Rights Agreement - Marvel Enterprises Inc. and American Stock Transfer & Trust Co.
MARVEL ENTERPRISES, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
Rights Agreement
Dated as of August 22, 2000
RIGHTS AGREEMENT
Rights Agreement, dated as of August 22, 2000, between MARVEL
ENTERPRISES, INC., a Delaware corporation (the "Company") and American Stock
Transfer & Trust Company as Rights Agent (the "Rights Agent").
RECITALS
WHEREAS, on August 22, 2000, the Board of Directors of the
Company adopted this Agreement, and has authorized a dividend of one preferred
share purchase right (a "Right") for each Common Share (as defined in Section
1.6) and 1.039 Rights for each 8% Preferred Share (as defined in Section 1.7) of
the Company outstanding at the close of business on September 15, 2000 (the
"Record Date") and has authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each Common Share and
1.039 Rights (subject to adjustment as provided herein) with respect to each 8%
Preferred Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date and the Expiration Date (as such terms are
defined in Sections 3.1 and 7.1), each Right initially representing the right to
purchase one one-hundredth (subject to adjustment) of a share of Class A Junior
Participating Preferred Stock (the "Class A Preferred Shares") of the Company
having the rights, powers and preferences set forth in the form of Certificate
of Designation, Preferences and Rights attached hereto as Exhibit A, upon the
terms and subject to the conditions hereinafter set forth; provided, however,
that Rights may be issued with respect to Common Shares and 8% Preferred Shares
that shall become outstanding after the Distribution Date and prior to the
Expiration Date in accordance with Section 22.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
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Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
1.1. "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
of the Company then outstanding but shall not include an Exempt Person (as such
term is hereinafter defined). Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" due to such Person becoming the Beneficial Owner of
15% or more of the Common Shares as a result of the issuance by the Company of
Common Shares to such Person in consideration for the sale, contribution,
conveyance, transfer, assignment or delivery of property, services or other
assets by such Person to the Company. Notwithstanding the first sentence of this
Section 1.1,
(i) no Person shall become an "Acquiring Person" as the result
of an acquisition of Common Shares or 8% Preferred Shares by the
Company which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such Person to
15% or more of the Common Shares of the Company then outstanding,
(ii) no Person shall become an "Acquiring Person" as the
result of the acquisition of Common Shares or 8% Preferred Shares from
an individual who, on the date of this Agreement, is the Beneficial
Owner of 15% or more of the Common Shares if such Common Shares or 8%
Preferred Shares are received upon that individual's death pursuant to
that individual's will or pursuant to a charitable trust created by
that individual for estate planning purposes, and
(iii) no Person shall become an "Acquiring Person" as the
result of the beneficial ownership of (A) Common Shares beneficially
owned by such Person on the date hereof unless such Person becomes,
after the date hereof, the Beneficial Owner of an additional 1% or more
of the Common Shares outstanding or (B) Common Shares beneficially
owned as the result of stock dividends, subdivisions or similar
transactions with respect to Common Shares or 8% Preferred Shares;
provided, however, that if a Person shall become the Beneficial Owner of 15% or
more of the Common Shares of the Company then outstanding solely by reason of
share purchases by the Company or by reason of shares received upon an
individual's death as aforesaid and shall thereafter become the Beneficial Owner
of one or more additional Common Shares of the Company (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding Common
Shares in Common Shares or on the outstanding 8% Preferred Shares in 8%
Preferred Shares or pursuant to a split or subdivision of the outstanding Common
Shares or 8% Preferred Shares), then such Person shall be deemed to be an
"Acquiring Person" unless upon
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becoming the Beneficial Owner of such additional Common Shares such Person does
not beneficially own 15% or more of the Common Shares then outstanding.
1.1.1. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this Section 1.1, has become such inadvertently (including,
without limitation, because (A) such Person was unaware that it beneficially
owned a percentage of Common Shares that would otherwise cause such Person to be
an "Acquiring Person", (B) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the consequences of
such Beneficial Ownership under this Agreement or (C) such Person became an
"Acquiring Person" as the result of the formation of a group (as that term is
used in the definition of "Person" in this Agreement) and such Person had no
actual knowledge of the consequences of the formation of such a group under this
Agreement), and without any intention of changing or influencing control of the
Company, and such Person, if requested by the Board of Directors of the Company,
divests itself as promptly as reasonably practicable of Beneficial Ownership of
a sufficient number of Common Shares so that such Person would no longer be an
Acquiring Person, as defined pursuant to the foregoing provisions of this
Section 1.1, then such Person shall not be deemed to be or have become an
"Acquiring Person" at any time for any purposes of this Agreement.
1.1.2. For all purposes of this Agreement, any calculation of
the number of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Shares 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 Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement, provided that, for purposes
of determining the particular percentage of outstanding Common Shares of which
any Person is the Beneficial Owner for any purpose of this Agreement, all Common
Shares issuable upon conversion of 8% Preferred Shares which are then
outstanding (whether or not beneficially owned by such Person) shall be deemed
to be outstanding.
1.2. "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement.
1.3. A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(1) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement, subject to Section
1.1.2);
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(2) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately, or only after the passage of
time, compliance with regulatory requirements, fulfillment of a condition or
otherwise) pursuant to any agreement, arrangement or understanding, whether or
not in writing (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, (w) 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, (x) securities which such Person has a right
to acquire upon the exercise of Rights at any time prior to the time that any
Person becomes an Acquiring Person, (y) securities issuable upon the exercise of
Rights from and after the time that any Person becomes an Acquiring Person if
such Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3.1 or Section
22 ("Original Rights") or pursuant to Section 11.9 or Section 11.15 with respect
to an adjustment to Original Rights or (z) securities which such Person or any
of such Person's Affiliates or Associates may acquire, does or do acquire or may
be deemed to have the right to acquire, pursuant to any merger or other
acquisition agreement between the Company and such Person (or one or more of his
Affiliates or Associates) if such agreement has been approved by the Board of
Directors of the Company prior to such Person's becoming an Acquiring Person; or
(B) the right to vote pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security under this
clause (B) if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(3) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) and with
respect to which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities), whether or not in writing, for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy or consent
as described in the proviso to Section 1.3(2)(B)) or disposing of any securities
of the Company; provided, however, that no Person who is an officer, director,
trustee or employee of an Exempt Person shall be deemed, solely by reason of
such Person's status or authority as such, to be the "Beneficial Owner" of, to
have "Beneficial Ownership" of or to "beneficially own" any securities that are
"beneficially owned" (as defined in this Section 1.3), including, without
limitation, in a fiduciary
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capacity, by an Exempt Person or by any other such officer, director, trustee or
employee of an Exempt Person.
1.4. "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.
1.5. "close of business" on any given date shall mean 5:00
p.m., Eastern time, ----------------- on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 p.m., Eastern time, on the
next succeeding Business Day.
1.6. "Common Shares" shall mean the shares of common stock,
$.01 par value per share, of the Company; provided, however, that "Common
Shares" when used with reference to any Person other than the Company 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
other Person or, if such Person is a Subsidiary (as such term is hereinafter
defined) of another Person, the Person or Persons which ultimately control such
first-mentioned Person, and which has issued and outstanding such capital stock,
equity securities or equity interest.
1.7. "8% Preferred Shares" shall mean the shares of 8%
Cumulative Convertible Exchangeable Preferred Stock, $.01 par value per share,
of the Company.
1.8. "Exempt Person" shall mean (A) the Company, (B) any
Subsidiary of the Company, (C) any employee benefit plan of the Company or of
any Subsidiary of the Company or any entity or trustee holding shares of stock
of the Company for or pursuant to the terms of any such plan, or for the purpose
of funding other employee benefits for employees of the Company or any
Subsidiary of the Company, or (D) any group (as that term is used in the
definition of "Person" in this Agreement) arising solely as a result of the
Stockholders Agreement, dated as of October 1, 1998, among the Company and
certain holders of its capital stock.
1.9. "Person" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation, unincorporated
association, trust, group (as such term is used in Rue 13d-5 of the General
Rules and Regulations under the Exchange Act) or other entity, and shall include
any successor (by merger or otherwise) of such entity.
1.10. "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, the filing of a report pursuant to Section 13(d) of the
Exchange Act or pursuant to a comparable successor statute) by the Company or an
Acquiring Person that an Acquiring Person has become such or that discloses
information which reveals the existence of an Acquiring Person or any earlier
date
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on which a majority of the Board of Directors shall become aware of the
existence of an Acquiring Person.
1.11. "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interests is owned, of record or beneficially, directly or
indirectly, by such Person.
1.12. A "Trigger Event" shall be deemed to have occurred upon
any Person becoming an Acquiring Person.
The following terms shall have the meanings defined for such
terms in the Sections set forth below:
Term Section
---- -------
Adjustment Shares 11.1.2
Beneficial Owner 1.3
Class A Preferred Shares Recitals
Common Stock Equivalent 11.1.3
Company Recitals
Current Per Share Market Price 11.4.1
Current Value 11.1.3
Distribution Date 3.1
Equivalent Preferred Stock 11.2
Exchange Act 1.1.2
Exchange Consideration 27.1
Expiration Date 7.1
Final Expiration Date 7.1
Original Rights 1.3
Principal Party 13.2
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4.1
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4.1
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Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3, shall prior to the Distribution Date
also be the holders of the Common Shares and 8% Preferred Shares) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable upon ten (10) days' prior written notice to
the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in
no event be liable for, the acts or omissions of any such co-Rights Agent. In
the event the Company appoints one or more co-Rights Agents, the respective
duties of the Rights Agent and any co-Rights Agent shall be as the Company shall
determine. Contemporaneously with such appointment, if any, the Company shall
notify the Rights Agent thereof.
