________________________________________________________________________________
NN,INC.
and
COMPUTERSHARE TRUST COMPANY, N.A.,
as Rights Agent
Rights Agreement
Dated as of December 16, 2008
________________________________________________________________________________
TABLE OF CONTENTS
Section 1. Certain Definitions...........................................1
Section 2. Appointment of Rights Agent...................................6
Section 3. Issue of Right Certificates...................................6
Section 4. Form of Right Certificates....................................8
Section 5. Countersignature and Registration.............................8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates..................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.9
Section 8. Cancellation and Destruction of Right Certificates...........10
Section 9. Status and Availability of Preferred Shares..................10
Section 10. Preferred Shares Record Date.................................11
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
the holders of the Rights, except that from and after such time
as any person
Section 12. Certificate of Adjustment....................................18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power................................................18
Section 14. Fractional Rights and Fractional Shares......................19
Section 15. Rights of Action.............................................20
Section 16. Agreement of Right Holders...................................20
Section 17. Right Certificate Holder Not Deemed a Stockholder............21
Section 18. Concerning the Rights Agent..................................21
Section 19. Merger or Consolidation or Change of Name of Rights Agent....22
Section 20. Duties of Rights Agent.......................................22
Section 21. Change of Rights Agent.......................................24
Section 22. Issuance of New Right Certificates...........................25
Section 23. Redemption...................................................25
Section 24. Exchange.....................................................26
Section 25. Notice of Certain Events.....................................27
Section 26. Notices......................................................27
Section 27. Supplements and Amendments...................................28
Section 28. Successors...................................................28
Section 29. Benefits of this Agreement...................................29
Section 30. Severability.................................................29
Section 31. Governing Law................................................29
Section 32. Counterparts.................................................29
Section 33. Descriptive Headings.........................................29
Section 34. Administration...............................................30
Section 35. Force Majeure................................................30
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RIGHTS AGREEMENT
This Rights Agreement (this "Agreement"), is made and entered into as of
December 16, 2008, between NN, Inc., a Delaware corporation (the "Company"), and
Computershare Trust Company, N.A. (the "Rights Agent").
The Board of Directors of the Company (the "Board") has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
share of Common Stock, par value $0.01 per share, of the Company (a "Common
Share") outstanding on the Close of Business on December 15, 2008 (the "Record
Date") and has authorized the issuance of one Right with respect to each
additional Common Share that shall become outstanding between the Record Date
and the earliest of the Close of Business on the Distribution Date, the
Redemption Date and the Close of Business on the Final Expiration Date, and
certain additional shares of Common Stock that shall become outstanding after
the Distribution Date as provided in Section 22 of this Agreement, each Right
representing the right to purchase one one-hundredth (0.01) of a Preferred
Share, or such different amount and/or kind of securities as shall be
hereinafter provided.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings
indicated:
"Acquiring Person" shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of
fifteen percent (15%) or more of the Common Shares of the Company then
outstanding but shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or any Subsidiary of the
Company, or (iv) any entity holding Common Shares for or pursuant to the terms
of any such employee benefit plan. Notwithstanding the foregoing, (1) no Person
shall become an "Acquiring Person" as the result of an acquisition of Common
Shares by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to fifteen percent (15%) (or such other percentage as would otherwise result in
such person becoming an Acquiring Person) or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall so become
the Beneficial Owner of fifteen percent (15%) (or such other percentage as would
otherwise result in such person becoming an Acquiring Person) or more of the
Common Shares of the Company then outstanding by reason of an acquisition of
Common Shares by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of an additional one percent (1%) of the
outstanding Common Shares of the Company, then such Person shall be deemed to be
an "Acquiring Person;" and (2) if the Board determines in good faith that a
Person who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph, has become such inadvertently, and such
Person divests as promptly as practicable 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 paragraph, or, in the case of any
Derivative Securities underlying a transaction entered into by such Person or
otherwise acquired by such Person or any Affiliate or Associate of such Person,
such Person terminates such transaction or otherwise disposes of such Derivative
Securities, then such Person shall not be deemed to have become an "Acquiring
Person" for any purposes of this Agreement.
"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.
"Agreement" shall have the meaning set forth in the first introductory
paragraph hereof.
A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, for purposes of Section 13(d) of the
Exchange Act and Rule 13d-3 thereunder (or any comparable or successor law or
regulation);
(ii) which such Person or any of such Person's Affiliates or Associates has
(A) the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), written or otherwise, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed pursuant to this
subparagraph (ii)(A) to be the Beneficial Owner of, or to beneficially own, (1)
securities tendered pursuant to a tender or exchange offer made pursuant to, and
in accordance with, the applicable rules and regulations promulgated under the
Exchange Act by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase or
exchange, or (2) securities which a Person or any of such Person's Affiliates or
Associates 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 its Affiliates or Associates) if such agreement has been approved by the
Board prior to there being an Acquiring Person; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);
(iii) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person or any of
such Person's Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), written or otherwise, for the purpose of acquiring, holding, voting
(except to the extent contemplated by the proviso to subparagraph (ii)(B)
immediately above) or disposing of any securities of the Company; provided,
however, that in no case shall an
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officer or director of the Company be deemed (x) the Beneficial Owner of any
securities beneficially owned by another officer or director of the Company
solely by reason of actions undertaken by such persons in their capacity as
officers or directors of the Company or (y) the Beneficial Owner of securities
held of record by the trustee of any employee benefit plan of the Company or any
Subsidiary of the Company for the benefit of any employee of the Company or any
Subsidiary of the Company, other than the officer or director, by reason of any
influence that such officer or director may have over the voting of the
securities held in the plan; or
(iv) which are Derivative Securities; provided that the number of Common
Shares deemed beneficially owned as a result of such Derivative Securities shall
equal the number of Common Shares that are synthetically owned pursuant to the
derivative transactions underlying such Derivative Securities.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder if the right to acquire such securities
were fully and effectively exercised.
