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock in accordance with Section 9 hereof) in
connection with such 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 the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights; provided that, upon
the subsequent occurrence of any consolidation, merger, sale or transfer of
assets or other extraordinary transaction in respect of such Principal Party,
each holder of a Right shall thereupon be entitled to receive, upon exercise
of a Right and payment of the Purchase Price as provided in this Section
13(a), such cash, shares, rights, warrants and other property which such
holder would have been entitled to receive had such holder, at the time of
such transaction, owned the Common Stock of the Principal Party receivable
upon the exercise of a Right pursuant to this Section 13(a), and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (i) or (ii)
of the first sentence of Section 13(a) hereof: (A) the Person that is
the issuer of the securities into which the shares of Common Stock are
converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer the shares of Common Stock of which have the
greatest aggregate market value of shares outstanding, or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger or consolidation, if such Person survives said merger, or, if
there is more than one such Person, the Person the shares of Common
Stock of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger
(including the Company if it survives) or (z) the Person resulting from
the consolidation; and
(ii) in the case of any transaction described in clause (iii) of
the first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power so transferred or if the
Person receiving the greatest portion of the assets or earning power
cannot be determined, whichever of such Persons as is the issuer of
Common Stock having the greatest aggregate market value of shares
outstanding;
provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), (1) if the Common Stock of such Person is not at such time
or has not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and if such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and has
been so registered, the term "Principal Party" shall refer to such other
Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stock of all of which is and has been so
registered, the term "Principal Party" shall refer to whichever of such
Persons is the issuer of Common Stock having the greatest aggregate market
value of shares outstanding, or (3) if such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in
clauses (1) and (2) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint venturers, and the Principal Party in
each such case shall bear the obligations set forth in this Section 13 in the
same ratio as its interest in such Person bears to the total of such
interests.
(c) The Company shall not consummate any consolidation, merger,
sale or transfer referred to in Section 13(a) hereof unless the Principal
Party shall have a sufficient number of its authorized Common Shares which
have not been issued or reserved for issuance to permit the exercise in full
of the Rights in accordance with this Section 13 and unless prior thereto the
Company and the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance
with their terms and that such consolidation, merger, sale or transfer of
assets shall not result in a default by the Principal Party under this
Agreement as the same shall have been assumed by the Principal Party pursuant
to Sections 13(a) and (b) hereof and providing that, as soon as practicable
after executing such agreement pursuant to this Section 13, the Principal
Party will:
(i) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as
soon as practicable after such filing and use its best efforts to cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the applicable
state securities laws of all such jurisdictions as may be necessary or
appropriate;
(iii) use its best efforts, if the Common Stock of the
Principal Party shall be listed or admitted to trading on the New York
Stock Exchange or on another national securities exchange or quotation
system, to list or admit to trading (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on the
New York Stock Exchange or such securities exchange or quotation system,
or, if the Common Stock of the Principal Party shall not be listed or
admitted to trading on the New York Stock Exchange or a national
securities exchange or quotation system, to cause the Rights and the
securities receivable upon exercise of the Rights to be reported by such
other system then in use;
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under
the Exchange Act; and
(v) obtain waivers of any rights of first refusal or preemptive or
similar rights in respect of the Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has provision in any of its
authorized securities or in its certificate of incorporation or by-laws or
other instrument governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue (other than to
holders of Rights pursuant to this Section 13), in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then
Current Per Share Market Price thereof (determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into, Common Stock of
such Principal Party at less than such then Current Per Share Market Price,
or (ii) providing for any special payment, tax or similar provision in
connection with the issuance of the Common Stock of such Principal Party
pursuant to the provisions of Section 13, then, in such event, the Company
hereby agrees with each holder of Rights that it shall not consummate any
such transaction unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such Principal Party
shall have been cancelled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision will have no
effect in connection with, or as a consequence of, the consummation of the
proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. The rights
under this Section 13 shall be in addition to the rights to exercise Rights
and adjustments under Section 11(a)(ii) and shall survive any exercise
thereof.