Section 3. Issuance of Right Certificates.
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3.1. Rights Represented by Share Certificates. Until the
earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth
Business Day after the date of the commencement of, or first public announcement
of the intent of any Person (other than an Exempt Person) to commence, a tender
or exchange offer the consummation of which would result in any Person (other
than an Exempt Person) becoming the Beneficial Owner of Common Shares
aggregating 15% or more of the then outstanding Common Shares of the Company
(the earlier of (i) and (ii) being herein referred to as the "Distribution
Date"), (x) the Rights (unless earlier expired, redeemed or terminated) will be
represented (subject to the provisions of Section 3.2) by the certificates for
Common Shares and 8% Preferred Shares registered in the names of the holders
thereof (which certificates for Common Shares and 8% Preferred Shares shall also
be deemed to be Right Certificates) and not by separate certificates, and (y)
the Rights (and the right to receive certificates therefor) will be transferable
only in connection with the transfer of the underlying Common Shares and 8%
Preferred Shares. The preceding sentence notwithstanding, prior to the
occurrence of a Distribution Date as a result of an event described in clause
(ii) (or such later Distribution Date as the Board of Directors of the Company
may select pursuant to this sentence), the Board of Directors may postpone, one
or more times, the Distribution Date which would occur as a result of an event
described in clause (ii) beyond the date set forth in such clause (ii). Nothing
herein shall permit such a postponement of a Distribution Date after a Person
becomes an Acquiring Person, except as a result of the operation of Section
1.1.1. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign and the Company (or, if
requested, the Rights Agent) will send, by first-class, postage-prepaid mail, to
each record holder of Common Shares and 8% Preferred Shares or both as of the
close of business on the Distribution Date (other than any Acquiring Person or
any Associate or Affiliate of an Acquiring Person), at the address of such
holder shown on the records of the Company, one or more certificates for Rights,
in substantially the form of Exhibit B hereto (a "Right Certificate"),
representing one Right (subject to adjustment as provided herein) for each
Common Share or 1.039 Rights (subject to adjustment as provided
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herein) for each 8% Preferred Share so held. As of the Distribution Date, the
Rights will be represented solely by such Right Certificates.
3.2. Summary of Rights. On the Record Date or as soon as
practicable thereafter, the Company will send or cause to be sent a copy of a
Summary of Rights to Purchase Class A Preferred Shares, in substantially the
form attached hereto as Exhibit C (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares or 8% Preferred
Shares or both as of the close of business on the Record Date at the address of
such holder shown on the records of the Company. With respect to certificates
for Common Shares or 8% Preferred Shares outstanding as of the close of business
on the Record Date, until the Distribution Date (or the earlier Expiration
Date), the Rights will be represented by such certificates for Common Shares or
8% Preferred Shares registered in the names of the holders thereof and the
registered holders of the Common Shares or 8% Preferred Shares or both shall
also be registered holders of the associated Rights. Until the Distribution Date
(or the earlier Expiration Date), the surrender for transfer of any certificate
for Common Shares or 8% Preferred Shares outstanding at the close of business on
the Record Date, with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Common Shares or 8%
Preferred Shares represented thereby.
3.3. New Certificates After Record Date. Certificates for
Common Shares or 8% Preferred Shares which become outstanding (whether upon
issuance out of authorized but unissued Common Shares or 8% Preferred Shares or
transfer or exchange of outstanding Common Shares or 8% Preferred Shares) after
the Record Date, but prior to the earliest of the Distribution Date or the
Expiration Date, shall have impressed, printed, stamped, written or otherwise
affixed onto them the following legend:
This certificate also represents and entitles the holder
hereof to certain rights ("Rights") as set forth in an
agreement between Marvel Enterprises, Inc. (the "Company") and
American Stock Transfer & Trust Company as Rights Agent, dated
as of August 22, 2000, as the same may be amended from time to
time (the "Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Agreement, such
Rights will be represented by separate certificates and will
no longer be represented by this certificate. The Company will
mail to the holder of this certificate a copy of the Agreement
without charge after receipt of a written request therefor. As
described in the Agreement, Rights which are owned by,
transferred to or have been owned by Acquiring Persons or
Associates or Affiliates thereof (as defined in the Agreement)
shall become null and void and will no longer be transferable.
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With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier Expiration Date), the Rights associated with
the Common Shares or 8% Preferred Shares represented by such certificates shall
be represented by such certificates alone, and the surrender for transfer of any
such certificates, except as otherwise provided herein, shall also constitute
the transfer of the Rights associated with the Common Shares or 8% Preferred
Shares represented thereby. In the event that the Company purchases or acquires
any Common Shares or 8% Preferred Shares after the Record Date but prior to the
Distribution Date (including as a result of the conversion or exchange of such
8% Preferred Shares in accordance with the terms of the 8% Preferred Shares),
any Rights associated with such Common Shares or 8% Preferred Shares shall be
deemed cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares or 8% Preferred Shares
which are no longer outstanding.
Notwithstanding this Section 3.3, the omission of a legend
shall not affect the enforceability of any part of this Agreement or the rights
of any holder of the Rights.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase shares, certification and assignment to
be printed on the reverse thereof) shall be substantially in the form of Exhibit
B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or trading system on which the Rights may from time to time be listed
or quoted, or to conform to usage. Subject to the terms and conditions hereof,
the Right Certificates, whenever issued, shall be dated as of the Record Date,
and shall show the date of countersignature by the Rights Agent, and on their
face shall entitle the holders thereof to purchase such number of one-hundredths
of a Class A Preferred Share as shall be set forth therein at the price per
one-hundredth of a Class A Preferred Share set forth therein (the "Purchase
Price"), but the number of such one-hundredths of a Class A Preferred Share and
the Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board of Directors, Chief Executive Officer, President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary,
or any Assistant Secretary, of the Company, either manually or by facsimile
signature. The Right Certificates shall be countersigned, either manually or by
facsimile signature, by an authorized signatory of the Rights Agent, but it
shall not be necessary for the same signatory to countersign all of the Right
Certificates hereunder. No Right Certificate shall 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
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by the Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent, and issued
and delivered by the Company with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, 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 represented on its face by each of the Right Certificates, the
certificate number of each of the Right Certificates and the date of each of the
Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 7.5, Section 11.1.2 and Section 14, at any
time after the close of business on the Distribution Date, and at or prior to
the close of business on the Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights that have become
void pursuant to Section 11.1.2 or that have been exchanged pursuant to Section
27) may be transferred, split up or combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase
the same number of one-hundredths of a Class A Preferred Share as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up or combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender, together with any required form of
assignment and certificate duly completed, the Right Certificate or Right
Certificates to be transferred, split up or combined or exchanged at the office
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered 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 from the holders of Right Certificates of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up or combination or exchange of such Right Certificates.
Subject to the provisions of Section 11.1.2, at any time after
the Distribution Date and prior to the Expiration Date, upon receipt by the
Company and the Rights Agent of evidence
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reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature 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
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of Rights.
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7.1. Exercise of Rights. Subject to Section 11.1.2 and except
as otherwise provided herein, the registered holder of any Right Certificate may
exercise the Rights represented thereby 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 certification on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price for the
total number of one-hundredths of a Class A Preferred Share (or other
securities, cash or other assets) as to which the Rights are exercised, at or
prior to the time (the "Expiration Date") that is the earliest of (i) the close
of business on September 15, 2010 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 (the "Redemption
Date"), (iii) the closing of any merger or other acquisition transaction
involving the Company pursuant to an agreement of the type described in Sections
1.3(2)(A)(z) and 13.3, at which time the Rights are terminated, or (iv) the time
at which the Rights are exchanged as provided in Section 27.
7.2. Purchase. The Purchase Price for each one-hundredth of a
Class A Preferred Share pursuant to the exercise of a Right shall be initially
$35, shall be subject to adjustment from time to time as provided in Sections
11, 13 and 26 and shall be payable in lawful money of the United States of
America in accordance with Section 7.3.
7.3. Payment Procedures. Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase and
certification duly executed, accompanied by payment of the aggregate Purchase
Price for the total number of one-hundredths of a Class A Preferred Share to be
purchased and an amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with Section 9, in cash or
by certified or cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i)(A) requisition from any
transfer agent of the Class A Preferred Shares (or make available, if the Rights
Agent is the transfer agent) certificates for the number of Class A Preferred
Shares 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 Class A Preferred Shares issuable
upon exercise of the Rights hereunder with a depositary agent, requisition from
the depositary agent depositary receipts representing interests in such number
of one-hundredths of a Class A Preferred Share as
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are to be purchased (in which case certificates for the Class A Preferred Shares
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 all such requests, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with Section 14 or otherwise in accordance with Section 11.1.3, (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Company is obligated to issue other securities of the Company,
pay cash and/or distribute other property pursuant to Section 11.1.3, 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.
7.4. Partial Exercise. In case the registered holder of any
Right Certificate shall exercise less than all the Rights represented thereby, a
new Right Certificate representing 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.
7.5. Full Information Concerning Ownership. Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder of Rights upon the occurrence of any purported exercise as set forth in
this Section 7 unless the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise shall have been duly completed and signed by the registered holder
thereof and the Company shall have been provided with such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split-up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
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Section 9. Reservation and Availability of Stock. The Company
covenants and agrees that from and after the Distribution Date it will cause to
be reserved and kept available out of its authorized and unissued Class A
Preferred Shares (and, following the occurrence of a Trigger Event, out of its
authorized and unissued Common Shares or other securities) the number of Class A
Preferred Shares (and, following the occurrence of a Trigger Event, Common
Shares and/or other securities) that will be sufficient to permit the exercise
in full of all outstanding Rights.