"Board" shall have the meaning set forth in the second introductory
paragraph hereof.
"Business Day" shall mean any day other than a Saturday, Sunday, or a day
on which banking institutions in the Commonwealth of Massachusetts are
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 P.M., New York time,
on such date; provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
"Common Shares" when used with reference to the Company shall mean the
shares of Common Stock, par value $.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
"common stock equivalents" shall have the meaning set forth in Section
11(a)(iii)(B)(3) hereof.
"Company" shall have the meaning set forth in the first introductory
paragraph hereof.
"current per share market price" shall have the meaning set forth in
Section 11(d) hereof.
"Current Value" shall have the meaning set forth in Section
11(a)(iii)(A)(1) hereof.
"Derivative Securities" shall mean:
(i) securities underlying a derivative transaction entered into by a
Person, or derivative securities acquired by a Person, which give such Person
the economic
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equivalent of ownership of an amount of securities in the Company due to the
fact that the value of the derivative transaction is explicitly determined by
reference to the price or value of securities in the Company, without regard to
whether (A) such derivative securities convey any voting rights in securities in
the Company to such Person, (B) such derivative securities are required to be,
or capable of being, settled through delivery of securities in the Company, or
(C) such Person may have entered into other transactions that hedge the economic
effect of such derivative securities;
(ii) any derivative, swap or other transaction or series of transactions
engaged in, directly or indirectly, by such Person, the purpose or effect of
which is to give such Person economic risk similar to ownership of shares of any
class or series of the Company, including due to the fact that the value of such
derivative, swap or other transactions are determined by reference to the price,
value or volatility of any shares of any class or series of the Company, or
which derivative, swap or other transactions provide, directly or indirectly,
the opportunity to profit from any increase in the price or value of shares of
any class or series of the Company (commonly referred to as "synthetic equity
interests"), without regard to whether (x) the derivative, swap or other
transactions convey any voting rights in such shares to such Person, (y) the
derivative, swap or other transactions are required to be, or are capable of
being, settled through delivery of such shares or (z) such Person may have
entered into other transactions that hedge or mitigate the economic effect of
such derivative, swap or other transactions;
(iii) any proxy (other than a revocable proxy or consent given in response
to a solicitation made pursuant to, and in accordance with, Section 14(a) of the
Exchange Act by way of a solicitation statement filed on Schedule 14A),
agreement, arrangement, understanding or relationship pursuant to which such
Person has or shares a right to vote any shares of any class or series of the
Company; or
(v) any agreement, arrangement, understanding or relationship, including
any repurchase or similar so-called "stock borrowing" agreement or arrangement,
engaged in, directly or indirectly, by such Person, the purpose or effect of
which is to mitigate loss to, reduce the economic risk (of ownership or
otherwise) of shares of any class or series of the Company by, manage the risk
of share price changes for, or increase or decrease the voting power of, such
Person with respect to the shares of any class or series of the Company, or
which provides, directly or indirectly, the opportunity to profit from any
decrease in the price or value of the shares of any class or series of the
Company (commonly referred to as "short interests").
"Distribution Date" shall mean the earlier of (i) the Close of Business
on the tenth (10th) Business Day (or such later date as may be determined by
action of the Board prior to such time as any Person becomes an Acquiring
Person) after the Shares Acquisition Date or (ii) the Close of Business on the
tenth (10th) Business Day (or such later date as may be determined by action of
the Board prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) of, or of the first public announcement (within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act) of the intention of any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary of
the
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Company or any entity holding Common Shares for or pursuant to the terms of any
such plan) to commence, a tender or exchange offer the consummation of which
would result in such Person becoming an Acquiring Person.
"earning power" shall have the meaning set forth in Section 13 hereof.
"equivalent preferred shares" shall have the meaning set forth in Section
11(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Ratio" shall have the meaning set forth in Section 24(a) hereof.
"Final Expiration Date" shall mean December 16, 2011.
"NASDAQ" shall have the meaning set forth in Section 11(d) hereof.
"Person" shall mean any individual, firm, corporation, partnership, limited
partnership, limited liability partnership, business trust, limited liability
company, unincorporated association or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Purchase Price" shall have the meaning set forth in Section 7(b) hereof.
"Preferred Shares" shall mean shares of Series A Junior Participating
Preferred Stock, par value $0.01 per share, of the Company having such rights
and preferences as are set forth in the Form of Certificate of Designation set
forth as Exhibit A attached hereto, as the same may be amended from time to
time.
"Record Date" shall have the meaning set forth in the second introductory
paragraph hereof.
"Redemption Date" shall have the meaning set forth in Section 23 hereof.
"Redemption Price" shall have the meaning set forth in Section 23 hereof.