(f) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in clauses (i)
and (ii) of Section 13(a) if: (i) such transaction is consummated with a
Person or Persons who acquired shares of Common Stock pursuant to a Permitted
Offer (or a wholly owned Subsidiary of any such Person or Persons); (ii) the
price per share of Common Stock offered in such transaction is not less than
the price per share of Common Stock paid to all holders of Common Stock whose
shares were purchased pursuant to such Permitted Offer; and (iii) the form of
consideration offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer. Upon consummation of
any such transaction contemplated by this Section 13(f), all Rights hereunder
shall expire.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for
the Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable. The closing price for any day shall be
the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on such date
as determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth 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
one-thousandth of a share of Preferred Stock). Interests in fractions of
Preferred Stock in integral multiples of one one-thousandth of a share of
Preferred Stock may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Stock represented by such depositary receipts. In lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share of Preferred Stock, the Company may pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of one share of Preferred Stock. For the purposes
of this Section 14(b), the current market value of a share of Preferred Stock
shall be the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 giving rise to the right to receive shares of Common
Stock, capital stock equivalents (other than shares of Preferred Stock) or
other securities upon the exercise of a Right, the Company shall not be
required to issue fractions of shares or units of such Common Stock, capital
stock equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractions of such shares of Common
Stock, capital stock equivalents or other securities. In lieu of fractional
shares or units of such shares of Common Stock, capital stock equivalents or
other securities, 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 Current Per Share Market
Price of a share or unit of such Common Stock, capital stock equivalents or
other securities. For purposes of this Section 14(c), the Current Per Share
Market Price shall be determined in the manner set forth in Section 11(d)
hereof for the Trading Day immediately prior to the date of such exercise
and, if such capital stock equivalent is not traded, each such capital stock
equivalent shall have the value of one one-hundredth of a share of Preferred
Stock.
(d) The holder of a Right by the acceptance of the Right expressly
waives his or her right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Right
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 Right
Certificate (or, prior to the Distribution Date, of the Common Stock), on his
own behalf and for his own benefit, may enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate (or, prior to the Distribution Date, such Common
Stock) in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations
of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
(c) subject to Section 6 and Section 7(e) hereof, the Company and
the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the 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 Right Certificates or the 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 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 of a beneficial interest in a Right or any 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 reasonable best
efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred 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 Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in this Agreement), or to
receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Right 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 other disbursements reasonably
incurred in the administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. The indemnity provided
for herein shall survive the expiration of the Rights and the termination of
this Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it
in connection with, its administration of this Agreement in reliance upon any
Right Certificate or certificate for the Preferred Stock or 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, or otherwise upon the advice
of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. (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 stock transfer or corporate trust powers of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto; provided, that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of
the Board of Directors, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Controller, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate shall
be full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 3,
11, 13, 23 and 24 hereof, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after receipt of a
certificate furnished pursuant to Section 12 hereof, describing such change
or adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock, Common Stock or other securities to be issued
pursuant to this Agreement or any Right Certificate or as to whether any
shares of Preferred Stock, Common Stock or other securities will, when
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 any
person reasonably believed by the Rights Agent to be one of the Chairman of
the Board of Directors, the President, a 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 for
any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set
forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights Agent shall
not be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five
(5) Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to
an earlier date) unless, prior to taking any such action (or the effective
date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to
be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has not been completed to certify the holder is
not an Acquiring Person (or an Affiliate or Associate thereof), a Rights
Agent shall not take any further action with respect to such requested
exercise of transfer without first consulting with the Company.
(k) The Rights Agent's duties shall be determined only with
reference to this Agreement and the Rights Agent shall not be charged with
knowledge of or any duties or responsibilities in connection with any other
document or agreement.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or the State
of New York (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the
State of New York), in good standing, having an office in the State of New
York, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50 million or (b) an
affiliate of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Stock or Preferred Stock, and, following the Distribution Date, mail
a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such forms as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Stock following
the Distribution Date and prior to the earliest of (i) the Redemption Date,
(ii) the Expiration Date and (iii) the consummation of a transaction
contemplated by Section 13(f) hereof, 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, 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.
