EXHIBIT 4
---------------------------------
PROGRAMMER'S PARADISE, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Rights Agent
--------------------
RIGHTS AGREEMENT
Dated as of November 18, 1999
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TABLE OF CONTENTS
Section Page
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1. Certain Definitions..................................................................................... 1
2. Appointment of Rights Agent............................................................................. 6
3. Issue of Right Certificates............................................................................. 6
4. Form of Right Certificates.............................................................................. 8
5. Countersignature and Registration....................................................................... 9
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed Lost or Stolen Right Certificates........................................................ 9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.......................................... 10
8. Cancellation and Destruction of Right Certificates..................................................... 12
9. Reservation and Availability of Capital Stock.......................................................... 12
10. Preferred Stock Record Date........................................................................... 13
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights.............................................................................. 13
12. Certificate of Adjusted Purchase Price of Number of Shares............................................ 21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................................. 22
14. Fractional Rights and Fractional Shares............................................................... 24
15. Rights of Action...................................................................................... 25
16. Agreement of Right Holders............................................................................ 26
17. Right Certificate Holder Not Deemed a Shareholder..................................................... 26
18. Concerning the Rights Agent........................................................................... 27
19. Merger or Consolidation or Change of Name of Rights Agent............................................. 27
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Page
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20. Duties of Rights Agent................................................................................ 28
21. Change of Rights Agent................................................................................ 30
22. Issuance of New Right Certificates.................................................................... 30
23. Redemption............................................................................................ 31
23A. Exchange............................................................................................. 32
24. Notice of Certain Events.............................................................................. 33
25. Notices............................................................................................... 33
26. Supplements and Amendments.............................................................................34
27. Successors............................................................................................ 35
28. Determinations and Actions by the Board of Directors, etc............................................. 35
29. Benefits of this Agreement............................................................................ 36
30. Severability.......................................................................................... 36
31. Governing Law......................................................................................... 36
32. Counterparts.......................................................................................... 36
33. Descriptive Headings.................................................................................. 36
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 18, 1999 (the
"Agreement"), between Programmer's Paradise, Inc., a Delaware corporation (the
"Company"), and American Stock Transfer & Trust Company, a New York
corporation (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has authorized
and declared a dividend of one preferred stock purchase right ("Right") for each
share of Common Stock, par value $0.01 per share, of the Company outstanding at
the Close of Business on November 18, 1999 (the "Record Date"), each Right
representing the right to purchase one five thousandth (1/5,000th) of a share of
Junior Participating Cumulative Preferred Stock, par value $0.01 per share, of
the Company having the rights and preferences set forth in the form of
Certificate of Designation attached hereto as Exhibit A, and has further
authorized the issuance of one Right with respect to each share of Common Stock
of the Company that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Expiration Date and the Final Expiration
Date (as such terms are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the Common Stock of the Company then
outstanding, but shall not include (i) any employee benefit plan of the Company
or any Subsidiary of the Company or any Person organized, appointed or
established by the Company or such Subsidiary as a fiduciary for or pursuant to
the terms of any such employee benefit plan or (ii) any Person or Persons who
are the Beneficial Owners of 20% or more of the Common Stock of the Company then
outstanding by virtue of ownership of Common Stock of the Company by such
Person's Affiliates and/or Associates, which Affiliates and/or Associates are
deemed to be Affiliates and/or Associates solely by reason of each of them being
members of either the Board of Directors of the Company or of a slate of
directors, proposed by management, standing for election to such Board.
Notwithstanding the foregoing, (x) no Person shall become an "Acquiring Person"
as a result of an acquisition of Common Stock by the Company which, by reducing
the number of shares of Common Stock outstanding, increases the proportionate
number of shares Beneficially Owned by such Person to 20% or more of the Common
Stock of the Company then outstanding, provided, however, that if a Person shall
become the Beneficial Owner
of 20% or more of the Common Stock of the Company by reason of share purchases
by the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Stock of the Company other than as a
direct or indirect result of any corporate action taken by the Company, then
such Person shall be deemed to be an "Acquiring Person", and (y) if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person", as defined pursuant to the foregoing
provisions of this Section 1(a), has become such inadvertently (including,
without limitation, because (i) such Person was unaware that it Beneficially
Owned 20% or more of the Common Stock of the Company or (ii) such Person was
aware of the extent of such Beneficial Ownership but such Person acquired
Beneficial Ownership of such shares of Common Stock without the intention to
change or influence the control of the Company and without actual knowledge of
the consequences of such Beneficial Ownership under this Rights Agreement), and
such Person divests itself as promptly as practicable of a sufficient number of
shares of Common Stock so that such Person would no longer be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this Section 1(a),
then such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement. All questions as to whether a Person who would
otherwise be a Acquiring Person has become such inadvertently shall be
determined in good faith by the Board of Directors of the Company, which
determination shall be conclusive.
(b) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii).
(c) "Affiliate" and "Associate", when used with reference to
any Person, shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as in effect on the Record Date.
(d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of,
including pursuant to any agreement, arrangement or understanding (whether or
not in writing); provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report);
(ii) which such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the exercise
of conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise, provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to
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beneficially own, (A) securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange,
or (B) securities issuable upon exercise of Rights at any time prior to the
occurrence of either a Section 11(a)(ii) Event or a Section 13 Event, or (C)
securities issuable upon exercise of Rights from and after the occurrence of
either a Section 11(a)(ii) Event or a Section 13 Event, which Rights were
acquired by such Person or any of such Person's Affiliates or Associates prior
to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
or any of such Person's Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in
subparagraph (i) of this paragraph (d) or disposing of any securities of the
Company in a manner that relates or is reasonably likely potentially to relate
to influencing the control or management of the Company; provided, however, that
nothing in this paragraph (d) shall cause a person engaged in business as an
underwriter of securities to be the Beneficial Owner of, or to beneficially own,
any securities acquired through such person's participation in good faith in a
firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(f) "Certificate of Designation" shall mean the Certificate of
Designation of Junior Participating Cumulative Preferred Stock setting forth the
powers, preferences, rights, qualifications, limitations and restrictions of
such series of preferred stock of the Company, a form of which is attached
hereto as Exhibit A.
(g) "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.
(h) "Common Stock" when used with reference to the Company
shall mean the Common Stock, par value $0.01 per share, of the Company. "Common
Stock" when used with reference to any Person other than the Company which is
organized in corporate form shall mean the capital stock with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person, or, if such Person is a
Subsidiary of another Person, the capital stock with the greatest voting power
of the Person which ultimately controls such first-mentioned Person. "Common
Stock" when used with reference to any Person which is not organized in
corporate form shall mean units of beneficial interest which (i) shall
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represent the right to participate generally in the profits and losses of such
Person (including, without limitation, any flow-through tax benefits resulting
from an ownership interest in such Person) and which (ii) shall be entitled to
exercise the greatest voting power of such Person or, in the case of a limited
partnership, shall have the power to remove the general partner or partners.
(i) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii).
(j) "Company" shall have the meaning set forth in the first
paragraph of this Agreement.
(k) "Continuing Director" shall mean any member of the Board
of Directors of the Company (while such person is a member of such Board of
Directors) who is not an Acquiring Person, an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an Acquiring Person or of
any such Affiliate or Associate, and who either (i) was a member of such Board
of Directors prior to the Stock Acquisition Date or (ii) subsequently became a
member of such Board of Directors, and whose nomination for election or election
thereto was recommended or approved by a majority of the Continuing Directors
then on such Board of Directors.