"Right" or "Rights" shall have the meaning set forth in the second
introductory paragraph hereof.
"Right Certificate" shall mean a certificate evidencing a Right in
substantially the form of Exhibit B attached hereto.
"Rights Agent" shall have the meaning set forth in the first introductory
paragraph hereof.
"Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Security" shall have the meaning set forth in Section 11(d) hereof.
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"Shares Acquisition Date" shall mean the earlier of the date of (i) the
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such or (ii) the public disclosure of facts by the Company or
an Acquiring Person indicating that an Acquiring Person has become such;
provided that, if such Person is determined not to have become an Acquiring
Person pursuant to the definition of "Acquiring Person" set forth in Section 1
hereof, then no Shares Acquisition Date shall be deemed to have occurred by
virtue of such event.
"Spread" shall have the meaning set forth in Section 11(a)(iii)(A) hereof.
"Subsidiary" of any Person shall mean any Person of which a majority of the
voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
"Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Summary of Rights" shall mean the Summary of Rights to Purchase Preferred
Shares in substantially the form of Exhibit C attached hereto.
"Trading Day" shall have the meaning set forth in Section 11(d) hereof.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable, 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.
Section 3. Issue of Right Certificates.
(a) Until the Distribution Date, (x) the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested, at the expense of the Company, send) by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate evidencing one Right for each Common
Share so held. As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of the Summary of Rights by first-class, postage-prepaid mail,
to each record holder of Common Shares as of the Close of Business on the Record
Date, at the address of such holder
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shown on the records of the Company. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Close of Business on the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Close of Business on the Distribution Date
(or the earlier of the Redemption Date or the Close of Business on the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares evidenced thereby.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this Section 3(c)) after the Record Date but prior to the earliest of the Close
of Business on the Distribution Date, the Redemption Date or the Close of
Business on the Final Expiration Date shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between NN, Inc. and
Computershare Trust Company, N.A., as Rights Agent, dated as of
December 16, 2008, as it may from time to time be amended or
supplemented pursuant to its terms (the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of NN, Inc.. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer
be evidenced by this certificate. NN, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances,
Rights that are or were acquired or beneficially owned by Acquiring
Persons (as defined in the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend, until the
Close of Business on the Distribution Date, the Rights associated with the
Common Shares represented by certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificate shall
also constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(d) In the event that the Company purchases or acquires any Common Shares
after the Record Date but prior to the Close of Business on the Distribution
Date, any Rights associated with such Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
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Section 4. Form of Right Certificates.
The Right Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B attached hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the other provisions of this
Agreement, the Right Certificates shall entitle the holders thereof to purchase
such number of one one-hundredths (0.01) of a Preferred Share as shall be set
forth therein at the Purchase Price, but the number of one one-hundredths (0.01)
of a Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its President, any of
its Vice Presidents, or its Treasurer, either manually or by facsimile
signature, shall have affixed thereto the Company's seal (if any) or a facsimile
thereof, and 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 by the Rights Agent and shall not be valid for any
purpose unless so countersigned, either manually or by facsimile. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration of the transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.
(a) Subject to the provisions of Section 14 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior to the earlier of
the Redemption Date or the Close of Business on the Final Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up,
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combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
(0.01) of 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, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient for
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Subject to the provisions of this Agreement, at any time after the
Close of Business on the Distribution Date, and at or prior to the earlier of
the Redemption Date or the Close of Business on the Final Expiration Date, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate (other than a holder
whose Rights have become void pursuant to Section 11(a)(ii) hereof or have been
exchanged pursuant to Section 24 hereof) may exercise the Rights evidenced
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 on the
reverse side thereof duly executed, to the Rights Agent at its principal office,
together with payment of the Purchase Price for each one one-hundredth (0.01) of
a Preferred Share as to which the Rights are exercised, prior to the earliest of
(i) the Close of Business on the Final Expiration Date, (ii) the time at which
the right to exercise the Rights terminates pursuant to Section 23 hereof, or
(iii) the time at which the right to exercise the Rights terminates pursuant to
Section 24 hereof.
(b) The purchase price for each one one-hundredth (0.01) of a Preferred
Share to be purchased upon the exercise of a Right shall initially be Fourteen
Dollars ($14.00) (the "Purchase Price"), shall be subject to adjustment from
time to time as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with Section 7(c)
below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and certificate duly executed, accompanied
by payment of the Purchase Price for the number of one one-hundredths (0.01) of
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 hereof by cash, certified check, cashier's check or
9
money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of one one-hundredths (0.01) of a Preferred
Share 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 one one-hundredths (0.01) of a Preferred Share
issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths (0.01) of a Preferred Share as are to be purchased
(in which case certificates for the 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 such request,
(ii) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of issuance of fractional Preferred Shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such Right
Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate following the form of election to purchase
set forth on the reverse side of the Right Certificate surrendered for such
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Status and Availability of Preferred Shares.
10
(a) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and non-assessable shares.
(b) 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 Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to issue or to
deliver any certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's reasonable satisfaction that
no such tax or charge is due.
(c) The Company covenants and agrees that it will use its best efforts to
cause to be reserved and kept available, out of its authorized and unissued
Preferred Shares or any Preferred Shares held in its treasury, the number of
Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with Section 7 hereof.
Section 10. Preferred Shares Record Date.