So long as the Class A Preferred Shares (and, following the
occurrence of a Trigger Event, Common Shares and/or other securities) issuable
upon the exercise of Rights may be listed on any national securities exchange or
traded in the over-the-counter market and quoted on Nasdaq, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed or admitted to
trading on such exchange or quoted on Nasdaq upon official notice of issuance
upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Class A Preferred Shares (and,
following the occurrence of a Trigger Event, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable shares.
From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
Class A Preferred Shares upon the exercise of Rights, to register and qualify
such Class A Preferred Shares under the Securities Act and any applicable state
securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
under the Securities Act (if required) shall have been declared effective.
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 Class A Preferred Shares (or Common Shares and/or other securities, as
the case may be) upon the exercise of Rights. The Company
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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 for the Class A Preferred
Shares (or Common Shares and/or other securities, as the case may be) in a name
other than that of, the registered holder of the Right Certificate representing
Rights surrendered for exercise or to issue or deliver any certificates for
Preferred Shares (or Common Shares and/or other securities, as the case may be)
in a name other than that of the registered holder 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. Class A Preferred Shares Record Date. Each person
in whose name any certificate for Class A Preferred Shares (or Common Shares
and/or other securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Class A Preferred Shares (or Common Shares 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 representing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Class A Preferred Shares (or Common Shares
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 or otherwise) on, and such certificate shall be dated, the
next succeeding Business Day on which the Class A Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights represented thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Class A Preferred Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Class A Preferred Shares or
other securities or property purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
11.1. Post-Execution Events.
---------------------
11.1.1. Corporate Dividends, Reclassifications, Etc.
In the event the Company shall at any time after the date of this Agreement (A)
declare and pay a dividend on the Class A Preferred Shares payable in Class A
Preferred Shares, (B) subdivide the outstanding Class A Preferred Shares, (C)
combine the outstanding Class A Preferred Shares into a smaller number of Class
A Preferred Shares or (D) issue any shares of its stock in a reclassification of
the Class A Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise
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provided in this Section 11.1, 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 stock
issuable on such date, shall be proportionately adjusted so that the holder of
any Right exercised after such time shall be entitled to receive the aggregate
number and kind of shares of stock which, if such Right had been exercised
immediately prior to such date and at a time when the Class A Preferred Shares
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; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of stock of the Company issuable upon exercise
of one Right. If an event occurs which would require an adjustment under both
Section 11.1.1 and Section 11.1.2, the adjustment provided for in this Section
11.1.1 shall be in addition to, and shall be made prior to, the adjustment
required pursuant to, Section 11.1.2.
11.1.2. Acquiring Person Events; Triggering Events.
Subject to Sections 23.1 and 27, in the event that a Trigger Event occurs, then,
from and after the first occurrence of such event, each holder of a Right,
except as provided below, shall thereafter have a right to receive, upon
exercise thereof at a price per Right equal to the then-current Purchase Price
multiplied by the number of one-hundredths of a Class A Preferred Share for
which a Right is then exercisable (without giving effect to this Section
11.1.2), in accordance with the terms of this Agreement and in lieu of Class A
Preferred Shares, such number of Common Shares per Right as shall equal the
result obtained by (x) multiplying the then-current Purchase Price by the number
of one-hundredths of a Class A Preferred Share for which a Right is then
exercisable (without giving effect to this Section 11.1.2) and (y) dividing that
product by 50% of the Current Per Share Market Price of the Common Shares
(determined pursuant to Section 11.4) on the first of the date of the occurrence
of, or the date of the first public announcement of, a Trigger Event (the
"Adjustment Shares"); provided that the Purchase Price and the number of
Adjustment Shares shall thereafter be subject to further adjustment as
appropriate in accordance with Section 11.6. Notwithstanding the foregoing, upon
the occurrence of a Trigger Event, any Rights that are or have been acquired or
beneficially owned by (1) any Acquiring Person or any Associate or Affiliate
thereof, (2) a transferee of any Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(3) a transferee of any 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 agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company determines or has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of this Section
11.1.2, and subsequent transferees, shall become void without any further
action, and any holder (whether or not such holder is an Acquiring Person or an
Associate or Affiliate of an Acquiring Person) of such Rights shall thereafter
have no right to exercise such Rights under any
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provision of this Agreement or otherwise. The Company shall not enter into any
transaction of the type described in this Section 11.1.2 if at the time of such
transaction there are any rights, warrants, instruments or securities
outstanding or any arrangements which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the benefits intended to
be afforded by the Rights. From and after the Trigger Event, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 that represents
Rights that are or have become void pursuant to the provisions of this
paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of
this paragraph shall be cancelled.
The Company shall use all reasonable efforts to ensure that
the provisions of this Section 11.1.2 are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to any Acquiring Person or its
Affiliates, Associates or transferees hereunder.
From and after the occurrence of an event specified in Section
13.1, any Rights that theretofore have not been exercised pursuant to this
Section 11.1.2 shall thereafter be exercisable only in accordance with Section
13 and not pursuant to this Section 11.1.2.
11.1.3. Insufficient Shares. The Company may at its
option substitute for a Common Share issuable upon the exercise of Rights in
accordance with the foregoing Section 11.1.2 a number of Class A Preferred
Shares or fraction thereof such that the Current Per Share Market Price of one
Class A Preferred Share multiplied by such number or fraction is equal to the
Current Per Share Market Price of one Common Share. In the event that upon the
occurrence of one or more of the events listed in Section 11.1.2 above there
shall not be sufficient Common Shares authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing Section 11.1.2,
the Company shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the Rights, provided,
however, that if the Company determines that it is unable to cause the
authorization of a sufficient number of additional Common Shares, then, in the
event the Rights become exercisable, the Company, with respect to each Right and
to the extent necessary and permitted by applicable law and any agreements or
instruments in effect on the date hereof to which it is a party, shall: (A)
determine the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value"), over (2) the Purchase Price (such
excess, the "Spread") and (B) with respect to each Right (other than Rights
which have become void pursuant to Section 11.1.2), 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) Class A Preferred
Shares or other equity securities of the Company (including, without limitation,
shares, or fractions of shares, of preferred stock which, by virtue of having
dividend, voting and liquidation rights substantially comparable to those of the
Common Shares, the Board of Directors of the Company has deemed in good faith to
have substantially the same value as Common Shares) (each such share of
preferred stock or fractions of shares of preferred stock
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<PAGE>
constituting a "Common Stock Equivalent")), (4) debt securities of the Company,
(5) other assets or (6) any combination of the foregoing having an aggregate
value equal to the Current Value, where such aggregate value has been determined
by the Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected in good faith by the Board of
Directors of the Company; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the first occurrence of one of the events listed in
Section 11.1.2 above, then the Company shall be obligated to deliver, to the
extent necessary and permitted by applicable law and any agreements or
instruments in effect on the date hereof to which it is a party, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, Common Shares (to the extent available) and then, if necessary, such
number or fractions of Class A Preferred Shares (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Board of Directors of the Company shall determine in good
faith that it is unlikely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended and re-extended to the extent necessary,
but not more than ninety (90) days following the first occurrence of one of the
events listed in Section 11.1.2 above, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period as may be extended, the "Substitution Period"). To the extent that the
Company determines that some action need be taken pursuant to the second and/or
third sentences of this Section 11.1.3, the Company (x) shall provide that such
action shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section 11.1.3, the
value of a Common Share shall be the Current Per Share Market Price (as
determined pursuant to Section 11.4) on the date of the occurrence of a Trigger
Event and the value of any "Common Stock Equivalent" shall be deemed to have the
same value as the Common Shares on such date. The Board of Directors of the
Company may, but shall not be required to, establish procedures to allocate the
right to receive Common Shares upon the exercise of the Rights among holders of
Rights pursuant to this Section 11.1.3.
11.2. Dilutive Rights Offering. In case the Company shall fix
a record date for the issuance of rights, options or warrants to all holders of
Class A Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Class A
Preferred Shares (or securities having the same rights, privileges and
preferences as the Class A Preferred Shares ("Equivalent Preferred Stock")) or
securities convertible into Class A Preferred Shares or Equivalent Preferred
Stock at a price per Class A Preferred Share or per share of Equivalent
Preferred Stock (or having a conversion or exercise price per share, if a
security convertible into or exercisable for Class A Preferred Shares or
NY/296241.3
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<PAGE>
Equivalent Preferred Stock) less than the Current Per Share Market Price of the
Class A Preferred Shares (as determined pursuant to Section 11.4) 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 Class A
Preferred Shares and shares of Equivalent Preferred Stock outstanding on such
record date plus the number of Class A Preferred Shares and shares of Equivalent
Preferred Stock which the aggregate offering price of the total number of Class
A Preferred Shares and/or shares of Equivalent Preferred Stock to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such Current Per Share Market Price and the
denominator of which shall be the number of Class A Preferred Shares and shares
of Equivalent Preferred Stock outstanding on such record date plus the number of
additional Class A Preferred Shares and/or shares of Equivalent Preferred Stock
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Class A Preferred Shares and shares of Equivalent
Preferred Stock owned by or held for the account of the Company or any
Subsidiary of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
11.3. Distributions. In case the Company shall fix a record
date for the making of a distribution to all holders of the Class A Preferred
Shares (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash, securities 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, in case regular periodic
cash dividends have not theretofore been paid, at a rate not in excess of 50% of
the average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or a dividend payable in
Class A Preferred Shares (which dividend, for purposes of this Agreement, shall
be subject to the provisions of Section 11.1.1(A))) or convertible securities,
or subscription rights or warrants (excluding those referred to in Section
11.2), 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 Per Share
Market Price of the Class A Preferred Shares (as determined pursuant to Section
11.4) on such record date, less the fair market value (as determined in good
faith by the Board of
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Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets, securities or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Class A Preferred Share and the denominator of which
shall be such Current Per Share Market Price of the Class A Preferred Shares (as
determined pursuant to Section 11.4); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of stock of the Company to be issued upon