(l) "Current Market Price" shall have the meaning set forth in
Section 11(d).
(m) "Current Value" shall have the meaning set forth in
Section 11(a)(iii).
(n) "Distribution Date" shall have the meaning specified in
Section 3(a).
(o) "Equivalent Preference Stock" shall have the meaning set
forth in Section 11(b).
(p) "Expiration Date" shall have the meaning specified in
Section 7(a).
(q) "Final Expiration Date" shall have the meaning specified
in Section 7(a).
(r) "NASDAQ" shall have the meaning set forth in Section
11(d).
(s) "Outside Directors" shall have the meaning set forth in
Section 11(a)(ii).
(t) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity, and shall include any successor (by merger
or otherwise) of such entity.
(u) "Preferred Stock" shall mean shares of Junior
Participating Cumulative Preferred Stock, par value $0.01 per share, of the
Company, having the rights, preferences and limitations set forth in the form of
Certificate of Designation attached to this Agreement as Exhibit A, and, to the
extent there are not a sufficient number of shares of Junior Participating
Cumulative Preferred Stock authorized to permit the full exercise of the then
outstanding Rights, any other series of preferred
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stock of the Company designated for such purpose by the Board of Directors of
the Company containing terms substantially similar to the terms of the Junior
Participating Cumulative Preferred Stock. (v) "Principal Party" shall have the
meaning set forth in Section 13(b).
(w) "Purchase Price" shall have the meaning set forth in
Section 4(a).
(x) "Record Date" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
(y) "Redemption Price" shall have the meaning set forth in
Section 23(a).
(z) "Right" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
aa) ( "Right Certificate" shall have the meaning set forth in
Section 3(a). -----------------
(bb) "Rights Agent" shall have the meaning set forth in the
first paragraph of this Agreement.
(cc) "Section 11(a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii).
(dd) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii).
(ee) "Section 13 Event" shall have the meaning set forth in
Section 13(a).
(ff) "Spread" shall have the meaning set forth in Section
11(a)(iii).
(gg) "Stock Acquisition Date" shall mean the time of
occurrence of whichever of the following first occurs: (i) the first public
announcement by the Company or an Acquiring Person that the Acquiring Person has
become such, or (ii) the communication to the Company "including, without
limitation, to the directors of the Company) of any notice (including, without
limitation, any written consent or notice related thereto) from an Acquiring
Person indicating or reflecting that the Acquiring Person has become such.
(hh) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other persons performing similar
functions are at the time beneficially owned, directly or indirectly, by such
Person or otherwise controlled by such Person.
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(ii) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii).
(jj) "Summary of Rights" shall have the meaning set forth in
Section 3(b).
(kk) "Trading Day" shall have the meaning set forth in Section
11(d).
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Stock of the Company) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable. Any actions which may be
taken by the Rights Agent pursuant to the terms of this Agreement may be taken
by any such Co-Rights Agent.
Section 3. Issue of Right Certificates.
(a) Until the earlier of the Close of Business on (i) the
tenth Business Day after the Stock Acquisition Date, or (ii) the tenth Business
Day, or such specified or unspecified later date as may be determined by action
of the Board of Directors of the Company, after the date of the commencement of
(as determined by reference to Rule 14d-2 (a), as now in effect under the
Exchange Act), or first public announcement of the intent of any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person organized,
appointed or established by the Company or such Subsidiary as a fiduciary
pursuant to the terms of any such employee benefit plan) to commence (which
intention to commence remains in effect for five Business Days after such
announcement), a tender or exchange offer for an amount of Common Stock of the
Company which, together with the shares of such stock already owned by such
Person, constitutes 20% or more of the outstanding Common Stock of the Company
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights) (the earlier of such dates described in clauses (i)
and (ii) above being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for shares of Common Stock registered in the
names of the holders of Common Stock (which certificates for Common Stock shall
be deemed also to be certificates for Rights) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of the underlying Common
Stock. As soon as practicable after the Distribution Date, the Rights Agent will
send, by first class, insured, postage-prepaid mail, to each record holder of
Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right Certificate,
in substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein and to the provisions of Section 14(a). As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
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(b) On the Record Date or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred Stock,
in substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of Common
Stock as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to certificates for
Common Stock outstanding as of the Record Date, until the earlier of the
Distribution Date or the Expiration Date, the Rights will be evidenced by such
certificates for Common Stock registered in the names of the holders of Common
Stock with a copy of the Summary of Rights attached thereto. Until the earliest
of the Distribution Date, the Expiration Date and the Final Expiration Date, the
surrender for transfer of any of the certificates for Common Stock outstanding
on the Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
(c) Certificates for Common Stock issued (or delivered from
the Company's treasury) after the Record Date but prior to the earliest of the
Distribution Date, the Expiration Date and the Final 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 Programmer's Paradise,
Inc. (the "Corporation") and American
Stock Transfer & Trust Company, dated as
of November ___, 1999 (the "Rights
Agreement"), the terms of which are
hereby incorporated herein by reference
and a copy of which is on file at the
principal executive offices of the
Corporation. Under certain
circumstances, as set forth in the
Rights Agreement, such Rights will be
evidenced by separate certificates and
will no longer be evidenced by this
certificate. The Corporation will mail
to the holder of this certificate a copy
of the Rights Agreement without charge
promptly after receipt of a written
request therefor. Under certain
circumstances set forth in the Rights
Agreement, Rights issued to an Acquiring
Person or any Associate or Affiliate
thereof (as such terms are defined in
the Rights Agreement) may be null and
void. The Rights shall not be
exercisable, and shall be void so long
as held, by a holder in any jurisdiction
where the requisite qualification for
the issuance to such holder, or the
exercise by such holder of the Rights in
such jurisdiction, shall not have been
obtained or be obtainable.
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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 of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares, certificate and assignment to be printed on the reverse
thereof) shall be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11 and 22 hereof, the Right Certificates, whenever
distributed, which are distributed in respect of shares of Common Stock which
were issued and outstanding as of the Record Date, shall be dated as of the
Record Date, and all Right Certificates which are distributed in respect of
other shares of Common Stock shall be dated as of the respective dates of
issuance of such Common Stock, and in each such case on their face shall entitle
the holders thereof to purchase such number of one five thousandths of a share
of Preferred Stock as shall be set forth therein at the price per one five
thousandths of a share of Preferred Stock set forth therein (the "Purchase
Price"), but the number and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided in this Agreement.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agree meet, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding (whether or not in
writing) which has as a primary purpose or effect the avoidance of the
provisions of Section 7(e), Section 11(a)(ii) or of Section 13 with respect to
the limitation of the Rights beneficially owned by an Acquiring Person (or any
Associate or Affiliate thereof), 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 modified as necessary to
apply to such Person:
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The Rights represented by this
Certificate are or were beneficially
owned by a Person who was or became an
Acquiring Person or an Affiliate or
Associate thereof (as such terms are
defined in the Rights Agreement).