Each Person in whose name any certificate for Preferred Shares is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the transfer books of
the Company are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of Preferred Shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights.
(a)
(i) Anything in this Agreement to the contrary notwithstanding, in the
event the Company shall at any time after the date of this Agreement (A) declare
a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares
(by reverse stock split or otherwise) into a smaller number of Preferred Shares,
or (D) issue any shares of its capital stock in a reclassification of the
11
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 provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date, the holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right.
(ii) Subject to the following paragraph of this Section 11(a)(ii) and to
Section 24 of this Agreement, in the event any Person shall become an Acquiring
Person, each holder of a Right shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths (0.01) of a Preferred Share for which a
Right is then exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of Common Shares of the Company as shall
equal the result obtained by (x) multiplying the then current Purchase Price by
the number of one one-hundredths (0.01) of a Preferred Share for which a Right
is then exercisable and dividing that product by (y) fifty percent (50%) of the
then current per share market price of the Company's Common Shares (determined
pursuant to Section 11(d) hereof) on the date such Person became an Acquiring
Person. In the event that any Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Company shall not take any action that
would eliminate or diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of such an event, any Rights that are or were
acquired or beneficially owned by such Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) on or after the earlier of (x) the date of
such event and (y) the Distribution Date shall be void and any holder of such
Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence or any Associate
or Affiliate thereof shall be canceled.
(iii) In lieu of issuing Common Shares in accordance with Section 11(a)(ii)
hereof, the Company may, if the Board determines that such action is necessary
or appropriate and not contrary to the interest of holders of Rights and, in the
event that the number of Common Shares which are authorized by the Company's
certificate of incorporation but not outstanding or subscribed for or reserved
or otherwise committed for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the holder of each Right to purchase the
number of Common Shares to which the holder would be entitled upon the exercise
in full of
12
the Rights, or if any necessary regulatory approval of such issuance has not
been obtained by the Company, the Company shall: (A) determine the excess of (1)
the value of the Common Shares issuable upon the exercise of a Right (calculated
as provided in the last sentence of this Section 11(a)(iii)) pursuant to Section
11(a)(ii) hereof (the "Current Value") over (2) the Purchase Price (such excess,
the "Spread"), and (B) with respect to each Right, make adequate provision to
substitute for such Common Shares, upon payment of the applicable Purchase
Price, any one or more of the following having an aggregate value determined by
the Board to be equal to the Current Value: (1) cash, (2) a reduction in the
Purchase Price, (3) Common Shares or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which the Board has determined to have the same value as Common Shares (such
shares of preferred stock, "common stock equivalents")), (4) debt securities of
the Company, or (5) other assets; provided, however, if the Company shall not
have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the first occurrence of an event triggering
the rights to purchase Common Shares described in Section 11(a)(ii) (the
"Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, Common Shares (to the extent available) and then,
if necessary, cash, which shares and cash have an aggregate value equal to the
Spread. If the Board shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90) days after
the Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof and the last paragraph of Section
11(a)(ii) hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall make a public announcement, and
shall deliver to the Rights Agent a statement, stating that the exercisability
of the Rights has been temporarily suspended. At such time as the suspension is
no longer in effect, the Company shall make another public announcement, and
deliver to the Rights Agent a statement, so stating. For purposes of this
Section 11(a)(iii), the value of the Common Shares shall be the current per
share market price (as determined pursuant to Section 11(d)(i) hereof) of the
Common Shares on the Section 11(a)(ii) Trigger Date and the value of any common
stock equivalent shall be deemed to have the same value as the Common Shares on
such date.
(b) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the issuance of rights, options or warrants to
all holders of Preferred Shares entitling such holders (for a period expiring
within forty-five (45) calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("equivalent preferred shares")) or
securities convertible into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or having a conversion
price per share, if a security convertible into Preferred Shares or equivalent
preferred shares) less than the then current per share market price of the
Preferred Shares (as defined in Section 11(d)) on such record date, the Purchase
Price to be in
13
effect after such record date shall be adjusted 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 Preferred Shares outstanding on such
record date plus the number of Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or equivalent preferred shares
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of Preferred Shares
outstanding on such record date, plus the number of additional Preferred Shares
and/or equivalent preferred shares to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent. Preferred Shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the making of a distribution to all holders of
the 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 or assets (other than a regular
quarterly cash dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current per
share market price of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent) of the portion of
the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d)
(i) For the purpose of any computation hereunder, the "current per share
market price" of any security (a "Security" for the purpose of this Section
11(d)(i)) on any date shall be deemed to be the average of the daily closing
prices per share of such Security for the thirty (30) consecutive Trading Days
(as such term is hereinafter defined) immediately prior
14
to such date; provided, however, that in the event that the current per share
market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of 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 the National Association of Securities Dealers, Inc. Automated
Quotations System ("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. 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 or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per share
market price" of the Preferred Shares shall be determined in accordance with the
method set forth in Section 11(d)(i). If the Preferred Shares are not publicly
traded, the "current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof), multiplied by one hundred (100). If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a statement filed
with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
hundred-thousandth (0.00001) of a Preferred Share or one hundred-thousandth
(0.00001) of any other share or security as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than three (3) years from the date of the transaction
which requires such adjustment.