Section 23. Redemption and Termination. (a) (i) The Board of Directors
of the Company may, at its option, redeem all but not less than all of the
then outstanding Rights 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"), at
any time prior to the earliest of (x) the occurrence of a Section 11(a)(ii)
Event, (y) the Final Expiration Date or (z) the consummation of a transaction
contemplated by Section 13(f) hereof. The Company may, at its option, pay
the Redemption Price either in shares of Common Stock (based on the Current
Per Share Market Price (determined pursuant to Section 11(d) hereof) of the
Common Stock at the time of redemption) or cash; provided that if the Company
elects to pay the Redemption Price in shares of Common Stock, the Company
shall not be required to issue any fractional shares of Common Stock and the
number of shares of Common Stock issuable to each holder of Rights shall be
rounded down to the next whole share.
(ii) The Board of Directors of the Company may also, at its option,
at any time following the occurrence of a Section 11(a)(ii) Event and the
expiration of any period during which the holder of Rights may exercise the
rights under Section 11(a)(ii) but prior to any Section 13 Event, redeem all
but not less than all of the then outstanding Rights at the Redemption Price
(x) in connection with any merger, consolidation or sale or other transfer
(in one transaction or in a series of related transactions) of assets or
earning power aggregating 50% or more of the earning power of the Company and
its subsidiaries (taken as a whole) in which all holders of shares of Common
Stock are treated alike and not involving (other than as a holder of shares
of Common Stock being treated like all other such holders) an Interested
Stockholder or (y)(aa) if and for so long as the Acquiring Person is not
thereafter the Beneficial Owner of 20% or more of the Common Stock and (bb)
at the time of redemption no other Persons are Acquiring Persons.
(b) In the case of a redemption permitted under Section 23(a)(i),
immediately upon the date for redemption set forth (or determined in the
manner specified) in a resolution of the Board of Directors 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. In the case of a redemption permitted only under Section 23(a)(ii),
evidence of which shall have been filed with the Rights Agent, the right to
exercise the Rights will terminate and represent only the right to receive
the Redemption Price upon the later of ten (10) Business Days following the
giving of such notice or the expiration of any period during which the rights
under Section 11(a)(ii) may be exercised. The Company shall promptly give
public notice of any such redemption; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such date for redemption set forth in
a resolution of the Board of Directors ordering the redemption of the Rights,
the Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 and other than in connection with
the purchase of shares of Common Stock prior to the Distribution Date.
(c) The Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights in accordance with this
Agreement and (ii) (subject to any lapse of time required by the second
sentence of Section 23(b)) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as they appear on
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the Transfer Agent of the Common Stock, and upon such
action, all outstanding Rights and Right Certificates shall be null and void
without any further action by the Company.
Section 24. Exchange. (a) The Board of Directors of the Company may,
at its option, at any time after any Person first becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than an Exempt Person), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of shares of Common Stock
aggregating 50% or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice of any
such exchange; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company
shall promptly mail a notice of any such exchange to all of the holders of
the Rights so exchanged at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute shares of Preferred Stock (or Equivalent Preferred
Shares, as such term is defined in Section 11(b) hereof) for some or all of
the shares of Common Stock exchangeable for Rights, at the initial rate of
one-thousandth of a share of Preferred Stock (or Equivalent Preferred Share)
for each share of Common Stock, as appropriately adjusted to reflect
adjustments in the voting rights of the shares of Preferred Stock pursuant to
the terms thereof, so that the fraction of a share of Preferred Stock
delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company may, in its discretion, take such action as may
be necessary to authorize additional shares of Common Stock or Preferred
Stock for issuance upon exchange of the Rights.
(e) The Company shall not, in connection with any exchange
pursuant to this Section 24, be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares
of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the Current Per
Share Market Price of a whole share of Common Stock. For the purposes of
this paragraph (e), the Current Per Share Market Price of a whole share of
Common Stock shall be determined pursuant to Section 11(d) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall
at any time after the earlier of the Distribution Date or the Stock
Acquisition Date propose (i) to pay any dividend payable in stock of any
class to the holders of its Preferred Stock or to make any other distribution
to the holders of its Preferred Stock (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its 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, (iii) to effect any reclassification of its Preferred Stock (other
than a reclassification involving only the subdivision of outstanding
Preferred Stock), (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
does not violate Section 11(p) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer) in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which does not violate
Section 11(p) hereof), (v) to effect the liquidation, dissolution or winding
up of the Company, or (vi) to declare or pay any dividend on the Common Stock
payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section
26 hereof, a notice of such proposed action to the extent feasible and file
a certificate with the Rights Agent to that effect, which shall specify the
record date for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up
is to take place and the date of participation therein by the holders of the
Common Stock and/or 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 Preferred Stock for purposes of such action, and in the case
of 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 Common Stock and/or Preferred Stock, whichever shall be the
earlier.