Accordingly, this Certificate and the
Rights represented hereby may become
null and void in the circumstances
specified in Section 7(e) of the Rights
Agreement.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company manually or by facsimile signature by the Chairman of the Board, the
President or any Vice President and have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or any Assistant
Secretary, either manually or by facsimile signature. The Right Certificates
shall be countersigned by the Rights Agent manually and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office in New York, New York, 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 and certificate number 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 4(b) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Expiration Date and the
Final 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
shares of Preferred Stock (or other securities, cash, and/or assets, 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 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, with the
form of assignment and certificate appropriately
9
executed, at the principal office of the Rights Agent in New York, New York.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate or Right Certificates until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate or Right Certificates and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall 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
any Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, if requested by
the Company, 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 execute and
deliver a new Right Certificate of like tenor to the Rights Agent for
counter-signature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office of the Rights Agent in New York, New York, together with
payment of the Purchase Price for each one five thousandth of a share of
Preferred Stock as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on November 18, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23, (iii) the time at which the Rights are exchanged as provided in
Section 23A, or (iv) the time at which the Rights expire pursuant to Section
13(d) (such earliest time being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one five thousandth of a share
of Preferred Stock issued pursuant to the exercise of a Right shall initially be
$77.78, 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) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and certificate duly
executed, accompanied by payment (in cash, or by certified check or bank draft
payable to the order of the Company) of the Purchase Price for the
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Preferred Stock (or other shares, securities, cash or other assets, as the case
may be) to be purchased and an amount equal to any applicable transfer tax
required to be paid by the holder of the Rights pursuant hereto in cash, or by
certified check or bank draft payable to the order of the Company, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)(A)
requisition from any transfer agent of the Preferred Stock (or make available,
if the Rights Agent is the transfer agent) certificates for the number of shares
of Preferred Stock to be purchased (and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests), or (B) if the
Company shall have elected to deposit the total number of shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one five thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of 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, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such 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 of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered 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, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of any such Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after such
Acquiring Person becomes such, or (iii) a transferee of any such Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with such Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
such Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to
11
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with but shall have no liability to any holder of Right Certificates or
any other Person as a result of its failure to make any determination with
respect to an Acquiring Person or any of its respective Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificate upon the occurrence of any purported transfer or exercise as set
forth in this Section 7 unless such registered holder shall have (i) completed
and signed the certificate following the form of assignment or election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such assignment 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 canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights 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 canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital 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 authorized and issued shares of Preferred Stock held in
its treasury (and will use its best efforts, following the occurrence of a
Section 11(a)(ii) Event, to cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares of Common Stock and/or other securities held in
its treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Section 11(a)(ii) Event, Common Stock and/or other securities)
that will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate
12
form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company may,
acting by resolution of its Board of Directors, temporarily suspend, for a
period of time not to exceed ninety (90) days after the date set forth in clause
(i) of the first sentence of this Section 9(b), the exercisability of the Rights
in order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one five thousandths of a
share of Preferred Stock (and, following the occurrence of a Section 11(a)(ii)
Event, Common Stock and/or other securities) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
(d) 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 shares of Common Stock
and/or other securities, as the case may be) 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 a number of one five thousandths of a share of Preferred Stock (or shares of
Common Stock and/or other securities, as the case may be), 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 for shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be) or
depositary receipts for Preferred Stock upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by the holder of
such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose
name any certificate for a number of one five thousandths of a share of
Preferred Stock (or shares of Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of shares of Preferred Stock (or shares of
Common Stock and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly
13
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or shares of Common Stock
and/or other securities, as the case may be) transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares (fractional and otherwise) on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Stock (or shares of Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate, as such, shall not be entitled to any rights of a stockholder
of the Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any meetings or other proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares,
or fractions thereof, covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock into a
greater number of shares, (C) combine or consolidate the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in Section 7(e) and 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 Preferred Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares of Preferred Stock or
capital stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock transfer
books of the Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification.
If an event occurs which would require 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) In the event (a "Section 11(a)(ii) Event") that any
Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person, unless the event causing such Person to become an Acquiring
Person is a Section 13 Event or is an acquisition of Common Stock of the Company
pursuant to a tender or exchange offer for all outstanding Common
14
Stock of the Company at a price and on terms determined by at least a majority
of the members of the Board of Directors of the Company who are not Acquiring
Persons or representatives, nominees, Affiliates or Associates of an Acquiring
Person (the "Outside Directors"), after receiving advice from one or more
investment banking firms, to be (A) at a price which is fair to stockholders
(taking into account all factors which such Outside Directors deem relevant,
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were to be sold on an orderly basis designed to realize
maximum value) and (B) otherwise in the best interests of the Company and its
stockholders, then proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof), shall thereafter have the
right to receive, upon exercise thereof following the Distribution Date at the
then current Purchase Price in accordance with the terms of this Agreement, in
lieu of a number of five thousandths of a share of Preferred Stock, such number
of shares of Common Stock of the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then number of one five
thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of such Section 11(a)(ii) Event,
whether or not such Right was then exercisable, and (y) dividing that product
(which, following such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement) by 50%
of the Current Market Price per share of the Common Stock of the Company
(determined pursuant to Section 11(d)) on the date of the occurrence of such
Section 11(a)(ii) Event (such number of shares being hereinafter referred to as
the "Adjustment Shares"). The Company shall notify the Rights Agent as to any
Persons who are deemed by the Company to be Acquiring Persons or Associates,
Affiliates or transferees (as described in subparagraphs (ii) and (iii) of
Section 7(e)) of such Persons and shall identify any Rights pertaining thereto.
(iii) In lieu of issuing shares of Common Stock of the Company
in accordance with Section 11(a)(ii) hereof, the Company, acting by resolution
of its Board of Directors, may (and, in the event that the number of shares of
Common Stock which are authorized by the Company's Certificate of Incorporation
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii), the Company, acting by resolution
of its Board of Directors, shall): (A) determine the excess of (1) the value of
the Adjustment Shares issuable upon the exercise of a Right (the "Current
Value"), over (2) the Purchase Price attributable to each Right (such excess,
the "Spread") and (B) with respect to each Right (subject to Section 7(e)), make
adequate provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as shares of Common
Stock of the Company (such shares or units of preferred stock hereinafter called
"Common Stock Equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing having an aggregate value equal
to the Current Value, where such aggregate value has been determined by action
of the Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors of the
Company which has theretofore performed no services for the Company or any
15
Subsidiary of the Company in the past five years; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the first date that the right to
redeem the Rights pursuant to Section 23 hereof, as such date may be amended
pursuant to Section 26 hereof, shall expire (the later of (x) and (y) being
referred to herein as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock of the
Company (to the extent available) and then, if necessary, cash, securities
and/or assets, that in the aggregate have a value equal to the Spread. If, after
the occurrence of a Section 11(a)(ii) Event, the number of shares of Common
Stock that are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof and the Company, acting by resolution
of its Board of Directors, shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, 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
period as it may be extended, the "Substitution Period"). To the extent that the
Company determines that some action is to be taken pursuant to the terms of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e), 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 such stockholder approval for the authorization of additional
shares and/or to decide the appropriate form of distribution to be made pursuant
to the first sentence of this Section 11(a)(iii) and to determine the value
thereof. In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the Current Market Price per share of Common Stock (as
determined pursuant to Section 11(d)) on the date of the first occurrence of the
Section 11(a)(ii) Event, and the per share or per unit value of any Common Stock
Equivalents shall be deemed to equal the Current Market Price per share of the
Common Stock of the Company on such date.