15
(f) If as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Shares, the
number of such other shares so receivable upon exercise of any Right shall
thereafter be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths
(0.01) of a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) or (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths
(0.01) of a Preferred Share (calculated to the nearest one hundred-thousandth
(0.00001) of a Preferred Share) obtained by (i) multiplying (x) the number of
Preferred Shares 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.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price as a result of the calculations made in Section 11(b) or (c) to
adjust the number of Rights, in substitution for any adjustment in the number of
Preferred Shares purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths (0.01) of 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 hundred-thousandth (0.00001)) 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 distributed, shall be at
least ten (10) days later than the date of the public announcement. If Right
Certificates have been distributed, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be
16
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates to be so distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of Preferred Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of one one-hundredths (0.01) of a Preferred Share
which were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredths (0.01) of the then par value of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its legal counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the
Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) combination or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iv)
dividends on Preferred Shares payable in Preferred Shares or (v) issuance of any
rights, options or warrants referred to hereinabove in Section 11(b), hereafter
made by the Company to holders of its Preferred Shares shall not be taxable to
such stockholders.
(n) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise other than by payment of dividends in Common
Shares) into a greater or lesser number of Common Shares, then in any such case
(i) the number of one one-hundredths (0.01) of a Preferred Share purchasable
after such event upon proper exercise of each Right shall be determined by
multiplying the number of one one-hundredths (0.01) of a Preferred Share so
purchasable immediately prior to such event by a fraction, the numerator of
which is the number of Common Shares outstanding immediately
17
before such event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (ii) each Common Share outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjustment.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate, and (c) if such
adjustment occurs following a Distribution Date, mail a brief summary thereof to
each holder of a Right Certificate in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be obligated or responsible for
calculating any adjustment nor shall it be deemed to have knowledge of such an
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
In the event that, at any time after a Person becomes an Acquiring Person,
directly or indirectly, (i) the Company shall consolidate with, or merge with
and into, any other Person (other than a wholly-owned Subsidiary of the Company
in a transaction the principal purpose of which is to change the state of
incorporation of the Company), (ii) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating fifty percent (50%) or more of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person (other than the Company or one or more of its
wholly-owned Subsidiaries in one or more transactions), then, and in each such
case, proper provision shall be made so that (A) each holder of a Right (except
as otherwise provided herein) shall thereafter have the right to receive, upon
the exercise thereof at a price equal to the then current Purchase Price
multiplied by the number of one one-hundredths (0.01) of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable Common Shares of such
other Person (including the Company as successor thereto or as the surviving
corporation) as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-hundredths (0.01) of a Preferred
Share for which a Right is then exercisable and dividing that product by (y)
fifty percent (50%) of the then current per share market price of the Common
Shares of such other Person (determined pursuant to Section 11(d) hereof) on the
date of consummation of such consolidation, merger, sale or transfer; (B) the
issuer of such Common Shares 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
18
Agreement; (C) the term "Company" shall thereafter be deemed to refer to such
issuer; and (D) such issuer shall take such steps (including, but not limited
to, the reservation of a sufficient number of its Common Shares in accordance
with Section 9 hereof) in connection with such consummation as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights. The Company covenants and agrees that it shall
not consummate any such consolidation, merger, sale or transfer unless prior
thereto the Company and such issuer shall have executed and delivered to the
Rights Agent a supplemental agreement so providing. The Company shall not enter
into any transaction of the kind referred to in this Section 13 if at the time
of such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or 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. The provisions of this Section
13 shall similarly apply to successive mergers or consolidations or sales or
other transfers. For purposes hereof, the "earning power" of the Company and its
Subsidiaries shall be determined in good faith by the Board on the basis of the
operating earnings of each business operated by the Company and its Subsidiaries
during the three (3) fiscal years preceding the date of such determination (or,
in the case of any business not operated by the Company or any Subsidiary during
three (3) full fiscal years preceding such date, during the period such business
was operated by the Company or any Subsidiary).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board.
If on any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the Board
shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
(0.01) (subject to appropriate adjustment in the case of a subdivision or
combination) of a Preferred Share) upon
19
exercise of the Rights or to distribute certificates which evidence fractional
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth (0.01) of a Preferred Share). Interests in fractions of Preferred
Shares in integral multiples of one one-hundredth (0.01) of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred Shares
that are not integral multiples of one one-hundredth (0.01) of a Preferred
Share, the Company shall pay to each registered holder of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share as the
fraction of one Preferred Share that such holder would otherwise receive upon
the exercise of the aggregate number of rights exercised by such holder. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
any right to receive fractional Rights or fractional shares (other than
fractions which are integral multiples of one one-hundredth (0.01) upon exercise
of a Right (except as provided above).
Section 15. Rights of Action.
All rights of action in respect of this Agreement, excepting the rights of
action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares) may, 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), on his or her own behalf and for his or her own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his or her right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders.
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares;
20
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books maintained by the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer with a completed form of certification; 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 certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common 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 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 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its 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 or
liability in connection therewith. The indemnification provided for hereunder
shall survive the expiration of the Rights and the termination of this
Agreement. The costs and expenses of enforcing this right of indemnification
shall also be paid by the Company.