(b) In case any Triggering Event shall occur, then the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate (or if occurring prior to the Distribution Date, the holders of
the Common Stock) in accordance with Section 26 hereof, a notice of the
occurrence of such Triggering Event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section
11(a)(ii) and Section 13 hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
PSINet Inc.
510 Huntmar Park Drive
Herndon, Virginia 22070
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
First Chicago Trust Company
of New York
Suite 4660
P.O. Box 2507
Jersey City, New Jersey 07303-2507
Attention: Tenders and Exchange Administration
Re: PSINet Inc. Rights Agreement
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are
then redeemable, 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 in any respect without the approval of any
holders of the Rights. At any time when the Rights are no longer redeemable,
except as provided in the penultimate sentence of this Section 27, the
Company may, and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) shorten or lengthen any
time period hereunder, or (iv) change or supplement the provisions hereunder
in any manner which the Company may deem necessary or desirable; provided
that no such supplement or amendment shall adversely affect the interests of
the holders of Rights as such (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person), and no such amendment may cause the
Rights again to become redeemable or cause the Agreement again to become
amendable other than in accordance with this sentence. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price. 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 27, the Rights Agent shall execute such supplement or
amendment.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common 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 Right Certificates (and, prior to the Distribution
Date, the Common Stock).
Section 30. Determinations and Actions by the Board of Directors.
The Board of Directions of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights or to amend this Agreement). For all purposes of this Agreement, any
calculation of the number of shares of Common Stock or other securities
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Stock or any other
securities of which any person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) that are done or made by the Board of
Directors of the Company in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights, as such,
and all other parties, and (y) not subject the Board of Directors to any
liability to the holders of the Rights.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement or applicable to 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 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 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of
the State of New York and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
Section 33. 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 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
PSINET INC.
By: /s/ William L. Schrader
Name: William L. Schrader
Title: Chairman, President and Chief
Executive Officer
Attest:
By: /s/ David N. Kunkel
Name: David N. Kunkel
Title: Vice President, Secretary and
General Counsel
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By: /s/ John C. Bambach
Name: John C. Bambach
Title: Vice President
Attest:
By: /s/ Ralph Persico
Name: Ralph Persico
Title: Customer Service Officer
<PAGE>
Exhibit A
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
PSINET INC.
Under Section 805 of the Business Corporation Law
The undersigned, being the President and Secretary of PSINet Inc. (the
"Corporation"), respectively, in order to amend the Corporation's Certificate
of Incorporation, do hereby certify that:
FIRST: The name of the Corporation is PSINet Inc.
SECOND: The Certificate of Incorporation of the Corporation was filed
by the Department of State of the State of New York on October 21, 1988 under
the name Graphic Specialty Finishers, Inc.
THIRD: The Certificate of Incorporation is hereby amended to add a
provision to Paragraph FOURTH stating the number, designation, relative
rights, preferences and limitations of the Series A Junior Participating
Preferred Stock as fixed by the Board of Directors of the Corporation and to
set forth in full the text of such provision.