(b) In the event that the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of shares 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 shares of Preferred
Stock ("Equivalent Preference Stock")) or securities convertible into shares of
Preferred Stock or Equivalent Preference Stock at a price per share of Preferred
Stock or Equivalent Preference Stock (or having a conversion price per share, if
a security convertible into shares of Preferred Stock or Equivalent Preference
Stock) less than the Current Market Price per share of the Preferred Stock (as
defined in Section 11(d)) 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
16
outstanding on such record date plus the number of additional shares of
Preferred Stock and/or Equivalent Preference Stock which the aggregate offering
price of the total number of such 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 outstanding on such record date plus the
number of additional shares of Preferred Stock and/or Equivalent Preference
Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, 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 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 periodic cash dividend at a rate not in excess
of 125% of the rate of the last regular periodic cash dividend theretofore paid
or a dividend payable in Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of Preferred
Stock (as defined in Section 11(d)) on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a 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 Market
Price per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the
"Current Market Price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common Stock for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
Current Market Price per share of Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (a) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into such Common Stock or (b) any subdivision,
combination or reclassification of such Common Stock, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
17
distribution, or the record date for such subdivision, combination or
reclassification, as the case may be, then, and in each such case, the "Current
Market Price" shall be appropriately adjusted to take into account the
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use, or, if
on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in shares of Common Stock selected by
the Company, acting by resolution of the Board of Directors of the Company. If
on any such date no market maker is making a market in shares of Common Stock,
the fair value of such shares on such date as determined in good faith by the
Company, acting by resolution of the Board of Directors of the Company, shall be
used. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange,
a Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions
in the State of New York are not authorized or obligated by law or executive
order to close. If the current per share market price of the Common Stock cannot
be determined in the manner provided above, or if the Common Stock is not
publicly held or not so listed or traded, "Current Market Price" per share of
Common Stock shall mean the fair value per share as determined in good faith by
the Company, acting by resolution of the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share of Preferred Stock shall be determined in the
same manner as set forth for the Common Stock in Section 11(d)(i) hereof (other
than the last sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in Section 11(d)(i) hereof, the "Current Market Price" per share of Preferred
Stock shall be conclusively deemed to be an amount equal to 5,000 (as such
number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the Current Market Price per share of
the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, the "Current Market Price" per share of
Preferred Stock shall mean the fair value per share as determined in good faith
by the Company, acting by resolution of its Board of Directors, whose
18
determination shall be described in a statement filed with Rights Agent and
shall be conclusive for all purposes. For all purposes of this Agreement, the
"Current Market Price" of one five thousandth of a share of Preferred Stock
shall be equal to the "Current Market Price" of one share of Preferred Stock
divided by 5,000.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in such price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or other share
or the nearest one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the Purchase Price and the number of such other
shares so receivable upon exercise of any Right and the number of Rights
outstanding shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j),
(k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Preferred Stock shall apply on like terms to any such other shares;
provided, however, that the Company shall not be liable for its inability or
failure to reserve and keep available for issuance upon exercise of the Rights
pursuant to Section 11(a)(ii) a number of shares of Common Stock greater than
the number then authorized by the Certificate of Incorporation of the Company
but not outstanding or reserved for any other purpose.
(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 five 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 Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one five
thousandths of a share of Preferred Stock (calculated to the nearest
one-millionth of a share of Preferred Stock) obtained by (i) multiplying (A) the
number of one five thousandths of a share covered by a Right immediately prior
to such adjustment of the Purchase Price by (B) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
19
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 five 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 five 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 ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the 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 shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to 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 may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of 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 shares of Preferred Stock, or fraction thereof, issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one five
thousandth of a share and the number of shares 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 one five
thousandths of a share of Preferred Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Preferred Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect
20
to defer until the occurrence of such event the issuing to the holder of any
Right exercised after such record date the Preferred Stock, or a fraction
thereof, 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
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company, acting by resolution of its Board of Directors,
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, any issuance wholly for
cash of any Preferred Stock at less than the current market price, any issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, any stock dividends or any
issuance of rights, options or warrants referred to herein above in this Section
11, hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction that complies with Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or in a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect that would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) shall have received a distribution of Rights previously owned
by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 26
hereof, 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.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event the Company shall at any time after the date of
this Agreement and prior to the Distribution Date (i) declare or pay any
dividend on the Common Stock of the Company payable in such Common Stock
21
or (ii) subdivide the outstanding Common Stock of the Company into a greater
number of shares (by reclassification or otherwise than by payment of dividends
in such Common Stock) or (iii) combine or consolidate the outstanding Common
Stock of the Company into a smaller number of shares, then in any such case, (x)
the number of one five thousandths of a share of Preferred Stock purchasable
after such event upon proper exercise of each Right shall be determined by
multiplying the number of one five thousandths of a share of Preferred Stock so
purchasable immediately prior to such event by a fraction, the numerator of
which is the number of shares of Common Stock of the Company outstanding
immediately before such event and the denominator of which is the number of
shares of such Common Stock outstanding immediately after such event and (y)
action shall be taken such that each share of Common Stock of the Company
outstanding immediately after such event shall have issued with respect to it
that number of Rights which each share of such Common Stock outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected. If an event occurs which would require an adjustment under Section
11(a)(ii) and this Section 11(p), the adjustments provided for in this Section
11(p) shall be in addition and prior to any adjustment required pursuant to
Section 11(a)(ii).
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Stock and
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate (or if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in accordance
with Section 25 of this Agreement. Notwithstanding the foregoing sentence, the
failure of the Company to make such certificates or give such notice shall not
affect the validity or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained. Any adjustment to be made
pursuant to Sections 11 and 13 shall be effective as of the date of the event
giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event (a "Section 13 Event") that, following the
Stock Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o))
and the Company shall not be the surviving or continuing corporation of such
merger, consolidation or combination, (y) any Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)) shall
consolidate with the Company, or merge with and into the Company, and the
Company shall be the surviving or continuing corporation of such merger or
consolidation and, in connection therewith, all or part of the Common Stock
shall be changed into or exchanged for stock or other securities of any Person
or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one or more transactions, assets, cash flow or earning power aggregating more
than
22
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole and calculated on the basis of the Company's most
recent regularly prepared financial statement) to any other Person or Persons
(other than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o)), then, and in each such
case (except as provided in Section 13(d)), proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided in Section 7(e))
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, nonassessable and freely
tradable shares of Common Stock of the Principal Party (as hereinafter defined),
not subject to any liens, encumbrances, rights of call, rights of first refusal
or other adverse claims, as shall be equal to the result obtained by (a)
multiplying the then current Purchase Price by the number of one five
thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of one five thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event, shall be referred to as
the "Purchase Price" for each Right and for all purposes of this Agreement) by
(B) 50% of the Current Market Price per share of Common Stock of such Principal
Party "determined pursuant to Section 11(d)) on the date of consummation of such
merger, consolidation, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 shall apply
only to such Principal Party following the first occurrence of a Section 13
Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9 hereof) in connection with such consummation as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be possible, in relation to its Common
Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Section 13 Event. The Company shall not consummate any such
merger, consolidation, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a supplemental
agreement containing the provisions required by this Section 13.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a) hereof, the Person that is the
issuer of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z)
of the first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets, cash flow
23
or earning power transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at any time and has not been continuously over the preceding twelve month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, "Principal Party" shall refer to such other Person; and
(2) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of shares of
authorized Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement containing the provisions
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any such Section 13 Event, the
Principal Party will:
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, this Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired Common Stock of the Company
pursuant to a tender offer or exchange offer for all outstanding Common Stock of
the Company which complies with the provisions of Section 11(a)(ii) (or a wholly
owned Subsidiary of any such Person or Persons), (ii) the price per share of
Common Stock of the Company offered in such transaction is not less than the
price per share of Common Stock of the Company paid to all holders of Common
Stock of the Company whose shares were purchased pursuant to such tender offer
or exchange offer and (iii) the form of consideration being offered to the
remaining holders of Common Stock of the Company pursuant to such transaction is
the same as the form of
24
consideration paid pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
(e) The Company covenants and agrees that it will not, after
the Stock Acquisition Date, engage in any Section 13 Event if at the time of or
after such event there are any charter or by-law provisions or any rights,
warrants or other instruments outstanding or any other action taken which would
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
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 fractions of 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 of the
Rights for any day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights (selected by the Company, acting by resolution of its Board of
Directors). 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 Company, acting by resolution of its Board of Directors, shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one five thousandths of a share of Preferred Stock) upon exercise of the Rights
or to distribute certificates which evidence fractional shares (other than
fractions which are integral multiples of one five thousandths of a share of
Preferred Stock). Fractions of Preferred Stock in integral multiples of one five
thousandths 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 depositary receipts shall have all
the rights, privileges and preferences to which they are entitled as beneficial
owners of the Preferred
25
Stock. In lieu of fractional shares which are not integral multiples of one five
thousandths of a share of Preferred Stock, the Company may pay to the registered
holders of Right Certificates at the time such Right Certificates 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 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 the
second sentence of Section 11(d)(ii)) for the Trading Day immediately prior to
the date of such exercise .