(b) The Rights Agent may conclusively rely upon and shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in
reliance upon any Right Certificate or certificate for Preferred Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed,
21
executed and, where necessary, verified or acknowledged, by the proper person or
persons. Notwithstanding anything in this Agreement to the contrary, in no event
shall the Rights Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Rights Agent has been advised of the likelihood of such loss or damage
and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any entity into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any entity resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any entity succeeding to the corporate trust business
of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
entity would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations expressly set forth
in this Agreement and no implied duties or obligations shall be read into this
Agreement against the Rights Agent. The Rights Agent shall perform those duties
and obligations upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it may consult
with legal counsel (who may be legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established
22
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the President, a
Vice President, the Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11
or 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, a Vice President, the Secretary
or the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than ten (10) Business Days after the
date any officer of the
23
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received, in response to such application, written instructions with respect to
the proposed action or omission specifying a different action to be taken or
omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
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 and the
Preferred Shares by registered or certified mail. In the event the transfer
agency relationship in effect between the Company and the Rights Agent
terminates, the Rights Agent will be deemed to have resigned automatically and
be discharged from its duties under this Agreement as of the effective date of
such termination, but no sooner than thirty (30) days after the Rights Agent
receives notice in writing of termination of the transfer agency relationship,
unless otherwise agreed by the parties, and the Company shall be responsible for
sending any required notice. 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 and the Preferred Shares by registered or certified
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
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,
24
whether appointed by the Company or by such a court, shall be a corporation or
national bank organized and doing business under the laws of the United States
or of any state of the United States, in good standing, which is authorized
under such laws to exercise corporate trust 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, including its
Affiliates, of at least $50 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 and the Preferred Shares. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Stock following the Distribution
Date and prior to the earlier of the Redemption Date and the Close of Business
on the Final Expiration Date, the Company may with respect to shares of Common
Stock so issued or sold pursuant to (i) the exercise of stock options, (ii)
under any employment plan or arrangement, (iii) upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company, or (iv) a
contractual obligation of 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.
Section 23. Redemption.
(a) The Company may, at its option and with the approval of the Board, at
any time prior to such time as any Person becomes an Acquiring Person, redeem
all but not less than all the then outstanding Rights at a redemption price of
$0.001 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The redemption
of the Rights by the Board may be made effective at such time, on such basis and
subject to such conditions as the Board in its sole discretion may establish.
(b) Immediately upon the time of the effectiveness of the redemption of the
Rights pursuant to Section 23(a) hereof or such earlier time as may be
determined by the Board in the action ordering such redemption (although not
earlier than the time of such action) (such time the "Redemption Date"), and
without any further action and without any notice, the right to exercise the
Rights shall terminate and the only right thereafter of the holders of Rights
shall be
25
to receive the Redemption Price. The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such redemption.
Within ten (10) days after such action of the Board ordering the redemption of
the Rights pursuant to Section 23(a) hereof, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. If the payment of
the Redemption Price is not included with such notice, each such notice 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 24 hereof, other than in
connection with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) The Company may, at its option, by action of the Board, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii) hereof) for Common
Shares at an exchange ratio of one Common Share per Right (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board shall not be empowered to effect such exchange at any time
after any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of a majority of the Common Shares then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of any
Rights pursuant to Section 24(a) hereof and without any further action and
without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that number
of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
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 will 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 Rights which have become void pursuant
to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company may, at its
option, by action of the Board, substitute Preferred Shares or common stock
equivalents for Common Shares exchangeable for Rights, at the initial rate of
one one-hundredth (0.01) of a
26
Preferred Share (or an appropriate number of common stock equivalents) for
each Common Share, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Shares pursuant to the terms thereof, so that the
fraction of a Preferred Share delivered in lieu of each Common Share shall have
the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares,
Preferred Shares or common stock equivalents authorized by the Company's
certificate of incorporation and not outstanding or subscribed for, or reserved
or otherwise committed for issuance for purposes other than upon exercise of
Rights, to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to
authorize additional Common Shares, Preferred Shares or common stock equivalents
for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common Shares
or to distribute certificates which evidence fractional Common Shares. 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 per share market value of a whole Common Share. For the purposes
of this Section 24(e), the current per share market value of a whole Common
Share shall be the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose to effect or permit to occur any
event set forth in Section 11(a)(ii) or 13 hereof, then the Company shall give
notice thereof to each holder of Rights in accordance with Section 26 hereof at
least ten (10) days prior to the occurrence of such event.
(b) In case any event set forth in Section 11(a)(ii) or 13 hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) and 13
hereof.
Section 26. Notices.
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
NN, Inc.
2000 Waters Edge Drive
Building C, Suite 12
Johnson City, TN 37604
Phone: (423) 743-9151
27
Fax: (423) 743-2670
Attention: William C. Kelly, Jr.
Copy to:
Husch Blackwell Sanders LLP
4801 Main Street, Suite 1000
Kansas City, MO 64112
Phone: (816) 983-8000
Fax: (816) 983-8080
Attention: James M. Ash, Esq.
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by registered or certified mail and shall be deemed given upon
receipt and, addressed (until another address is filed in writing with the
Company) as follows:
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
Attention: Client Services
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
The Company may from time to time, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or to make any change to or delete any
provision hereof or to adopt any other provisions with respect to the Rights
which the Company may deem necessary or desirable; provided, however, that from
and after such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended or supplemented in any manner which would adversely affect
the interests of the holders of Rights (other than an Acquiring Person and its
Affiliates and Associates). Any supplement or amendment authorized by this
Section 27 will be evidenced by a writing signed by the Company and the Rights
Agent. Notwithstanding anything in this Agreement to the contrary, no supplement
or amendment that changes the rights and duties of the Rights Agent under this
Agreement will be effective against the Rights Agent without the execution of
such supplement or amendment by the Rights Agent.