FOURTH: To effect the foregoing, Paragraph FOURTH of the Certificate of
Incorporation is amended to add the following at the end of such Paragraph
FOURTH:
Series A Junior Participating Preferred Stock
The Corporation is hereby authorized to establish a series of Preferred
Stock of the Corporation of the designation and number of shares, and having
the relative rights, preferences and limitations thereof (in addition to the
provisions set forth in this Certificate of Incorporation which are
applicable to the Preferred Stock of all classes and series) as follows:
Section 1. Designation of Series of Preferred Stock and Amount. There
shall be a series of Preferred Stock, par value $.01 per share, of the
Corporation which shall be designated as "Series A Junior Participating
Preferred Stock," par value $.01 per share, and the number of shares
constituting such series shall be one million (1,000,000). Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided that no decrease shall reduce the number of shares of Series A
Junior Participating Preferred Stock to a number less than that of the shares
then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock, in
preference to the holders of shares of Common Stock, par value $0.01 per
share (the "Common Stock"), of the Corporation and any other stock of the
Corporation ranking junior to the Series A Junior Participating Preferred
Stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of January, April, July and October in each
year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock in an amount per share (rounded to the nearest
cent) equal to, subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend or distribution
payable in shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. In the event the Corporation shall at any time after May 8,
1996 (the "Rights Declaration Date") (i) declare or pay any dividend on the
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, then in each such case the
amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A)
above concurrently with any declaration by it of a dividend or distribution
on the Common Stock (other than a dividend or distribution payable in shares
of Common Stock) and in no event shall the Corporation declare a dividend or
distribution on the Common Stock (other than a dividend or distribution
payable in shares of Common Stock) without concurrently declaring such a
dividend or distribution on the Series A Junior Participating Preferred
Stock.
(C) Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Junior Participating Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may
fix a record date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 50 days prior to the date fixed for the payment thereof.
Section 3. Liquidation, Dissolution or Winding Up.
(A) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, no distribution shall be made
(i) to the holders of Common Stock or of shares of any other stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred
Stock shall have received per share, the amount of $1,000, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the holders of
shares of Series A Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 1,000 times the aggregate amount to be distributed per share
to holders of shares of Common Stock (the "Series A Liquidation Preference"),
or (ii) to the holders of shares of stock ranking on a parity upon
liquidation, dissolution or winding up with the Series A Participating
Preferred Stock, except distributions made ratably on the Series A
Participating Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. Following the payment of the full
amount of the Series A Liquidation Preference, holders of Series A Junior
Participating Preferred Stock and holders of shares of Common Stock shall
share pari passu on a per share basis in the remaining assets of the
Corporation.
(B) In the event the Corporation shall at any time (i) declare or pay
any dividend on the 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 of Common
Stock, then in each such case the aggregate amount to which holders of shares
of Series A Participating Preferred Stock were entitled immediately prior to
such event under the proviso in clause (i) of paragraph (A) of this Section
3 shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(C) In the event there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a
parity with the Series A Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares (including the Series A Junior Participating Preferred Stock) in
proportion to their respective liquidation preferences.
Section 4. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided herein or in the Certificate of Incorporation or
as required by law, each share of Series A Junior Participating Preferred
Stock shall entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the shareholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare
or pay any dividend on the 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, then in
each such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or in the Certificate of
Incorporation or in any other Certificate of Amendment creating a new series
of Preferred Stock or any similar stock, and except as otherwise required by
law, the holders of shares of Series A Junior Participating Preferred Stock
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by law, holders
of Series A Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
Section 5. Certain Restrictions and Limitations.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been paid in
full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating
Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock, and all such parity stock
on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock or any shares of stock
ranking on a parity with the Series A Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
5, purchase or otherwise acquire such shares at such time and in such manner.
Section 6. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 7. Consolidation, Merger, etc. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are converted into, exchanged for or changed into
other stock or securities, cash and/or any other property, then in any such
event the shares of Series A Junior Participating Preferred Stock shall at
the same time be similarly converted into, exchanged for or changed into an
amount per share (subject to the provision for adjustment hereinafter set
forth) equal to 1,000 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is converted, changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
conversion, exchange or change of shares of Series A Junior Participating
Preferred Stock shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that are outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank senior to the Common Stock and junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up of the
Corporation, unless the terms of any such series shall provide otherwise.
Section 10. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder,
in proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Junior Participating Preferred Stock.
Section 11. Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Junior Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of not less than a majority of the then
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
FIFTH: The foregoing amendment to the Certificate of Incorporation was
authorized by the unanimous affirmative vote of the members of the Board of
Directors of the Corporation at a meeting held duly called and held on May 8,
1996.