exercise of one Right. Such adjustments shall be made successively whenever such
a record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
11.4. Current Per Share Market Value.
------------------------------
11.4.1. General. For the purpose of any computation
hereunder, the "Current Per Share Market Price" of any security (a "Security"
for the purpose of this Section 11.4.1) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the thirty
(30) consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the Current Per
Share Market Price of the Security is determined during any period following the
announcement by the issuer of such Security of (i) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
"Current Per Share Market Price" shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported 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 Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use, or, if on any such date
the Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Security selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the Security, the fair
value of the Security on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business or, if the
Security is not listed
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or admitted to trading on any national securities exchange, a Business Day. If
the Security is not publicly held or not so listed or traded, or if on any such
date the Security is not so quoted and no such market maker is making a market
in the Security, "Current Per Share Market Price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company or,
if at the time of such determination there is an Acquiring Person, by a
nationally recognized investment banking firm selected by the Board of
Directors, which shall have the duty to make such determination in a reasonable
and objective manner, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
11.4.2. Class A Preferred Shares. Notwithstanding
Section 11.4.1, for the purpose of any computation hereunder, the "Current Per
Share Market Price" of the Class A Preferred Shares shall be determined in the
same manner as set forth above in Section 11.4.1 (other than the last sentence
thereof). If the Current Per Share Market Price of the Class A Preferred Shares
cannot be determined in the manner described in Section 11.4.1, the "Current Per
Share Market Price" of the Class A Preferred Shares shall be conclusively deemed
to be an amount equal to 100 (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with respect
to the Common Shares occurring after the date of this Agreement) multiplied by
the Current Per Share Market Price of the Common Shares (as determined pursuant
to Section 11.4.1). If neither the Common Shares nor the Class A Preferred
Shares are publicly held or so listed or traded, or if on any such date neither
the Common Shares nor the Class A Preferred Shares are so quoted and no such
market maker is making a market in either the Common Shares or the Class A
Preferred Shares, "Current Per Share Market Price" of the Class A Preferred
Shares shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company, or, if at the time of such determination
there is an Acquiring Person, by a nationally recognized investment banking firm
selected by the Board of Directors of the Company, which shall have the duty to
make such determination in a reasonable and objective manner, which
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For purposes of this Agreement, the
"Current Per Share Market Price" of one one-hundredth of a Class A Preferred
Share shall be equal to the "Current Per Share Market Price" of one Class A
Preferred Share divided by 100.
11.5. Insignificant Changes. No adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price. Any adjustments which by reason
of this Section 11.5 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one-hundred
thousandth of a Class A Preferred Share or the nearest one-hundredth of a Common
Share or other share or security, as the case may be.
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11.6. Shares Other Than Class A Preferred Shares. If as a
result of an adjustment made pursuant to Section 11.1, the holder of any Right
thereafter exercised shall become entitled to receive any shares of stock of the
Company other than Class A Preferred Shares, thereafter the number of such other
shares so receivable upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Class A Preferred Shares contained in
Sections 11.1, 11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Class A Preferred Shares shall
apply on like terms to any such other shares.
11.7. Rights Issued Prior to Adjustment. All Rights originally
issued by the Company subsequent to any adjustment made to the Purchase Price
hereunder shall include the right to purchase, at the adjusted Purchase Price,
the number of one-hundredths of a Class A Preferred Share purchasable from time
to time hereunder upon exercise of the Rights, all subject to further adjustment
as provided herein.
11.8. Effect of Adjustments. Unless the Company shall have
exercised its election as provided in Section 11.9, upon each adjustment of the
Purchase Price as a result of the calculations made in Sections 11.2 and 11.3,
each Right outstanding immediately prior to the making of such adjustment shall
thereafter include the right to purchase, at the adjusted Purchase Price, that
number of one-hundredths of a Class A Preferred Share (calculated to the nearest
one-hundred thousandth of a Class A Preferred Share) obtained by (i) multiplying
(x) the number of one-hundredths of a Class A Preferred Share covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
11.9. Adjustment in Number of Rights. 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-hundredths of
a Class A Preferred Share issuable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one-hundredths of a Class A Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one-hundredth) 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
ten (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 11.9, the Company may, as promptly as practicable,
cause to be distributed to holders of record of Right
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Certificates on such record date Right Certificates representing, subject to
Section 14, 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
representing 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.
11.10. Right Certificates Unchanged. Irrespective of any
adjustment or change in the Purchase Price or the number of one-hundredths of a
Class A Preferred Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of one-hundredths of a Class A Preferred
Share which were expressed in the initial Right Certificates issued hereunder.
11.11. Par Value Limitations. Before taking any action that
would cause an adjustment reducing the Purchase Price below one one-hundredth of
the then par value, if any, of the Class A Preferred Shares or other shares of
stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Class A
Preferred Shares or other such shares at such adjusted Purchase Price.
11.12. Deferred Issuance. In any case in which this Section 11
shall require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised after
such record date of that number of Class A Preferred Shares and shares of other
stock or securities of the Company, if any, issuable upon such exercise over and
above the Class A Preferred Shares and shares of other stock or other
securities, assets or cash 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 representing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
11.13. Reduction in Purchase Price. Anything in this Section
11 to the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any consolidation or subdivision
of the Class A Preferred Shares, issuance wholly for cash of any of the Class A
Preferred Shares at less than the current market price, issuance wholly for cash
of Class A Preferred Shares or securities which by their terms are convertible
into or exchangeable for Class A Preferred Shares,
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dividends on Class A Preferred Shares payable in Class A Preferred Shares or
issuance of rights, options or warrants referred to above in this Section 11,
hereafter made by the Company to holders of its Class A Preferred Shares, shall
not be taxable to such stockholders.
11.14. Company Not to Diminish Benefits of Rights. The Company
covenants and agrees that after the earlier of the Shares Acquisition Date or
Distribution Date it will not, except as permitted by Section 23, Section 26 or
Section 27, 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
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
11.15. Adjustment of Rights Associated with Common Shares and
8% Preferred Shares. Notwithstanding anything contained in this Agreement to the
contrary, in the event that the Company shall at any time after the date hereof
and prior to the Distribution Date (i) declare or pay any dividend on the
outstanding Common Shares payable in Common Shares, (ii) effect a subdivision or
consolidation of the outstanding Common Shares (by reclassification or otherwise
than by the payment of dividends payable in Common Shares), or (iii) combine the
outstanding Common Shares into a greater or lesser number of Common Shares, then
in any such case, the number of Rights associated with each Common Share then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date or in accordance with Section 22 shall be proportionately adjusted so that
the number of Rights thereafter associated with each Common Share following any
such event shall equal the result obtained by multiplying the number of Rights
associated with each Common Share immediately prior to such event by a fraction,
the numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event. Notwithstanding anything contained in this Agreement
to the contrary, in the event that the Company shall at any time after the date
hereof and prior to the Distribution Date (i) declare or pay any dividend on the
outstanding 8% Preferred Shares payable in 8% Preferred Shares (other than as
required by the terms of the 8% Preferred Shares), (ii) effect a subdivision or
consolidation of the outstanding 8% Preferred Shares (by reclassification or
otherwise than by the payment of dividends payable in 8% Preferred Shares), or
(iii) combine the outstanding 8% Preferred Shares into a greater or lesser
number of 8% Preferred Shares, then in any such case, the number of Rights
associated with each 8% Preferred Share then outstanding, or issued or delivered
thereafter but prior to the Distribution Date or in accordance with Section 22
shall be proportionately adjusted so that the number of Rights thereafter
associated with each 8% Preferred Share following any such event shall equal the
result obtained by multiplying the number of Rights associated with each 8%
Preferred Share immediately prior to such event by a fraction, the numerator of
which shall be the total number of 8% Preferred Shares outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of 8% Preferred Shares outstanding immediately following the
occurrence of such event. The adjustments provided for in this Section 11.15
shall be made successively whenever a
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dividend referred to in this Section 11.15 is declared or paid or a subdivision,
combination or consolidation referred to in this Section 11.15 is effected.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or 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 Shares,
8% Preferred Shares or the Class A Preferred Shares a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment therein contained and shall not be
deemed to have knowledge of any such adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer
-----------------------------------------
of Assets or Earning Power.