(c) Following the occurrence of a Section 11(a)(ii) Event or a
Section 13 Event, the Company shall not be required to issue fractions of shares
of its Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of its Common Stock. In lieu of fractional
shares of its Common 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 its Common Stock. For purposes of this Section 14(c), the current
market value of one share of Common Stock of the Company shall be the closing
price of one share of Common Stock of the Company (as determined pursuant to
Section 11(d)(i)) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect
of this Agreement, except the rights of action vested in the Rights Agent
pursuant to Section 18, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of Common Stock); and any registered holder of any Right Certificate (or, prior
to the Distribution Date, of Common Stock), without the consent of the Rights
Agent or of any holder of any other Right Certificate (or, prior to the
Distribution Date, of Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations hereunder, 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 such Right consents and agrees with the Company and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
evidenced by the certificates for shares of Common Stock registered in the name
of the holders of such shares (which certificates
26
for shares of Common Stock shall also constitute certificates for Rights) and
each Right will be transferable only in connection with the transfer of 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 principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
duly completed and fully executed;
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common 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 associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder
No holder, as such, of any Right or Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of one five thousandth
of a share of Preferred Stock or any other securities of the Company which may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right or Right Certificate, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in Section
24), or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions 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
27
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
b. The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Preferred On Common Stock or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
a. Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. The purchase of all or substantially all of the
Rights Agent's assets employed in the performance of transfer agent activities
shall be deemed a merger or consolidation for purposes of this Section 19. 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.
28
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 Cer tificates, 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 (in cluding, without limitation, the identity of an Acquiring Person and
the determination of the Current Market Price per share of Preferred Stock and
Common Stock) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board, the President, any Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c). The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d). The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e). The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any 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 adjustment required under the provisions of
Sections 11 or 13 or respon sible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment), nor shall it be
responsible for any determination by the Board of Directors of the Company of
the Current Market Price of the Rights or Preferred Stock or Common Stock, nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Common Stock or
Preferred Stock or other securities to be issued pursuant to this Agreement or
any Right Certificate or as to whether any shares of Preferred Stock or Common
Stock or other securities will, when issued, be validly authorized and issued,
fully paid and nonassessable.
29
(f). The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g). The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.
(h). The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity, except it may not act for an Acquiring Person in an investment banking
capacity, or otherwise assist an Acquiring Person in ways hostile to the
Company, without the consent of the Company.
(i). The Rights Agent may execute and exercise any of the
rights and 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, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company or to
holders of the Rights resulting from any such act, omission, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
(j). No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k). If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in
30
writing mailed to the Company and to each transfer agent of the Common Stock and
Preferred Stock by registered, certified or express mail, and 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 and Preferred Stock by registered, certified
or express mail, and 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 corporation organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust 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 $100
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock
and Preferred Stock, and 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 form as may be approved by resolution of its Board of
Directors, to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares of stock 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 redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures hereinafter issued by the Company,
and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Right Certificates representing the
appropriate number of
Rights in connection with such issuance or sale;
provided, however, that (i) no such Right
Certificates shall be issued if, and to the extent
that, the Company shall be advised
31
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
Certificates would be issued, and (ii) no such Right Certificates 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.
(a). The Company may, by resolution of its Board of Directors
(which resolution shall, if adopted following the Stock Acquisition Date, be
effective only with the concurrence of a majority of the Continuing Directors
and only if the Continuing Directors constitute a majority of the number of
directors then in office), at its option, at any time prior to the earlier of
(x) the Close of Business on the tenth Business Day following the Stock
Acquisition Date or (y) the Close of Business on the Final Expiration Date,
redeem all but not less than all of the then outstanding Rights at a redemption
price of $0.01 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event
until such time as the Company's right of redemption under this Section 23(a)
has expired. The Board of Directors of the Company may, in its discretion, at
any time prior to the Stock Acquisition Date, extend the time within which to
redeem the then outstanding Rights prior to their exercise. The redemption of
the Rights by the Board of Directors may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole discretion
may establish. The company may, at its option, pay the Redemption Price in cash,
Common Stock (based on the Current Market Price of the Common Stock at the time
of redemption) or any other form of consideration deemed appropriate by the
Board of Directors of the Company.
(b). Immediately upon the action of the Board of Directors of
the Company (with, if required, the concurrence of a majority of the Continuing
Directors) ordering the redemption of the Rights (or at such time subsequent to
such action as the Board of Directors, with the concurrence of a majority of the
Continuing Directors, may determine), 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. Within 10 days
after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of the
then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common 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 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
repurchase of Common Stock of the Company prior to the Distribution Date.
32
Section 23A. Exchange
(a) The Board of Directors of the Company (with the
concurrence of a majority of the Continuing Directors and only if the Continuing
Directors constitute a majority of the number of Directors then in office) may,
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7(e)) for 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 the Company, any wholly owned Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary, or
any entity holding Common Stock as a fiduciary for or pursuant to the terms of
any such employee benefit plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the 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 23A, evidence of which shall have been filed with the Rights Agent,
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 such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e)) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 23A, the
Company shall take all such action as may be necessary to authorize additional
Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
Common Stock or to distribute certificates which evidence fractional Common
Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share of Common Stock. For
the purposes of this paragraph (d),
33
the current market value of a whole share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to the second sentence
of Section 11(d)) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 23A.