IN WITNESS WHEREOF, we have made and subscribed this certificate and
hereby affirm under the penalties of perjury that its contents are true this
18th day of May, 1996.
/s/ William L. Schrader
William L. Schrader, President
/s/ David N. Kunkel
David N. Kunkel, Secretary
<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JUNE 5, 2006 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT REFERRED TO
BELOW. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.
Right Certificate
PSINET INC.
This certifies that ___________ or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, dated as of May 8, 1996, as the same may be amended
from time to time (the "Rights Agreement"), between PSINet Inc., a New York
corporation (the "Company"), and First Chicago Trust Company of New York (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M., New York City time, on June 5, 2006 at the office or agency of
the Rights Agent designated for such purpose, or of its successor as Rights
Agent, one one-thousandth of a fully paid non-assessable (subject to Section
630 of the New York Business Corporation Law) share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Stock"), of the Company, at a purchase price of $75.00 per one one-thousandth
of a share of Preferred Stock (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Rights Certificate
(and the number of one one-thousandths of a share of Preferred Stock which
may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of May 8, 1996,
based on the Preferred Stock as constituted at such date. As provided in
the Rights Agreement, the Purchase Price, the number of one one-thousandths
of a share of Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Rights and the number of Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of
the Rights Agent. The Company will mail to the holder of this Right
Certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a
like aggregate number of shares of Preferred Stock as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price
of $.01 per Right or (ii) may be exchanged in whole or in part for shares of
Preferred Stock or shares of the Company's Common Stock, par value $.01 per
share, or certain other securities.
The Company shall not be required to issue fractional shares of
Preferred Stock upon the exercise of any Right or Rights evidenced hereby
(other than fractions which are integral multiples of one one-thousandth of
a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a 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 the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ____________.
PSINET INC.
By: ______________________________
Name:
Title:
Attest:
By: ________________________
Name:
Title:
Countersigned:
[Name of Rights Agent],
as Rights Agent
By: ________________________
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Right Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
Rights represented by this Right Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
___________________ Attorney, to transfer said Rights on the books of the
within-named Company, with full power of substitution.
Dated: _________________
______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
______________________________________________________________________________
(To be completed)
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
______________________________
Signature
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate)
To PSINet Inc.:
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to purchase
the shares of Preferred Stock (or other securities or property) issuable upon
the exercise of such Rights and requests that certificates for such shares of
Preferred Stock (or such other securities) be issued in the name of:
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivery to:
Please insert social security
or other identifying number
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
Dated: ____________________
________________________
Signature
(Signature must conform to holder specified on Right Certificate)
Signature Guaranteed:
Signature must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
Form of Reverse Side of Right Certificate -- continued
______________________________________________________________________________
(To be completed)
The undersigned certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).
______________________________
Signature
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment
or the Form of Election to Purchase, as the case may be, is not completed,
such Assignment or Election to Purchase will not be honored.
<PAGE>
Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT
REFERRED TO BELOW, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER
BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF PREFERRED STOCK
On May 8, 1996, the Board of Directors of PSINet Inc. (the "Company")
declared a dividend of one preferred share purchase right (a "Right") for
each outstanding share of common stock, par value $.01 per share, of the
Company (the "Common Stock"). The dividend is payable on June 5, 1996
(the "Record Date"), or as soon as reasonably practicable thereafter,
to the shareholders of record on June 5, 1996. Each Right entitles the
registered holder to purchase from the Company one one-thousandth of a share
of Series A Junior Participating Class A Preferred Stock, par value $.01 per
share (the "Preferred Stock"), of the Company at a price of $75.00 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement dated as of May 8, 1996, as the same by be amended from time
to time (the "Rights Agreement"), between the Company and First Chicago Trust
Company of New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following the first date of a
public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") have acquired beneficial ownership of 20% or
more of the outstanding shares of Common Stock (except pursuant to a
Permitted Offer, as hereinafter defined) or such earlier date as a majority
of the Board of Directors shall have become aware of the existence of an
Acquiring Person, or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any
person or group of affiliated persons becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a tender offer
or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding shares of
Common Stock (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock
certificate together with a copy of this Summary of Rights.