---------------------------
13.1. Certain Transactions. In the event that, from and after
the first occurrence of a Trigger Event, directly or indirectly, (A) the Company
shall consolidate with, or merge with and into, any other Person and the Company
shall not be the continuing or surviving corporation, (B) any Person shall
consolidate with the Company, or merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of the Company or any other
Person or cash or any other property, or (C) the Company shall sell, exchange,
mortgage or otherwise transfer (or one or more of its Subsidiaries shall sell,
exchange, mortgage or otherwise transfer), in one or more transactions, assets
or earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company or one or more wholly-owned Subsidiaries of the Company
in one or more transactions each of which complies with Section 11.14), then,
and in each such case, proper provision shall be made so that (i) each holder of
a Right (other than Rights which have become void pursuant to Section 11.1.2)
shall thereafter have the right to receive, upon the exercise thereof at a price
per Right equal to the then-current Purchase Price multiplied by the number of
one-hundredths of a Class A Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12), in
accordance with the terms of this Agreement and in lieu of Class A Preferred
Shares or Common Shares, such number of validly authorized and issued, fully
paid, non-assessable and freely tradable Common Shares of the Principal Party
(as such term is hereinafter defined) not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the result
obtained by (x) multiplying the then-current Purchase Price by the number of
one-hundredths of a Class A Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12) and (y)
dividing that product by 50% of the then Current
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Per Share Market Price of the Common Shares of such Principal Party (determined
pursuant to Section 11.4) on the date of consummation of such consolidation,
merger, sale or transfer; provided, that the price per Right so payable and the
number of Common Shares of such Principal Party so receivable upon exercise of a
Right shall thereafter be subject to further adjustment as appropriate in
accordance with Section 11.6 to reflect any events covered thereby occurring in
respect of the Common Shares of such Principal Party after the occurrence of
such consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the authorization and reservation of a
sufficient number of its Common Shares in accordance with Section 9) 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, in relation to its Common Shares thereafter deliverable upon the exercise of
the Rights; provided that, upon the subsequent occurrence of any consolidation,
merger, sale or transfer of assets or other extraordinary transaction in respect
of such Principal Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Purchase Price as provided
in this Section 13.1, such cash, shares, rights, warrants and other property
which such holder would have been entitled to receive had such holder, at the
time of such transaction, owned the Common Shares of the Principal Party
receivable upon the exercise of a Right pursuant to this Section 13.1, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property. The Company shall not consummate
any such consolidation, merger, sale or transfer unless prior thereto the
Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement confirming that the requirements of this Section
13.1 and Section 13.2 shall promptly be performed in accordance with their terms
and that such consolidation, merger, sale or transfer of assets shall not result
in a default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to this Section 13.1 and Section
13.2 and providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party, at its own expense, shall
(1) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date and
similarly comply with applicable state securities laws;
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(2) use its best efforts, if the Common Shares of the
Principal Party shall be listed or admitted to trading on the New York Stock
Exchange or on another national securities exchange, to list or admit to trading
(or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on the New York Stock Exchange or such securities
exchange, or, if the Common Shares of the Principal Party shall not be listed or
admitted to trading on the New York Stock Exchange or a national securities
exchange, to cause the Rights and the securities receivable upon exercise of the
Rights to be authorized for quotation on Nasdaq or on such other system then in
use;
(3) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(4) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Shares of the Principal Party subject
to purchase upon exercise of outstanding Rights.
In case the Principal Party has provision in any of its
authorized securities or in its charter or bylaws or other instrument governing
its corporate affairs, which provision would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights pursuant to this
Section 13), in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, Common Shares or Common Stock
Equivalents of such Principal Party at less than the then-current market price
per share thereof (determined pursuant to Section 11.4) or securities
exercisable for, or convertible into, Common Shares or Common Stock Equivalents
of such Principal Party at less than such then-current market price (other than
to holders of Rights pursuant to this Section 13), or (ii) providing for any
special payment, taxes or similar provision in connection with the issuance of
the Common Shares of such Principal Party pursuant to the provision of Section
13, then, in such event, the Company hereby agrees with each holder of Rights
that it shall not consummate any such transaction unless prior thereto the
Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
The Company covenants and agrees that it shall not, at any
time after the Trigger Event, enter into any transaction of the type described
in clauses (A) through (C) of this Section 13.1 if (i) at the time of or
immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (ii)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the stockholders of the Person who
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constitutes, or would constitute, the Principal Party for purposes of Section
13.2 shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates or Associates or (iii) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights. The provisions of this Section 13 shall similarly apply to
successive transactions of the type described in clauses (A) through (C) of this
Section 13.1.
13.2. Principal Party. "Principal Party" shall mean:
--------------- ---------------
(i) in the case of any transaction described in (A) or (B) of
the first sentence of Section 13.1: (i) the Person that is the issuer of the
securities into which the Common Shares are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the Common
Shares of which have the greatest aggregate market value of shares outstanding,
or (ii) if no securities are so issued, (x) the Person that is the other party
to the merger, if such Person survives said merger, or, if there is more than
one such Person, the Person the Common Shares of which have the greatest
aggregate market value of shares outstanding or (y) if the Person that is the
other party to the merger does not survive the merger, the Person that does
survive the merger (including the Company if it survives) or (z) the Person
resulting from the consolidation; and
(ii) in the case of any transaction described in clause (C) of
the first sentence in Section 13.1, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons is the
issuer of Common Shares having the greatest aggregate market value of shares
outstanding; provided, however, that in any such case described in clause (A) or
(B) of the first sentence of Section 13.1, if the Common Shares of such Person
are not at such time or have not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, then (1) if such Person
is a direct or indirect Subsidiary of another Person the Common Shares of which
are and have been so registered, the term "Principal Party" shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of Common Shares having the greatest aggregate market value of
shares outstanding, or (3) if such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.
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<PAGE>
13.3. Approved Acquisitions. Notwithstanding anything
contained herein to the contrary, in the event of any merger or other
acquisition transaction involving the Company pursuant to a merger or other
acquisition agreement between the Company and any Person (or one or more of such
Person's Affiliates or Associates) which agreement has been approved by the
Board of Directors of the Company prior to any Person becoming an Acquiring
Person, this Agreement and the rights of holders of Rights hereunder shall be
terminated in accordance with Section 7.1.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
14.1. Cash in Lieu of Fractional Rights. The Company shall not
be required to issue fractions of Rights or to distribute Right Certificates
which represent fractional Rights (except prior to the Distribution Date in
accordance with Section 11.15). In lieu of such fractional Rights, there shall
be paid to the registered holders of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Right. For the purposes
of this Section 14.1, the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the current market
value of the Rights on such date shall be the fair value of the Rights as
determined in good faith by the Board of Directors of the Company, or, if at the
time of such determination there is an Acquiring Person, by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company, which shall have the duty to make such determination in a reasonable
and objective manner, which determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
14.2. Cash in Lieu of Fractional Class A Preferred Shares. The
Company shall not be required to issue fractions of Class A Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Class A Preferred Share) upon exercise or exchange of the Rights or to
distribute certificates which represent fractional Class A Preferred Shares
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(other than fractions which are integral multiples of one one-hundredth of a
Class A Preferred Share). Interests in fractions of Class A Preferred Shares in
integral multiples of one one-hundredth of a Class A Preferred Share may, at the
election of the Company, be represented by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Class A Preferred Shares represented by
such depositary receipts. In lieu of fractional Class A Preferred Shares that
are not integral multiples of one one-hundredth of a Class A Preferred Share,
the Company shall pay to the registered holders of Right Certificates at the
time such Rights are exercised or exchanged as herein provided an amount in cash
equal to the same fraction of the Current Per Share Market Price of one Class A
Preferred Share (as determined in accordance with Section 11.4) for the Trading
Day immediately prior to the date of such exercise or exchange.
14.3. Cash in Lieu of Fractional Common Shares. The Company
shall not be required to issue fractions of Common Shares or to distribute
certificates which represent fractional Common Shares upon the exercise or
exchange of Rights. In lieu of such fractional Common Shares, the Company shall
pay to the registered holders of the Right Certificates with regard to which
such fractional Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole Common Share
(as determined in accordance with Section 14.1) for the Trading Day immediately
prior to the date of such exercise or exchange.
14.4. Waiver of Right to Receive Fractional Rights or Shares.
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 or
exchange 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 given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares and 8% Preferred Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares and 8%
Preferred Shares), without the consent of the Rights Agent or of the holder of
any other Right Certificate (or, prior to the Distribution Date, of the Common
Shares and 8% Preferred Shares), may, in his own behalf and for his own benefit,
enforce this Agreement, and may institute and maintain any suit, action or
proceeding against the Company to enforce this Agreement, or otherwise enforce
or act in respect of his right to exercise the Rights represented 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
shall be entitled to specific performance of the obligations under, and
injunctive relief
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against actual or threatened violations of, the obligations of any Person
(including, without limitation, the Company) subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of
the Common Shares and 8% Preferred Shares;
(b) as of and after the Distribution Date, the Right
Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the
office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper
instrument of transfer with all required
certifications completed; and
(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
Shares or 8% Preferred Shares certificate) is
registered as the absolute owner thereof and of the
Rights represented hereby (notwithstanding any
notations of ownership or writing on the Right
Certificates or the associated Common Shares or 8%
Preferred Shares 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.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Class A Preferred
Shares or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights represented by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder in accordance with a fee schedule to be mutually agreed upon and, from
time to time, on demand of the Rights
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Agent, its reasonable expenses and counsel fees and other disbursements incurred
in the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Class A Preferred Shares or the Common Shares
or for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, instruction,
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. Any corporation, limited liability company or other entity into
which the Rights Agent or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation, limited liability company or other
entity resulting from any merger or consolidation to which the Rights Agent or
any successor Rights Agent shall be a party, or any corporation, limited
liability company or other entity 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 that such corporation, limited liability company or other entity would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
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.
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<PAGE>
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
20.1. Legal Counsel. The Rights Agent may consult with legal
counsel selected by it (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.
20.2. Certificates as to Facts or Matters. Whenever in the
performance of its duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other representation in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board of Directors, the
Chief Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, the Secretary or any Assistant Treasurer or Assistant
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
20.3. Standard of Care. The Rights Agent shall be liable
hereunder only for its own gross negligence, bad faith or willful misconduct.