Section 24. Notice of Certain Events. In case the Company
shall 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 dividend out of earnings
on retained earnings of the Company at a rate not in excess of 125% of the rate
of the last regular quarterly cash dividend theretofore paid), or (ii) to offer
to the holders of Preferred Stock options, rights or warrants to subscribe for
or to purchase any additional Preferred Stock or shares of stock of any class or
any other securities, rights or options, or (iii) to effect any reclassification
of the Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
merger, consolidation or other combination into or with, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets, cash flow or earning power of the Company and its Subsidiaries (taken as
a whole) to, any other Person, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 25 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, merger, consolidation, combination, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of 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 twenty days prior to the
record date for determining holders of Preferred Stock for purposes of such
action, and in the case of any such other action, at least twenty days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of Common Stock and/or Preferred Stock, whichever shall
be the earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(a). In case any of the events set forth in Section 11(a)(ii)
or Section 13(a) of this Agreement shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each holder of a Right
Certificate, to the extent feasible and in accordance with Section 25, a notice
of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13(a), and (ii) all references in Section 24(a) hereof to Preferred
Stock shall be deemed thereafter to refer also to Common Stock or other
securities issuable in respect of the Rights.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any 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
34
is filed in writing with the Rights Agent) as follows:
Programmer's Paradise, Inc.
1157 Shrewsbury Avenue
Shrewsbury, New Jersey 07702
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any 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:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or if prior
to the Distribution Date to each holder of a certificate representing shares of
Common Stock) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such Right holder (or if prior to the Distribution
Date to such holder of Common Stock) at the address of such holder as shown on
the registry books of the Company.
Section 26. Supplements and Amendments. The Company may, by
resolution of its Board of Directors, and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement in any respect
whatsoever (including without limitation any extension of the period in which
the Rights may be redeemed) at any time prior to the Stock Acquisition Date,
without the approval of any holders of certificates representing shares of
Common Stock or, after the Distribution Date, of Right Certificates. From and
after the Stock Acquisition Date, the Company may, by resolution of its Board of
Directors (which resolution shall be effective only with the concurrence of a
majority of the Continuing Directors, and only if the Continuing Directors
constitute a majority of the number of directors then in office), and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of certificates representing shares of
Common Stock or of Right Certificates in order (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder or (iv) to change or supplement or make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Rights Agent may deem necessary or desirable, which shall not adversely
affect the interests of the holders of Right Certificates (other than an
35
Acquiring Person or an Affiliate or Associate thereof); provided, however, that
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the Rights may
be redeemed or to modify the ability (or inability) of the Board of Directors of
the Company (with, where required, the concurrence of a majority of the
Continuing Directors) to redeem the Rights, in either case at such time as the
Rights are not then redeemable or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of or the benefits to the holders of Rights (other than an Acquiring Person or
an Affiliate or Associate of any such Person). Without limiting the foregoing,
the Company may at any time prior to the Stock Acquisition Date amend this
Agreement to lower the thresholds set forth in Sections l(a) and 3(a) hereof to
not less than the greater of (i) any percentage greater than the largest
percentage of the outstanding Common Stock then known by the Company to be
beneficially owned by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any Subsidiary of the
Company or any Person organized, appointed or established by the Company or such
Subsidiary as a fiduciary for or pursuant to the terms of any such employee
benefit plan) and (ii) 10%. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment. Prior to the Stock Acquisition Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 28. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the Company
(with, where specifically provided for herein, the concurrence of the Continuing
Directors or the Outside Directors) shall have the exclusive power, authority
and discretion to administer this Agreement and to exercise all rights and
powers specifically granted to such Board of Directors (with, where specifically
provided for herein, the concurrence of the Continuing Directors or the Outside
Directors) or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, but not limited to, a determination to redeem or not
redeem the Rights, to amend the Agreement or to find or to announce publicly
that any Person has become an Acquiring Person). All such actions, calculations,
interpretations and determinations (including, for purposes of clauses (i) and
(iii) below, all omissions with respect to the foregoing) which are done or made
by the Board of Directors of the Company (with, where specifically provided for
herein, the concurrence of the Continuing Directors or the Outside Directors),
the Outside Directors or the Company (i) shall be within the discretion
36
of the Board of Directors (with, where specifically provided for herein, the
concurrence of the Continuing Directors or the Outside Directors), (ii) shall be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Right Certificates and all other parties, and (iii) shall not subject the
Board of Directors of the Company, the Continuing Directors or the Outside
Directors to any liability to the holders of the Rights and Right Certificates.
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, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
provided, however, that notwithstanding anything in this -------- -------
Agreement to the contrary, if any such term, provision, covenant or restriction
is held by such court or authority to be invalid, void or unenforceable and the
Board of Directors of the Company determines in its good faith judgment that
severing the invalid language from this Agreement would adversely affect the
purpose or effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until the Close of
Business on the tenth Business Day following the date of such determination by
the Board of Directors. Without limiting the foregoing, if any provision of this
Agreement requiring that a determination be made by the Board of Directors with
the concurrence of a majority of the Continuing Directors or the Outside
Directors or by the Outside Directors is held by a court of competent juris
diction or other authority to be invalid, void, or unenforceable, such
determination shall then be made by the Board of Directors in accordance with
applicable law and the Company's certificate of incorporation and by-laws.
Section 31. 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 Delaware 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 32. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together consti
tute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
37
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
Attest: PROGRAMMER'S PARADISE, INC.
By: /s/ William H. Willett
________________________
Title:
Attest: AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:__________________________ By: /s/ Herbert J. Lemmer
_______________________
Title: Title: Vice President
38
EXHIBIT A
CERTIFICATE OF DESIGNATION OF JUNIOR
PARTICIPATING CUMULATIVE PREFERRED STOCK
Par Value $0.01 Per Share
of
Programmer's Paradise, Inc.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
We, William H. Willett, Chief Executive Officer and Chairman
of the Board of Directors, and John P. Broderick, Chief Financial Officer, of
Programmer's Paradise, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the said Corporation, the said
Board of Directors on November 4, 1999 by the unanimous written consent to
action the members of the Board of Directors, adopted the following resolution
creating a series of two thousand (2,000) shares of Preferred Stock, par value
$0.01 per share:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be,
and it hereby is, created, and that the designation and amount thereof and the
voting powers, preferences and relative participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
Section 1. Designation and Amount.
The shares of such series shall be designated as Junior
Participating Cumulative Preferred Stock, par value $0.01 per share (the "Junior
Preferred Stock"), and the number of shares constituting such series shall be
2,000. 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 Junior Preferred Stock to a number less than the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Junior Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and
superior to the Junior Preferred Stock with respect to dividends, the
holders of shares of Junior Preferred Stock, in preference to the
holders of Common Stock, and of any other junior stock which may be
outstanding, 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 Junior Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $12.50 per
share ($50.00 per annum), or (b) subject to the provision for
adjustment hereinafter set forth, 5,000 times the aggregate per share
amount of all cash dividends, and 5,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Junior Preferred Stock. In the
event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of
shares of Junior Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
2
(B) The Corporation shall declare a dividend or distribution
on the Junior Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the
Common Stock I other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $12.50 per share ($50.00 per
annum) on the Junior Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Junior Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for
the determination of holders of shares of Junior Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall accumulate but shall not bear
interest. Dividends paid on the shares of Junior 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 Junior Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall
be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights.
The holders of shares of Junior Preferred Stock shall have the
following voting rights.