Section 28. Successors.
28
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
entity other than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares)
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares).
Section 30. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
Close of Business on the tenth (10th) day following the date of such
determination by the Board.
Section 31. Governing Law.
This Agreement and each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
Section 32. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 33. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
29
Section 34. Administration.
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 Exchange Act.
The Board shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board, or the Company, or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power (i) to
interpret the provisions of this Agreement and (ii) to make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Right Certificates and all other parties and (y) with respect to claims
specifically arising from the Agreement, not subject the Board to any liability
to the holders of the Rights.
Section 35. Force Majeure.
Notwithstanding anything to the contrary contained herein, the Rights
Agent shall not be liable for any delays or failures in performance resulting
from acts beyond its reasonable control including, without limitation, acts of
God, terrorist acts, shortage of supply, breakdowns or malfunctions,
interruptions or malfunction of computer facilities, or loss of data due to
power failures or mechanical difficulties with information storage or retrieval
systems, labor difficulties, war, or civil unrest.
[Remainder of page intentionally left blank. Signature page follows.]
30
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed and their respective corporate seals to be hereunder affixed
and attested, all as of the day and year first above written.
"COMPANY" NN, INC.
By: /s/ Roderick R. Baty
---------------------------------------
Name: Roderick R. Baty
Title: Chairman and Chief Executive Officer
"RIGHTS AGENT" COMPUTERSHARE TRUST COMPANY, N.A.
By: /s/ Dennis V. Moccia
---------------------------------------
Name: Dennis V. Moccia
Title: Manager, Contract Administration
(Signature page to Rights Agreement)
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
NN, INC.
___________________________________________________
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
_____________________________________________________
NN, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Corporation"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law at a meeting duly called and held on December 13, 2008:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the Restated Certificate of
Incorporation of the Corporation (the "Certificate of Incorporation"), the Board
of Directors hereby creates a series of Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), of the Corporation and hereby states the
designation and number of shares, and fixes the relative rights, preferences,
and limitations thereof as follows:
Section 1. Designation and Amount. The shares of this series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 200,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A 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 Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any other stock) ranking prior and superior to the Series A
Preferred Stock with respect
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to dividends, the holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the last day of March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount (if any) per share
(rounded to the nearest cent), 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, par value $0.01 per share (the "Common Stock"), of
the Corporation or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A 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 or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).
(C) Dividends due pursuant to paragraph (A) of this Section shall begin to
accrue and be cumulative on outstanding shares of Series A Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of 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 Series 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 Series
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
Series 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.
-A-2-
Section 3. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series 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 in the Certificate of Incorporation,
including any other Certificate of Designations creating a series of Preferred
Stock or any similar stock, or by law, the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise required by law, holders of
Series 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 Series 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 Series 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 Series 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 Series A Preferred Stock, except dividends
paid ratably on the Series 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; or
(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 Series 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
-A-3-
Corporation ranking junior (as to dividends and upon dissolution, liquidation or
winding up) to the Series A Preferred Stock.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. The
Corporation shall take all such actions as are necessary to cause all such
shares to become authorized but unissued shares of Preferred Stock that may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein or in the Certificate of
Incorporation, including any Certificate of Designations creating a series of
Preferred Stock or any similar stock, or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock plus an amount equal to any accrued and unpaid dividends. 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 or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
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
Series 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 or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
-A-4-
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. Amendment. The Certificate of Incorporation shall not be amended
in any manner, including in a merger or consolidation, which would alter,
change, or repeal the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and upon liquidation, dissolution and winding up,
junior to all series of Preferred Stock.
Section 10. Fractional Shares. The Corporation may, but shall not be
required to, issue Series A Preferred Stock 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 Series A Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation by its duly authorized officer this ___ day of December,
2008.
NN, INC.
By: _______________________________
Name:
Title:
-A-5-
EXHIBIT B
Form of Right Certificate
Certificate No. R-_______ _____ Rights
NOT EXERCISABLE AFTER DECEMBER 16, 2011 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR WERE ACQUIRED OR
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES OR
AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
NN, 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 December 16, 2008 (the "Rights Agreement"),
between NN, Inc., a Delaware corporation (the "Company"), and Computershare
Trust Company, N.A. (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York time, on December 16, 2011, at the
principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth (0.01) of a fully paid non-assessable share of
Series A Junior Participating Preferred Stock, par value $0.01 per share (the
"Preferred Shares"), of the Company, at a purchase price of $14.00 per one
one-hundredth (0.01) of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the certification and
the Form of Election to Purchase duly executed. The number of Rights evidenced
by this Right Certificate (and the number of one one-hundredths (0.01) of a
Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
December 16, 2008, based on the Preferred Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of one
one-hundredths (0.01) of a Preferred Share which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
From and after the occurrence of an event described in Section
11(a)(ii) of the Rights Agreement, if the Rights evidenced by this Right
Certificate are or were at any time on or after the earlier of (x) the date of
such event and (y) the Distribution Date (as such term is defined in the Rights
Agreement) acquired or beneficially owned by an Acquiring Person or an Associate
or Affiliate of an Acquiring Person (as such terms are defined in the Rights
Agreement), such
-B-1-
Rights shall become void, and any holder of such Rights shall thereafter have no
right to exercise such Rights.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, at the Company's option,
the Rights evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $0.001 per Right or (ii) may be exchanged in whole or in
part for shares of the Company's Common Stock, par value $0.01 per share, or
Preferred Shares.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth (0.01) of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate 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 Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
-B-2-
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ____________, _____.