20.4. Reliance on Agreement and Right Certificates. 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.
20.5. No Responsibility as to Certain Matters. The Rights
Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11.1.2) or any adjustment required under the provisions of
Section 3, 11, 13, 23 or 27 or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
represented by Right Certificates after actual notice of any such change or
adjustment); nor shall it by any act
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<PAGE>
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Class A Preferred Shares or other securities
to be issued pursuant to this Agreement or any Right Certificate or as to
whether any Class A Preferred Shares will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
20.6. Further Assurance by Company. 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.
20.7. Authorized Company Officers. The Rights Agent is hereby
authorized and directed to accept instructions with respect to the performance
of its duties hereunder from any one of the Chairman of the Board of Directors,
the Chief Executive Officer, the President, the Chief Financial Officer, any
Vice President, the Treasurer, the Secretary or any Assistant Treasurer or
Assistant Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties under this Agreement, 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 or for any delay in acting
while waiting for these instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent with respect to its duties or obligations under this Agreement and the
date on and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable to the Company for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified therein (which
date shall not be less than three business days after the date any such officer
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking of any such action (or
the effective date in the case of omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
20.8. Freedom to Trade in Company Securities. 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.
20.9. Reliance on Attorneys and Agents. The Rights Agent may
execute and exercise any of the rights or powers hereby vested in it or perform
any duty hereunder either itself or by or through its attorneys or agents, and
the Rights Agent shall not be answerable or
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<PAGE>
accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
omission, default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
20.10. Incomplete Certificate. If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise or transfer, the
certificate contained in the form of assignment or the form of election to
purchase set forth on the reverse thereof, as the case may be, has not been
completed to certify the holder is not an Acquiring Person (or an Affiliate or
Associate thereof), the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company.
20.11. Rights Holders List. At any time and from time to time
after the Distribution Date, upon the request of the Company, the Rights Agent
shall promptly deliver to the Company a list, as of the most recent practicable
date (or as of such earlier date as may be specified by the Company), of the
holders of record of Rights.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares, 8% Preferred Shares and/or Class A
Preferred Shares, as applicable, by registered or certified mail. Following the
Distribution Date, the Company shall promptly notify the holders of the Right
Certificates by first-class mail of any such resignation. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares, 8% Preferred Shares and/or
Class A Preferred Shares, as applicable, by registered or certified 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
resigning, removed, or incapacitated Rights Agent shall remit to the Company, or
to any successor Rights Agent designated by the Company, all books, records,
funds, certificates or other documents or instruments of any kind then in its
possession which were acquired by such resigning, removed or incapacitated
Rights Agent in connection with its services as Rights Agent hereunder, and
shall thereafter be discharged from all duties and obligations hereunder.
Following notice of such removal, resignation or incapacity, the Company shall
appoint a successor to such Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business under the laws
of the United States or of the State of New York or
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<PAGE>
the State of Delaware (or any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the State
of New York or Delaware) in good standing, having an office in the State of New
York or the State of Delaware, which is authorized under such laws to exercise
stock transfer or corporate trust powers and is subject to supervision or
examination by Federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $10
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 Shares,
8% Preferred Shares and/or Class A Preferred Shares, as applicable, and,
following the Distribution Date, mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
representing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares or 8%
Preferred Shares following the Distribution Date and prior to the Expiration
Date, the Company shall, with respect to Common Shares or 8% Preferred Shares so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, granted or awarded, or upon exercise, conversion or
exchange of securities (other than Common Shares and 8% Preferred Shares)
hereinafter issued by the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however, that (i)
no such Right Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
----------
23.1. Right to Redeem. The Company may, at its option, at any
time prior to a Trigger Event, redeem all but not less than all of the then
outstanding Rights at a redemption
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<PAGE>
price of $.01 per Right, appropriately adjusted to reflect any stock split,
stock dividend, recapitalization or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"), and the Company may, at its option, pay the Redemption Price in Common
Shares (based on the "Current Per Share Market Price," determined pursuant to
Section 11.4, of the Common Shares at the time of redemption), cash or any other
form of consideration deemed appropriate by the Board of Directors. The
redemption of the Rights by the Company may be made effective at such time, on
such basis and subject to such conditions as the Board of Directors in its sole
discretion may establish.
23.2. Redemption Procedures. Immediately upon the action of
the Board of Directors of the Company ordering the redemption of the Rights (or
at such later time as the Board of Directors may establish for the effectiveness
of such redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. The Company shall promptly give public notice of such redemption;
provided, however, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption. The Company shall promptly
give, or cause the Rights Agent to give, notice of such redemption to the
holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares and 8% Preferred Shares. 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 shall state the
method by which the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or purchase
for value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 27, and other than in connection with the
purchase, acquisition or redemption of Common Shares and 8% Preferred Shares
prior to the Distribution Date.
Section 24. Notice of Certain Events. In case the Company
shall propose at any time after the earlier of the Shares Acquisition Date and
the Distribution Date (a) to pay any dividend payable in stock of any class to
the holders of Class A Preferred Shares or to make any other distribution to the
holders of Class A Preferred Shares (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, in case regular periodic cash dividends have not
theretofore been paid, at a rate not in excess of 50% of the average net income
per share of the Company for the four quarters ended immediately prior to the
payment of such dividends, or a stock dividend on, or a subdivision, combination
or reclassification of the Common Shares), or (b) to offer to the holders of
Class A Preferred Shares rights or warrants to subscribe for or to purchase any
additional Class A Preferred Shares or shares of stock of any class or any other
securities, rights or options, or (c) to effect any reclassification of its
Class A Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Class A Preferred Shares), or (d) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or
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<PAGE>
more of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person (other than pursuant to
a merger or other acquisition agreement of the type described in Section
1.3(2)(A)(z)), or (e) to effect the liquidation, dissolution or winding up of
the Company, or (f) to declare or pay any dividend on the Common Shares payable
in Common Shares or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of dividends in
Common Shares), then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Right Certificate, in accordance with Section 25,
a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Class A Preferred Shares and/or
Common Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (a) or (b) above at least ten
(10) days prior to the record date for determining holders of the Class A
Preferred Shares for purposes of such action, and in the case of any such other
action, at least ten (10) days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the Class A
Preferred Shares and/or Common Shares, whichever shall be the earlier.
In case any event set forth in Section 11.1.2 or Section 13
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25, a notice of the occurrence of such
event, which notice shall describe the event and the consequences of the event
to holders of Rights under Section 11.1.2 and Section 13, and (ii) all
references in this Section 24 to Class A Preferred Shares shall be deemed
thereafter to refer to Common Shares and/or, if appropriate, other securities.
Notwithstanding anything in this Agreement to the contrary,
prior to the Distribution Date a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given.
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 is filed in
writing with the Rights Agent) as follows:
Marvel Enterprises, Inc.
387 Park Avenue South
New York, New York 10016
Attention: Secretary
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Subject to the provisions of Section 21 and Section 24, 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
6201 Fifteenth Avenue
Brooklyn, New York 11219
Attention: Joseph Wolf
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, prior to the Distribution Date, to the holder of any certificate
representing Common Shares) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Any notices or demands given or made under this section shall
be deemed given or made five (5) Business Days after having been deposited in
the mail with postage prepaid. If a notice or demand is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.
Section 26. Supplements and Amendments. For so long as the
Rights are redeemable, the Company may in its sole and absolute discretion, and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any holders
of Rights, Common Shares or 8% Preferred Shares. From and after the time that
the Rights are no longer redeemable, the Company may, and the Rights Agent
shall, if the Company so directs, from time to time supplement or amend this
Agreement without the approval of any holders of Rights (i) to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, or (ii) to make
any other changes or provisions in regard to matters or questions arising
hereunder which the Company may deem necessary or desirable, including but not
limited to extending the Final Expiration Date; provided, however, that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such supplement or amendment may cause the Rights
again to become redeemable or cause this Agreement again to become amendable
other than in accordance with this sentence; provided further, that the right of
the Board of Directors to extend the Distribution Date shall not require any
amendment or supplement hereunder. 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. Without limiting the foregoing, at
any time prior to such time as any Person becomes an
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Acquiring Person, the Company and the Rights Agent may amend this Agreement to
lower the thresholds set forth in Sections 1.1 and 3.1 to not less than the
greater of (i) any percentage greater than the largest percentage of the
outstanding Common Shares then known by the Company to be beneficially owned by
any Person (other than an Exempt Person) and (ii) 10%.
Section 27. Exchange.
--------
27.1. Exchange of Common Shares for Rights. The Company may,
at its option, at any time after the occurrence of a Trigger Event, exchange
Common Shares for all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 11.1.2) at an exchange ratio of that number of Common Shares having
an aggregate value equal to the Spread (with such value being based on the
Current Per Share Market Price (as determined pursuant to Section 11.4) on the
date of the occurrence of a Trigger Event) per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such amount per Right being hereinafter referred to as the
"Exchange Consideration"). Notwithstanding the foregoing, the Company shall not
be empowered to effect such exchange at any time after any Acquiring Person
shall have become the Beneficial Owner of 50% or more of the Common Shares then
outstanding. From and after the occurrence of an event specified in Section
13.1, any Rights that theretofore have not been exchanged pursuant to this
Section 27.1 shall thereafter be exercisable only in accordance with Section 13
and may not be exchanged pursuant to this Section 27.1. The exchange of the
Rights by the Company may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole discretion may establish.