(A) Subject to the provisions for adjustment as hereinafter
set forth, each share of Junior Preferred Stock shall entitle the
holder thereof to 5,000 votes (and each one one-five thousandth of a
share of Junior Preferred Stock shall entitle the holder thereof to one
vote) on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or
pay any dividend on Common Stock payable in shares of Common Stock or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by classification or otherwise than by payment
of a dividend in shares of Common Stock) into a greater or less number
of shares of Common Stock, then in each such case the number of votes
per share to which holders of shares of Junior 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.
3
(B) Except as otherwise provided herein, in the Certificate of
Incorporation, in any other certificate of designation creating a
series of preferred stock or any similar stock, or by law, the holders
of shares of Junior Preferred Stock and the holders of shares of Common
Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) If at any time the Corporation shall not have declared and
paid all accrued and unpaid dividends on the Junior Preferred Stock as
provided in Section 2 hereof for four consecutive Quarterly Dividend
Payment Dates, then, in addition to any voting rights provided for in
paragraphs (A) and (B), the holders of the Junior Preferred Stock shall
have the exclusive right, voting separately as class, to elect two
directors on the Board of Directors of the Corporation (such directors,
the "Preferred Directors"). The right of the holders of the Junior
Preferred Stock to elect the Preferred Directors shall continue until
all such accrued and unpaid dividends shall have been paid. At such
time, the terms of any of the Preferred Directors shall terminate. At
any time when the holders of the Junior Preferred Stock shall have thus
become entitled to elect Preferred Directors, a special meeting of
shareholders shall be called for the purpose of electing such Preferred
Directors, to be held within 30 days after the right of the holders of
the Junior Preferred Stock to elect such Preferred Directors shall
arise, upon notice given in the manner provided by law or the by-laws
of the Corporation for giving notice of a special meeting of
shareholders (provided, however, that such a special meeting shall not
be called if the annual meeting of shareholders is to convene within
said 30 days). At any such special meeting or at any annual meeting at
which the holders of the Junior Preferred Stock shall be entitled to
elect Preferred Directors, the holders of a majority of the then
outstanding Junior Preferred Stock present in person or by proxy shall
be sufficient to constitute a quorum for the election of such
directors. The persons elected by the holders of the Junior Preferred
Stock at any meeting in accordance with the terms of the preceding
sentence shall become directors on the date of such election.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior 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
Junior Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends or, make any other
distributions on any shares or stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding-up)
to the Junior Preferred Stock;
4
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding-up) with the Junior Preferred Stock except dividends
paid ratably on the Junior 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 than 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 Junior 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 of the Corporation ranking junior (either
as to dividends or upon dissolution, liquidation or
winding-up) to the Junior Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding-up) with the Junior
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 classes, shall determine
in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation could,
under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5. Reacquired Shares.
Any shares of Junior 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,
without designation as to series, 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 fourth
herein, in the Certificate of Incorporation, in any other certificate of
designation creating a series of preferred stock or any similar stock or as
otherwise required by law.
5
Section 6. Liquidation, Dissolution or Winding-Up.
Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, no distribution shall be made (A) to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding-up) to the Junior Preferred Stock unless prior thereto,
the holders of shares of Junior Preferred Stock shall have received the higher
of (i) $5,000.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
or (ii) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 5,000 times the aggregate amount to be
distributed per share to holders of Common Stock; nor shall any distribution be
made (B) to the holders of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding-up) with the Junior Preferred Stock,
except distributions made ratably on the Junior Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding-up. In
the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Junior Preferred
Stock are entitled immediately prior to such event under the provision in clause
(A) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, or otherwise changed, then in any such case each share of Junior
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 5,000 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Junior
Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
6
Section 8. No Redemption.
The shares of Junior Preferred Stock shall not be redeemable.
Section 9. Rank.
Unless otherwise provided in the Certificate of Incorporation
of the Corporation or a certificate of designation relating to a subsequent
series of preferred stock of the Corporation, the Junior Preferred Stock shall
rank junior to all other series of the Corporation's preferred stock as to the
payment of dividends and the distribution of assets on liquidation, dissolution
or winding-up, and senior to the Common Stock of the Corporation.
Section 10. Amendment.
The Certificate of Incorporation of the Corporation, as
amended, shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Junior Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Junior Preferred Stock, voting
together as a single series.
Section 11. Fractional Shares.
Junior Preferred Stock may be issued in fractions of a share
(in one five thousandth (1/5,000) of a share and integral multiples thereof)
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 Junior
Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Corporation by its Chief Executive Officer and
attested by its Chief Financial Officer this ____ day of November 1999.
--------------------------------
William H. Willett,
Chief Executive Officer
- ------------------------------
John Broderick,
Chief Financial Officer
7
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- ________Rights
NOT EXERCISABLE AFTER NOVEMBER 18, 1999 OR EARLIER IF NOTICE
OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS
REPRESENTED BY THIS CERTIFICATE WERE ISSUED TO A PERSON WHO
WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID AS PROVIDED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.]*
Right Certificate
PROGRAMMER'S PARADISE, 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 November 18, 1999 (the "Rights Agreement")
between Programmer's Paradise, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M. (New York City time) on November
18, 2009, at the principal
- ---------------------
* The portion of the legend in brackets shall be inserted only if applicable.
office of the Rights Agent, or its successors as Rights Agent, in New York, New
York, one five thousandth of a share of Junior Participating Cumulative
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), of the
Company, at a purchase price of $77.78 per one five thousandth of a share (the
"Purchase Price") in cash, or by certified bank check or money order payable to
the order of the Company, upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of November 18, 1999
based on the shares of Preferred Stock of the Company as constituted at such
date.
As provided in the Rights Agreement, the Purchase Price and
the number of one five thousandths of a share of Preferred Stock or other
securities which may be purchased upon the exercise of the 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
Programmer's Paradise, Inc. and the above-mentioned office of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one five thousandths of a share 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 may be redeemed by the company at its option at a
redemption price of $0.01 per Right. Subject to the provisions of the Rights
Agreement, the Rights evidenced by this Rights Certificate may be exchanged by
the Company in whole or in part for Common Stock of the Company under certain
circumstances.
No fractional shares of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Stock or
of any other securities of the Company which may at the time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this 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.
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers unto
---------------------------------------------
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________ Attorney, to
transfer the within Right Certificate on the books of the within named Company,
with full power of substitution.
Dated: ______________,_____
------------------------------
Signature
Signatures Guaranteed:
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
------------------------------
Signature
NOTICE
The signature to the foregoing Assignment must correspond to
the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To Programmer's Paradise, Inc.:
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Right Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of such Rights and requests
that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
- ---------------------------------
(Please print name and address)
- ---------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- ---------------------------------
(Please print name and address)
- ---------------------------------
Dated:
----------------, ----------
[Form of Election to Purchase -- continued]
---------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate.)
Signature Guaranteed:
- ---------------------------------
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
---------------------------------
Signature
- ---------------------------------
NOTICE
In the event the certification set forth above in the Forms of
Assignment and Election is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and, in the case of an Assignment, will affix a legend to that effect on any
Right Certificates issued in exchange for this Rights Certificate.
EXHIBIT C
PROGRAMMER'S PARADISE, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On November 4, 1999, the Board of Directors of Programmer's
Paradise, Inc. (the "Company") declared a dividend distribution of one preferred
stock purchase right (a "Right") for each outstanding share of Common Stock, par
value $0.01 per share (the "Common Stock"), of the Company. The distribution is
payable on November 18, 1999 to the stockholders of record on November 18, 1999.