Attest: NN, INC.
_____________________________ By: ____________________________________
Countersigned:
COMPUTERSHARE TRUST COMPANY, N.A.
Rights Agent
By: _______________________________
Authorized Signature
-B-3-
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________________ hereby sells,
assigns and transfers unto (Please print name and address of transferee) this
Right Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _______________________________,
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Date: ______________ __, _______
__________________________________
Signature
Signature Guaranteed:
Signatures should be guaranteed by an eligible guarantor institution (bank,
stock broker or savings and loan association with membership in an approved
signature medallion program).
----------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
__________________________________
Signature
----------------------------------------------------------------
-B-4-
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To NN, 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 and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _____________ __, ______
__________________________________
Signature
Signature Guaranteed:
Signatures should be guaranteed by an eligible guarantor institution (bank,
stock broker or savings and loan association with membership in an approved
signature medallion program).
-B-5-
Form of Reverse Side of Right Certificate -- continued
------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
__________________________________
Signature
----------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
-B-6-
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On December 13, 2008, the Board of Directors (the "Board") of NN, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock, par value $0.01 per share (the
"Common Shares") outstanding on December 15, 2008 (the "Record Date") to the
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-hundredth (0.01) of a share of Series A
Junior Participating Preferred Stock, par value $0.01 per share (the "Preferred
Shares"), of the Company, at a price of $14.00 per one one-hundredth (0.01) of a
Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and Computershare Trust Company, N.A., as Rights
Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the tenth (10th)
business day (or such later date as may be determined by action of the Board
prior to such time as any Person becomes an Acquiring Person) following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of fifteen percent (15%)
or more of the outstanding Common Shares or (ii) the close of business on the
tenth (10th) business day (or such later date as may be determined by action of
the Board prior to such time as any Person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of fifteen percent (15%) or more of the
outstanding Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date or upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the Close of Business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on December 16, 2011 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
-C-1-
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 at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths
(0.01) of a Preferred Share issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Shares or a
stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a quarterly dividend
payment of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to an
aggregate payment of 100 times the aggregate payment made per Common Share. Each
Preferred Share will have 100 votes, voting together with the Common Shares. 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. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth (0.01) interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
From and after the time any Person becomes an Acquiring Person, if the
Rights evidenced by this Right Certificate are or were at any time on or after
the earlier of (x) the date of such event and (y) the Distribution Date (as such
term is defined in the Rights Agreement) acquired or beneficially owned by an
Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such
terms are defined in the Rights Agreement), such Rights shall become void, and
any holder of such Rights shall thereafter have no right to exercise such
Rights.
In the event that, at any time after a Person becomes an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
fifty percent (50%) or more of its consolidated assets or earning power are
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two (2) times the exercise price of the Right. In the event that any
person becomes an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
and its Affiliates and Associates (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Common Shares
having a
-C-2-
market value of two (2) times the exercise price of the Right. If the Company
does not have sufficient Common Shares to satisfy such obligation to issue
Common Shares, or if the Board so elects, the Company shall deliver upon payment
of the exercise price of a Right an amount of cash or securities equivalent in
value to the Common Shares issuable upon exercise of a Right; provided that, if
the Company fails to meet such obligation within thirty (30) days following the
date a Person becomes an Acquiring Person, the Company must deliver, upon
exercise of a Right but without requiring payment of the exercise price then in
effect, Common Shares (to the extent available) and cash equal in value to the
difference between the value of the Common Shares otherwise issuable upon the
exercise of a Right and the exercise price then in effect. The Board may extend
the 30-day period described above for up to an additional sixty (60) days to
permit the taking of action that may be necessary to authorize sufficient
additional Common Shares to permit the issuance of Common Shares upon the
exercise in full of the Rights.
At any time after any Person becomes an Acquiring Person and prior to the
acquisition by any person or group of a majority of the outstanding Common
Shares, the Board may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least one
percent (1%) in such Purchase Price. No fractional Preferred Shares will be
issued (other than fractions which are integral multiples of one one-hundredth
(0.01) of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on the last
trading day prior to the date of exercise.
At any time prior to the time any Person becomes an Acquiring Person, the
Board may redeem the Rights in whole, but not in part, at a price of $0.001 per
Right (the "Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board 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.
The terms of the Rights may be amended by the Board without the consent of
the holders of the Rights, except that from and after such time
as any person becomes an Acquiring Person no such amendment may adversely affect
the interests of the holders of the Rights (other than the Acquiring Person and
its Affiliates and Associates).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the 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 Agreement, which is hereby
incorporated herein by reference.
-C-3-
RE: NN, Inc.
2000 Waters Edge Drive
Johnson City, TN 37604
FOR FURTHER INFORMATION:
AT THE COMPANY AT FINANCIAL RELATIONS BOARD
Will Kelly Marilynn Meek Susan Garland