27.2. Exchange Procedures. Immediately upon the action of the
Board of Directors of the Company ordering the exchange for any Rights pursuant
to Section 27.1 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 the Exchange Consideration. 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 promptly shall 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 shall state the
method by which the exchange of the Common Shares 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 the Rights that have become void pursuant to the
provisions of Section 11.1.2) held by each holder of Rights.
27.3. Insufficient Shares. The Company may at its option
substitute, and, in the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit an exchange of
Rights for Common Shares as contemplated in accordance
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<PAGE>
with this Section 27, the Company shall substitute to the extent of such
insufficiency, for each Common Share that would otherwise be issuable upon
exchange of a Right, a number of Class A Preferred Shares or fraction thereof
(or Equivalent Preferred Stock, as such term is defined in Section 11.2) such
that the Current Per Share Market Price (determined pursuant to Section 11.4) of
one Class A Preferred Share (or equivalent preferred share) multiplied by such
number or fraction is equal to the Current Per Share Market Price of one Common
Share (determined pursuant to Section 11.4) as of the date of such exchange.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares and the 8% Preferred
Shares) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares and the 8% Preferred Shares).
Section 30. Determination and Actions by the Board of
Directors. The Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors of the Company or to the Company,
or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including, without
limitation, a determination to redeem or not redeem the Rights or amend this
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) that are done or made by the Board of Directors of the Company in
good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights, as such, and all other parties, and (y) not
subject the Board of Directors to any liability to the holders of the Rights.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement 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.
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware
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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; provided, however, that the rights, duties and obligations of
the Rights Agent shall be governed by, and construed in accordance with, the
laws of the State of New York.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Heading. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
MARVEL ENTERPRISES, INC.
By: /s/ F. Peter Cuneo
-----------------------------------------------
Name: F. Peter Cuneo
Title: President and Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Herbert J. Lemmer
-----------------------------------------------
Name: Herbert J. Lemmer
Title: Vice President
NY/296241.3
<PAGE>
EXHIBIT A
MARVEL ENTERPRISES, INC.
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
CLASS A JUNIOR PARTICIPATING PREFERRED STOCK
-- OF--
MARVEL ENTERPRISES, INC.
-----------------------------
The undersigned officer of Marvel Enterprises, Inc. (the
"Corporation"), a corporation organized and existing under the Delaware General
Corporation Law (the "DGCL"), does hereby certify that, pursuant to the
authority conferred upon the Board of Directors by Article VI of the Restated
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation"), the Board of Directors on August 22, 2000 adopted the following
resolution creating a series of 500,000 shares of preferred stock designated as
Class A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by Article VI of the Restated Certificate of Incorporation of the
Corporation, 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:
CLASS A JUNIOR PARTICIPATING PREFERRED STOCK
Section 1. Designation and Amount. The shares of such series shall be
designated as Class A Junior Participating Preferred Stock, $.01 par value per
share (the "Class A Preferred Stock"), and the number of shares constituting the
Class A Preferred Stock shall be five hundred thousand (500,000). 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 Class A
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Class A Preferred Stock.
NY/296241.3
<PAGE>
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of the holders of the
Corporation's 8% Cumulative Convertible Exchange Preferred Stock, par value $.01
per share ("8% Preferred Stock") and the holders of any shares of any class or
series of stock of this Corporation ranking prior and superior to the Class A
Preferred Stock with respect to dividends, the holders of shares of Class A
Preferred Stock, in preference to the holders of Common Stock, par value $.01
per share (the "Common Stock"), of the Corporation, and of any other stock
ranking junior to the Class A Preferred Stock, shall be entitled to receive,
when, as and if authorized by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the fifteenth
day of January, April, July and October of 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 Class A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $0.10 or (b) an amount, subject
to the provision for adjustment hereinafter set forth, equal to 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock 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
Class A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision, 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 Class A
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.
(B) The Corporation shall declare a dividend or distribution on the
Class A Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.10 per share on the
Class A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Class A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of
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such shares, 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 Class A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Class
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Class A 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.
(D) In determining whether a distribution (other than upon voluntary or
involuntary liquidation), by dividend, redemption or other acquisition of shares
of stock of the Corporation or otherwise, is permitted under the DGCL, amounts
that would be needed, if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of
the Class A Preferred Stock shall not be added to the Corporation's total
liabilities.
Section 3. Voting Rights. The holders of shares of Class A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Class A Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the holders of Common Stock. In the event
the Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision, 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
number of votes per share to which holders of shares of Class A Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation, or in any other Certificate of Designation, Preferences and
Rights creating a series of Preferred Stock or any similar stock, the holders of
shares of Class A Preferred Stock and the holders of shares of Common Stock and
any other shares of 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.
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(C) Except as set forth herein, or as otherwise provided by law,
holders of Class A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Class A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Class A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Class A Preferred
Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Class A Preferred
Stock, except dividends paid ratably on the Class A
Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Class A Preferred
Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock
of the Corporation ranking junior (both as to
dividends and upon dissolution, liquidation or
winding up) to the Class A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Class A Preferred Stock,
or any shares of stock ranking on a parity with the
Class A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of
Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes,
shall determine in good faith will result in fair and
equitable treatment among the respective series or
classes.
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(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 Class A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein, in the Certificate of
Incorporation, or in any other Certificate of Designation, Preferences and
Rights creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up.
---------------------------------------
(A) Upon any liquidation, dissolution or winding up of the Corporation,
voluntary or otherwise no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Class A Preferred Stock unless, prior thereto,
the holders of shares of Class A Preferred Stock shall have received an amount
per share (the "Class A Liquidation Preference") equal to $10 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, provided that the holders of
shares of Class A Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per share to holders
of shares of Common Stock, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Class A Preferred Stock, except distributions made ratably on the Class
A Preferred Stock and all such parity stock in proportion to the total amounts
to which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision, 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 Class A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) 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 are
outstanding immediately prior to such event.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Class A Liquidation Preference and
the liquidation preferences of all other classes and series of stock of the
Corporation, if any, that rank on a parity with the Class A Preferred Stock in
respect thereof, then the assets available for such distribution shall be
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distributed ratably to the holders of the Class A Preferred Stock and the
holders of such parity shares in proportion to their respective liquidation
preferences.
(C) Neither the merger or consolidation of the Corporation into or with
another corporation nor the merger or consolidation of any other corporation
into or with the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Class A Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision, 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 Class A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Class A Preferred Stock shall
not be redeemable by the Company.
Section 9. Rank. The Class A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, junior to the 8% Preferred Stock and to all other
series of any other class of the Corporation's Preferred Stock, except to the
extent that any such other series specifically provides that it shall rank on a
parity with or junior to the Class A Preferred Stock.
Section 10. Amendment. At any time any shares of Class A Preferred
Stock are outstanding, neither the Certificate of Incorporation nor this
Certificate of Designation, Preferences and Rights shall be amended in any
manner which would materially alter or change the powers, preferences or special
rights of the Class A Preferred Stock, as set forth herein, so as to affect them
adversely without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Class A Preferred Stock, voting separately as a single
class.
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Section 11. Fractional Shares. Class A Preferred Stock may be issued in
fractions of a share that 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 Class A Preferred Stock.
SECOND: The shares of Class A Preferred Stock have been classified and
designated by the Board of Directors under the authority contained in the
Certificate of Incorporation.
THIRD: This Certificate of Designation, Preferences and Rights has been
approved by the Board of Directors in the manner and by the vote required by
law.
FOURTH: The undersigned officer acknowledges this Certificate of
Designation, Preferences and Rights to be the corporate act of the Corporation
and, as to all matters of fact required to be verified under oath, the
undersigned officer acknowledges that to the best of his knowledge, information
and belief, these matters and facts are true in all material respects and that
this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designation, Preferences and Rights on August 22, 2000.
By:
------------------------------------------
F. Peter Cuneo
President and Chief Executive Officer of
Marvel Enterprises, Inc.
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<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- Rights
----------
NOT EXERCISABLE AFTER SEPTEMBER 15, 2010 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR ACQUIRED
PURSUANT TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION 1.3(2)(A)(z)
OF THE AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 11.1.2 OF THE AGREEMENT),
RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO AN ACQUIRING PERSON (AS
DEFINED IN THE AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Right Certificate
MARVEL ENTERPRISES, 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 August 22, 2000 as the same may be amended from time to
time (the "Agreement"), between Marvel Enterprises, Inc., a Delaware corporation
(the "Company"), and American Stock Transfer & Trust Company, as Rights Agent
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date and prior to 5:00 P.M. (New York time) on September 15, 2010,
at the offices of the Rights Agent, or its successors as Rights Agent,
designated for such purpose, one one-hundredth of a fully paid, nonassessable
share of Class A Junior Participating Preferred Stock, $.01 par value per share
(the "Preferred Shares") of the Company, at a purchase price of $35 per
one-hundredth of a Preferred Share, subject to adjustment (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase and certification duly executed. The number of Rights
represented by this Right Certificate (and the number of one-hundredths of a
Preferred Share which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
August 22, 2000 based on the Preferred Shares as constituted at such date.
Capitalized terms used in this Right Certificate without definition shall have
the meanings ascribed to them in the Agreement. As provided in the Agreement,
the Purchase Price and the number of Preferred Shares which may be purchased
upon the exercise of the Rights represented by this Right Certificate are
subject to modification and adjustment upon the happening of certain events.