Each Right entitles the registered holder to purchase from the Company one-five
thousandth of a share of Junior Participating Cumulative Preferred Stock, par
value $0.01 per share ("Preferred Stock") at a price of $77.78 per one five
thousandth of a share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and American Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten business days following
the time (the "Stock Acquisition Date") of a public announcement or notice to
the Company that a person or group of affiliated or associated persons has
acquired beneficial ownership (as defined in the Rights Agreement) of 20% or
more of the outstanding shares of Common Stock of the Company (such 20%
beneficial owner, an "Acquiring Person"), or (ii) ten business days, or such
later date as may be determined by the Board of Directors of the Company, after
the date of the commencement or announcement by a person of an intention to make
a tender offer or exchange offer for an amount of Common Stock which, together
with the shares of such stock already owned by such person, constitutes 20% or
more of the outstanding shares of such Common Stock (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Company's Common Stock certificates outstanding as of
November 18, 1999, by such Common Stock certificate with a copy of this Summary
of Rights attached thereto. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the
Company's Common Stock. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after November
18, 1999, upon transfer or new issuance of the Company's 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 of the Company's Common Stock certificates
outstanding as of November 18, 1999, even without a copy of this Summary of
Rights attached thereto, will also constitute 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 Company's 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 November 18, 2009 unless earlier redeemed by the
Company as described below.
The Purchase Price payable, and the number of shares of
Preferred Stock or other securities or property issuable upon exercise of the
Rights, are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the fixing of a record date
for the issuance to holders of Preferred Stock of certain rights, options or
warrants to subscribe for shares of Preferred Stock or convertible securities at
less than the current market price of shares of Preferred Stock or (iii) upon
the fixing of a record date for the making of a distribution to holders of
shares of Preferred Stock of evidences of indebtedness or assets (excluding
regular periodic cash dividends not exceeding 125% of the last regular periodic
cash dividend or dividends payable in shares of Preferred Stock) or of
subscription rights or warrants (other than those referred to above). The number
of Rights and number of shares of Preferred Stock issuable upon the exercise of
each Right are also subject to adjustment in the event of a stock split,
combination or stock dividend on the Common Stock prior to the Distribution
Date.
In the event that after the Stock Acquisition Date the Company
is acquired in a merger or other business combination transaction or 50% or more
of its assets, cash flow or earning power are sold or otherwise transferred,
proper provision shall be made so that each holder of a Right shall thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction would have a market
value (as defined in the Rights Agreement) of two times the exercise price of
the Right. In the event that the Company were the surviving corporation of a
merger and its Common Stock were changed or exchanged, proper provision shall be
made so that each holder of a Right will thereafter have the right to receive
upon exercise that number of shares of common stock of the other party to the
transaction having a market value of two times the exercise price of the Right.
In the event that a person or group becomes an Acquiring
Person (otherwise than pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock at a price and on terms which are determined
to be fair and in the best interests of the Company and its stockholders by a
majority of the members of the Board of Directors of the Company who are not
Acquiring Persons or representatives or nominees of or affiliated or associated
with an Acquiring Person), proper provision shall be made so that each holder of
a Right, other than Rights that were beneficially owned by the Acquiring Person,
which will thereafter be void, will thereafter have the right to receive upon
exercise that number of shares of Common Stock having a market value (as defined
in the Rights Agreement) of two times the exercise price of the Right. A person
or group will not be deemed to be an Acquiring Person if the Board of Directors
of the Company determines that such person or group became an Acquiring Person
inadvertently and such person or group promptly divests itself of a sufficient
number of shares of Common Stock so that such person or group is no longer an
Acquiring Person.
2
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. No fractional shares of Common Stock will be issued
and, in lieu thereof, an adjustment in cash will be made based on the market
value of shares of Common Stock on the last trading date prior to the date of
exercise.
At any time prior to the earlier of (i) ten business days
after the Stock Acquisition Date and (ii) November 18, 1999, the Company, by
resolution of its Board of Directors, may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the "Redemption Price"). If such resolution
is adopted following the Stock Acquisition Date, it will be effective only with
the concurrence of a majority of the members (the "Continuing Directors") of the
Board of Directors of the Company who are not Acquiring Persons or
representatives or nominees of or affiliated or associated with an Acquiring
Person and who either were members of such Board of Directors prior to the Stock
Acquisition Date or subsequently became a member and whose election thereto was
approved by a majority of the directors who were not Acquiring Persons or
representatives or nominees of or affiliated or associated with an Acquiring
Person. The Company may, at any time prior to the Stock Acquisition Date, extend
the time in which the Rights may be redeemed. Immediately upon the action of the
Board of Directors of the Company electing to redeem the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
At any time after a person becomes an Acquiring Person and
prior to the acquisition by such person of 50% or more of the outstanding Common
Stock of the Company, the Board of Directors of the Company, with the
concurrence of a majority of the Continuing Directors, may exchange the Rights
(other than Rights beneficially owned by such person which have become void), in
whole or in part, for Common Stock of the Company at an exchange ratio of one
share of Common Stock per Right (subject to adjustment).
Each share of Preferred Stock purchasable upon exercise of the
Rights will have a minimum preferential dividend of $50.00 per year, but will be
entitled to receive, in the aggregate, a dividend of 5,000 times the dividend
declared on a share of Common Stock. In the event of liquidation, the holders of
the shares of Preferred Stock will be entitled to receive a minimum liquidation
payment of $5,000.00 per share, but will be entitled to receive an aggregate
liquidation payment equal to 5,000 times the payment to be made per share of
Common Stock. Each share of Preferred Stock will have 5,000 votes, voting
together with the shares of Common Stock. In addition, if dividends on the
Preferred Stock are in arrears for four consecutive quarterly payment periods,
the holders of the Preferred Stock will have the right, voting as a class, to
elect two members of the Board of Directors. In the event of any merger,
consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Preferred Stock will be entitle to receive 5,000 times
the amount and type of consideration received per share of Common Stock. The
rights of the shares of Preferred Stock as to dividends and liquidation and in
the event of mergers and consolidations, are protected by antidilution
provisions.
3
Until a Right is exercised, the holder thereof as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Rights and the Rights Agreement can be amended by the
Board of Directors of the Company in any respect (including, without limitation,
any extension of the period in which the Rights may be redeemed) at any time
prior to the Stock Acquisition Date. From and after such a time, without the
approval of the stockholders of the Company or the holders of the Rights, the
Board of Directors may only supplement or amend the Rights Agreement in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
in the Rights Agreement which may be defective or inconsistent with any other
provision in the Rights Agreement, (iii) to shorten or lengthen any time period
under the Rights Agreement, or (iv) to make any changes or supplements which the
Company and the Rights Agent may deem necessary or desirable which shall not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or an affiliate or associate thereof). The Company may, at
any time prior to the Stock Acquisition Date, amend the Rights Agreement to
lower the threshold of Common Stock beneficial ownership at which a person will
become an Acquiring Person to not less than the greater of (i) a percentage
larger than the largest percentage of Common Stock then known by the Company to
be beneficially owned by a person and (ii) 10%.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated November 18, 1999. A copy of the Rights Agreement is available
free charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.
4