An Acquiring Person does not include (i) a person who acquires shares of
Common Stock pursuant to a tender offer or exchange offer which is for all
outstanding shares of Common Stock at a price and on terms which the Board of
Directors determines to be adequate and otherwise in the best interests of
the Company and its shareholders (other than the person on whose basis the
offer is being made and its affiliates and associates) taking into account
all factors that such directors may deem relevant (a "Permitted Offer"), or
(ii) a person who acquires 20% or more of the outstanding shares of Common
Stock directly from the Company, a Grandfathered Person (as hereinafter
defined) and certain other persons or entities affiliated with the Company.
A "Grandfathered Person" means any one or more of the following persons,
either in his or its individual capacity or collectively with other of the
following persons: (i) William L. Schrader, Chairman of the Board of
Directors and Chief Executive Officer of the Company, who at May 8, 1996
owned approximately 14% of the outstanding shares of Common Stock, any
descendant of William L. Schrader, or any spouse, widow or widower of William
L. Schrader, or any such descendant (William L. Schrader, and any such
descendants, spouses, widows and widowers collectively defined as the
"Schrader Family Members"); (ii) any trust (including any voting trust) which
is in existence on the date of the Rights Agreement and which has been
established by one or more Schrader Family Members, any estate of, or the
executor or administrator of any estate of, or any guardian or custodian for,
a Schrader Family Member who died on or before the date of the Rights
Agreement (such trusts, estates, executors, administrators or guardians or
custodians collectively defined as the "Schrader Family Entities"); (iii) any
estate of, or the executor or administrator of any estate of, or any guardian
or custodian for, a Schrader Family Member, or any trust established after
the date of the Rights Agreement by one or more Schrader Family Members or
Schrader Family Entities, provided that one or more Schrader Family Members
or Schrader Family Entities, collectively, are the beneficiaries of at least
50% of the actuarially-determined beneficial interests in such estate or
trust; (iv) any charitable organization which qualifies as an exempt
organization under Section 501(c) of the Internal Revenue Code of 1986, as
amended ("Charitable Organization"), which is established by one or more
Schrader Family Members or Schrader Family Entities (a "Schrader Family
Charitable Organization"); (v) any corporation of which a majority of the
voting power and a majority of the equity interest is held, directly or
indirectly, by or for the benefit of one or more Schrader Family Members,
Schrader Family Entities, estates, executors, administrators, guardians or
custodians or trusts described in clause (iii) above or Schrader Family
Charitable Organizations; and (vi) any general partnership, limited
partnership, organization or other entity or arrangement of which a majority
of the voting interest and a majority of the economic interest is held,
directly or indirectly, by or for the benefit of one or more Grandfathered
Persons; provided, however, that William L. Schrader and each of the other
Persons contemplated by this paragraph shall not be a Grandfathered Person if
William L. Schrader or any of such Persons makes an acquisition of shares of
Common Stock that would increase the aggregate beneficial ownership of all
Grandfathered Persons to 50% or more of the outstanding shares of Common
Stock. Notwithstanding the foregoing, William L. Schrader and each of the
other Persons contemplated by this paragraph shall not cease to be a
Grandfathered Person either (x) as a result of the acquisition of shares of
Common Stock by the Company which, by reducing the number of shares of Common
Stock outstanding, increases the proportional number of shares beneficially
owned by William L. Schrader or such other Persons, together with all
Affiliates and Associates thereof, unless (i) William L. Schrader and each of
such other Persons would cease to be a Grandfathered Person (but for the
operation of this subclause (x)) as a result of the acquisition of shares of
Common Stock by the Company and (ii) after such share acquisition by the
Company, William L. Schrader or any such other Person, or an Affiliate or
Associate thereof, becomes the beneficial owner of any additional shares of
Common Stock or (y) if within ten (10) Business Days after William L.