NY/296241.3
<PAGE>
This Right Certificate is subject to all of the terms, provisions and
conditions of the Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which 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 Agreement are
on file at the principal offices of the Company and the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the offices of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date representing Rights entitling the holder to purchase the same aggregate
number of one-hundredths of a Preferred Share as the Rights represented 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 Agreement, the Board of Directors may,
at its option, (i) redeem the Rights represented by this Right Certificate at a
redemption price of $.01 per Right or (ii) exchange Common Shares for the Rights
represented by this Certificate, in whole or in part.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights represented hereby (other than fractions of Preferred Shares
which are integral multiples of one one-hundredth of a Preferred Share, which
may, at the election of the Company, be represented by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the 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
Agreement) or to receive dividends or subscription rights, or otherwise, until
the Right or Rights represented by this Right Certificate shall have been
exercised as provided in the Agreement.
If any term, provision, covenant or restriction of the 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 the Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
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This Right Certificate shall not be valid or binding for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ____________, ____.
Attest: MARVEL ENTERPRISES, INC.
By:
--------------------------- -------------------------------
Title: Title:
Countersigned:
American Stock Transfer & Trust Company, as Rights Agent
By
----------------------------
Authorized Signature
NY/296241.3
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
--------------------------------------------------------------
hereby sells, assigns and transfers unto
----------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
Rights represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated:
--------------------
----------------------------------------
Signature
Signature Guaranteed:
----------------------------
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" as defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended.
The undersigned hereby certifies that:
(1) the Rights represented by this Right Certificate are not
beneficially owned by and are not being assigned to an Acquiring Person or an
Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights represented by this
Right Certificate from any person who is, was, had been or subsequently became
an Acquiring Person or an Affiliate or Associate thereof.
Dated:
--------------------
----------------------------------------
Signature
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<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: Marvel Enterprises, Inc.
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights (or such other
securities or property of the Company or of any other Person which may be
issuable upon the exercise of the Rights) and requests that certificates for
such shares be issued in the name of:
------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------
If such number of Rights shall not be all the Rights represented by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to: Please insert social
security or other identifying number
------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------
Dated:
--------------------
----------------------------------------
Signature
Signature Guaranteed:
--------------------------
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Signatures must be guaranteed by an "eligible guarantor
institution" as defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended. The undersigned hereby certifies that:
(1) the Rights represented by this Right Certificate are not
beneficially owned by and are not being assigned to an Acquiring Person or an
Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights represented by this
Right Certificate from any person who is, was, had been or subsequently became
an Acquiring Person or an Affiliate or Associate thereof.
Dated:
--------------------
----------------------------------------
Signature
NOTICE
The signature in the foregoing Form of Assignment and Form of
Election to Purchase must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the Form of
Assignment or Form of Election to Purchase is not completed, the Company will
deem the beneficial owner of the Rights represented by this Right Certificate to
be an Acquiring Person or an Affiliate or Associate hereof and such Assignment
or Election to Purchase will not be honored.
NY/296241.3
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<PAGE>
EXHIBIT C
As described in the Rights Agreement, as defined below, Rights
which are held by or have been held by an Acquiring Person or Associates or
Affiliates thereof (as defined in the Rights Agreement) and certain transferees
thereof are null and void and are not transferable.
SUMMARY OF RIGHTS TO PURCHASE
CLASS A PREFERRED SHARES
On August 22, 2000 the Board of Directors of Marvel
Enterprises, Inc. (the "Company") authorized a dividend of one preferred share
purchase right (a "Right") for each share of common stock, $.01 par value per
share ("Common Shares") and 1.039 Rights for each share of 8% Cumulative
Convertible Exchangeable Preferred Stock, $.01 par value per share ("8%
Preferred Shares"), of the Company outstanding at the close of business on
September 15, 2000 (the "Record Date"). As long as the Rights are attached to
the Common Shares or 8% Preferred Shares, the Company will issue one Right
(subject to adjustment) with each new Common Share and 1.039 Rights (subject to
adjustment) with each new 8% Preferred Share so that all such shares will have
attached Rights. When exercisable, each Right will entitle the registered holder
to purchase from the Company one one-hundredth of a share of Class A Junior
Participating Preferred Stock (the "Preferred Shares") at a price of $35 per
one-hundredth of a Preferred Share, subject to adjustment (the "Purchase
Price"). The description and terms of the Rights are set forth in a Rights
Agreement, dated as of August 22, 2000, as the same may be amended from time to
time (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 (10) days following a
public announcement that a person or group of affiliated or associated persons
has acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the Common Shares (an "Acquiring Person") or (ii) ten (10) business days
(or such later date as may be determined by action of the Board of Directors
prior to such time as any person or group of affiliated persons becomes an
Acquiring Person) following the commencement or announcement of an intention to
make a tender offer or exchange offer the consummation of which would result in
the beneficial ownership by a person or group of 15% or more of the Common
Shares (the earlier of (i) and (ii) being called the "Distribution Date"), the
Rights will be represented, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate and with
respect to any of the 8% Preferred Share certificates outstanding as of the
Record Date, by such 8% Preferred Share certificate.
The Rights Agreement provides that until the Distribution Date
(or earlier redemption, exchange, termination or expiration of the Rights), the
Rights will be transferred with and only with the Common Shares and 8% Preferred
Shares. Until the Distribution Date (or earlier redemption, exchange,
termination or expiration of the Rights), new Common Share certificates
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and 8% Preferred Share certificates issued after the close of business on the
Record Date upon transfer or new issuance of the Common Shares or 8% Preferred
Shares will contain a notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption, exchange, termination or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares or 8% Preferred Shares, with or without such notation or a copy of
this Summary of Rights, will also constitute the transfer of the Rights
associated with the Common Shares or 8% Preferred Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates representing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares and 8% Preferred Shares as of the close
of business on the Distribution Date and such separate Right Certificates alone
will represent the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on September 15, 2010 subject to the Company's right to
extend such date (the "Final Expiration Date"), unless earlier redeemed or
exchanged by the Company or terminated.
The Preferred Shares will rank junior to the 8% Preferred
Shares as to dividends and upon liquidation, dissolution and winding up of the
Company. Each Preferred Share purchasable upon exercise of the Rights will be
entitled, when, as and if declared, to a minimum preferential quarterly dividend
payment of $0.10 per share but will be entitled to an aggregate dividend of 100
times the dividend, if any, declared per Common Share. In the event of
liquidation, dissolution or winding up of the Company, the holders of the
Preferred Shares will be entitled to a minimum preferential liquidation payment
of $10 per share (plus any accrued but unpaid dividends) but will be entitled to
an aggregate payment of 100 times the payment made per Common Share. Each
Preferred Share will have 100 votes and will vote together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. Preferred Shares will
not be redeemable. These rights are protected by customary antidilution
provisions. Because of the nature of the Preferred Share's dividend, liquidation
and voting rights, the value of one one-hundredth of a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
The Purchase Price payable, and the number of Preferred Shares
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 Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares or
convertible securities at less than the current market price of the Preferred
Shares or (iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness, cash, securities or assets (excluding regular
periodic cash dividends at a rate not in excess of 125% of the rate of the last
regular periodic cash dividend theretofore paid or, in case regular periodic
cash dividends have not theretofore been paid, at a rate not in excess of 50% of
the average net income per share of the Company for the
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four quarters ended immediately prior to the payment of such dividend, or
dividends payable in Preferred Shares (which dividends will be subject to the
adjustment described in clause (i) above)) or of subscription rights or warrants
(other than those referred to above).
In the event that a person becomes an Acquiring Person or if
the Company is the surviving corporation in a merger with an Acquiring Person or
any affiliate or associate of an Acquiring Person and the Common Shares and/or
8% Preferred Shares were not changed or exchanged, each holder of a Right, other
than Rights that are or were acquired or beneficially owned by the Acquiring
Person (which Rights will be void), will thereafter have the right to receive,
upon exercise thereof, that number of Common Shares having a market value of two
times the then-current Purchase Price of the Right. In the event that, after a
person has become an Acquiring Person, the Company is acquired in a merger or
other business combination transaction or more than 50% of its assets or earning
power are sold, 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 Purchase 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 of two times the then-current Purchase Price of the Right.
At any time after a person becomes an Acquiring Person and
prior to the earlier of one of the events described in the last sentence of the
previous paragraph or the acquisition by such Acquiring Person of 50% or more of
the outstanding Common Shares, the Board of Directors may cause the Company to
exchange the Rights (other than Rights owned by an Acquiring Person, which will
be void), in whole or in part, for that number of Common Shares having an
aggregate value equal to the Spread (the excess of the value of the Common
Shares issuable upon the exercise of a Right over the Purchase Price) per Right
(subject to adjustment).
No adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in the Purchase
Price. No fractional Preferred Shares or Common Shares will be issued (other
than fractions of Preferred Shares which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the Company,
be represented by depository receipts), and in lieu thereof, a payment in cash
will be made based on the market price of the Preferred Shares or Common Shares
on the last trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price") by the Board of Directors at
any time prior to the time that an Acquiring Person has become such. The
redemption of the Rights 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. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
NY/296241.3
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Until a Right is exercised, it will not entitle its holder to
any rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company for so long as the Rights are then
redeemable, and after the Rights are no longer redeemable, the Company may amend
or supplement the Rights Agreement in any manner that does not adversely affect
the interests of the holders of the Rights.
The Rights are designed to assure that all of the Company's
stockholders receive fair and equal treatment in the event of any proposed
takeover of the Company and to guard against partial tender offers, open market
accumulations and other abusive tactics to gain control of the Company without
paying all stockholders a control premium. The Rights will cause substantial
dilution to a person or group that acquires 15% or more of the Company's stock
on terms not approved by the Company's Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the Board of
Directors at any time before a person or group has become an Acquiring Person.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Current Report on Form
8-K. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
NY/296241.3