Schrader and such other Persons would otherwise have ceased to be
Grandfathered Persons (but for the operation of this subclause (y)) William
L. Schrader or any such other Person notifies the Board of Directors that the
Grandfathered Persons, together with all Affiliates and Associates thereof,
are the beneficial owners in the aggregate of less than 50% of the
outstanding shares of Common Stock.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Stock. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date (including, without limitation,
upon transfer or new issuances of Common Stock) will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for shares of Common Stock outstanding as of the
Record Date, even without such notation or a copy of this Summary of Rights,
will also constitute (except as otherwise provided in the Rights Agreement)
the transfer of the Rights associated with the shares of Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on June 5, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Preferred Stock,
Common Stock or other securities or property issuable upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights or warrants to subscribe for or
purchase Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then-current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends or dividends payable in Preferred Stock) or of subscription rights
or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled, when, as
and if declared, to an aggregate dividend of 1,000 times the dividend
declared per share of Common Stock. No dividend may be declared on the
Common Stock without the concurrent declaration of a dividend on the
Preferred Stock. In the event of liquidation, the holders of the Preferred
Stock will be entitled to a minimum preferential liquidation payment of
$1,000 per share (plus any accrued but unpaid dividends) but will be entitled
to an aggregate payment of 1,000 times the payment made per share of Common
Stock; thereafter, the holders of the Preferred Stock and the holders of the
Common Stock will share pari passu per share in the remaining assets of the
Company. Each share of Preferred Stock will have 1,000 votes, voting
together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled to
receive 1,000 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate
the value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person (except pursuant to a Permitted Offer),
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereupon become void), will thereafter have the right
(the "Flip-In Right") to receive, upon exercise of a Right at the then
current exercise price of the Right, that number of one one-thousandths of a
share of Preferred Stock or, in the discretion of the Board of Directors,
that number of shares of Common Stock (or, in certain circumstances, other
securities of the Company), having a market value of two times the exercise
price of the Right.
In the event that, after a person or group has become an Acquiring
Person, (i) the Company is acquired in a merger or other business combination
transaction or (ii) 50% or more of its consolidated assets or earning power
are sold or transferred, in either case with or to any person, proper
provision will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right (the "Flip-Over Right") to receive, upon the
exercise thereof at the then current exercise price of the Right, that number
of shares of common stock of the person with which the Company has engaged in
the foregoing transaction (or its parent), which number of shares at the time
of such transaction will have a market value of two times the exercise price
of the Right. The holder of a Right will continue to have the Flip-Over
Right whether or not such holder exercises or surrenders the Flip-In Right.
The Flip-Over Right provisions do not apply to a merger or other business
combination with a person who has acquired shares of Common Stock pursuant to
a Permitted Offer in which the price per share is at least as great as the
price (and is the same form of consideration) paid in the Permitted Offer.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which
will have become void), in whole or in part, at an exchange ratio of one
share of Common Stock, or one one-thousandth of a share of Preferred Stock
(or of a share of a class or series of the Company's preferred stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. At the discretion of the Company, fractional shares of
Preferred Stock may not be issued (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may, at
the election of the Company, be evidenced by depositary receipts) and, if the
Company elects not to issue fractional shares, an adjustment in cash will be
made in lieu thereof based on the market price of the Preferred Stock on the
last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain
other circumstances, the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price") which redemption
shall be effective upon the action of the Board of Directors. The Company
may, at its option, pay the Redemption Price in shares of Common Stock.
Additionally, after the date that a person becomes an Acquiring Person, the
Company may redeem the then outstanding Rights in whole, but not in part, at
the Redemption Price, provided that such redemption is in connection with a
merger or other business combination transaction or series of transactions
involving the Company in which all holders of shares of Common Stock are
treated alike and not involving an Interested Shareholder (as hereinafter
defined) or if and for so long as the Acquiring Person's share in the Company
is not 20% or more and at the time of the redemption there are no other
Acquiring Persons. Interested Shareholder means any Acquiring Person
(including affiliates and associates thereof) or any person in which any such
Acquiring Person, affiliate or associate has an interest, or any other person
acting on behalf of or in concert with any Acquiring Person, affiliate or
associate.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner. After
the Rights are no longer redeemable, the Company may, except with respect to
the redemption price, amend the Rights in any manner that does not adversely
affect the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to shareholders of the Company, shareholders may,
depending upon the circumstances, recognize taxable income should the Rights
become exercisable or upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated June 3, 1996. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, as the same may be amended from time to time, which is
hereby incorporated herein by reference.
