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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN
CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
H&R Block, Inc.
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(Exact name of registrant as specified in charter)
MISSOURI
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(State of incorporation or organization)
44-0607856
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(I.R.S. Employer Identification No.)
4400 Main Street, Kansas City, MO 64111
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(Address of principal executive offices) (zip code)
If this Form relates to the registration of a class of debt securities and
is effective upon filing pursuant to General Instruction A.(c)(1), please check
the following box. [ ]
If this Form relates to the registration of a class of debt securities
and is to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [ ]
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange on which each
Title of each class to be so registered class is to be registered
- --------------------------------------- -----------------------------------
Preferred Stock Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act: None
Item 1. Description of Registrant's Securities to be Registered.
The Board of Directors of H&R Block, Inc. (the "Company") declared a
dividend distribution of one right (a "Right") for each outstanding share of the
Company's Common Stock, without par value (the "Common Stock"), payable to the
shareholders of record at the close of business on the Effective Date (defined
below) (the "Record Date"). Except as set forth below, each Right, when
exercisable, entitles the registered holder to purchase from the Company one
one-hundredth of a share of a newly issued series of the Company's preferred
stock, designated Participating Preferred Stock, without par value (the
"Preferred Stock"), at a purchase price of $215.00 per one one-hundredth (1/100)
of a share, subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement") between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
Capitalized terms herein have the same meaning set forth in the Rights
Agreement. The following description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the form of Rights
Agreement (and the exhibits attached thereto) attached hereto.
Effective Date of Plan
The Plan will become effective upon the earliest of the termination or
expiration of the existing Shareholder Rights Plan (first effective on July 14,
1988 (the "Existing Plan")) or the date upon which the Existing Plan is
determined to have become ineffective, regardless of the reasons therefor (the
"Effective Date"). The anticipated Effective Date for the Plan is July 25, 1998.
Rights Evidenced by Common Stock Certificates
The Rights will not be exercisable until the Distribution Date (defined
below). Certificates for the Rights will not be sent to shareholders and the
Rights will attach to and trade only together with Common Stock certificates.
Accordingly, Common Stock certificates outstanding on the Record Date will
evidence the rights related thereto (even if such Certificates make reference to
a prior plan), and Common Stock certificates issued after the Record Date will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange, or expiration of the
Rights), the surrender or transfer of any certificates for Common Stock
outstanding as of the Record Date, even without notation or a copy of this
Summary being attached thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Distribution Date
The Rights will separate from the Common Stock certificates, Right
Certificates (as defined below) will be issued, and the Rights will become
exercisable upon the "Distribution Date", which is the earlier of the following
dates:
(i) the first to occur of (a) a public announcement that, without the prior
written consent of the Company, a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
15% or more of the outstanding shares of Common Stock, or (b) the date on which
the Company first has notice or otherwise determines that a person has become an
Acquiring Person (the "Stock Acquisition Date"); or
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(ii) ten days (or such later date as may be determined by action of the
Board of Directors, but in no event later than the date set forth in (i) above)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer for 15% or more of the outstanding shares of Common
Stock without the Prior Written Approval of the Company.
Issuance of Right Certificates
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date, and such separate Right Certificates alone will then evidence
the Rights.
Final Expiration Date
The Rights will expire on the earliest of (i) March 25, 2008 (the "Final
Expiration Date") unless the Final Expiration Date is extended by the Board, or
(ii) the redemption or exchange of the Rights by the Company, as described
below.
Initial Exercise of the Rights
Following the Distribution Date, and until one of the further events
described below, holders of the Rights will be entitled to receive, upon
exercise and the payment of $215 per Right, one one-hundredth of a share of
Preferred Stock.
Adjustments to Prevent Dilution
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for Preferred Stock, certain convertible securities or
securities having the same or more favorable rights, privileges and preferences
as the Preferred Stock at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
out of earnings or retained earnings) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right are subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock.
Cash Paid Instead of Issuing Fractional Shares
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractions of shares will be issued and, in lieu thereof,
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an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
Right to Buy Common Stock at Half Price
In the event that an Acquiring Person becomes such, proper provisions shall
be made so that each holder of a Right will 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 having a market value of two times the exercise price of
the Right, to the extent available, and then (after all authorized and
unreserved shares of Common Stock have been issued) a common stock equivalent
(such as Preferred Stock or another equity security with at least the same
economic value as the Common Stock) having a market value of two times the
exercise price of the Right, with Common Stock to the extent available being
issued first (such right being called the "Subscription Right").
Right to Buy Acquiring Company Stock at Half Price
In the event that following the Distribution Date, the Company is involved
in a merger or other business combination transaction in which the Common Stock
is exchanged or changed, or 50% or more of the Company's assets or earning power
are sold (in one transaction or a series of transactions), proper provision
shall be made so that each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company (or, in
the event there is more than one acquiring company, the acquiring company
receiving the greatest portion of the assets or earning power transferred) which
at the time of such transaction would have a market value of two times the
exercise price of the Right (such right being called the "Merger Right"). The
holder of a Right will continue to have the Merger Right whether or not such
holder exercises the Subscription Right, in whole or in part.
Acquiring Person Rights Void
Upon the occurrence of any of the events giving rise to the exercisability
of the Merger Right or the Subscription Right, any Rights that are or were at
any time owned by an Acquiring Person shall become void insofar as they relate
to the Merger Right or the Subscription Right.
Redemption
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $.00125 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. The redemption of the Rights by the Board of Directors may
be made effective at such time, in such form and on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon the action of the majority of the Board of Directors of the
Company electing to redeem the Rights, evidence of which shall be promptly filed
with the Rights Agent, and without any further action and without any notice,
the right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio.
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Exchange
After a person or group has become an Acquiring Person, the Company may
exchange all or part of the then outstanding and exercisable Rights (other than
Rights owned by an Acquiring Person that became void with respect to the Merger
Right or the Subscription Right) for Common Stock or common stock equivalents at
an Exchange Ratio of one share of Common Stock (or equivalent value of common
stock equivalent) per Right or such other Exchange Ratio as determined by the
Board of Directors. The Company may not effect such an exchange, however, at any
time after any person (other than the Company and related entities), together
with certain related parties, beneficially owns 50% or more of the Common Stock.
Upon action by the Company ordering such exchange, the right to exercise the
Rights subject to the exchange will terminate and the only right of the holders
of such Rights will be to receive shares of Common Stock based on the above
Exchange Ratio.
Terms of Preferred Stock
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock the Company may
issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential quarterly dividend in an amount equal
to 100 times the dividend declared on each share of Common Stock, but in no
event less than $1.00. In the event of liquidation, the holders of Preferred
Stock will receive a preferred liquidation payment equal to the greater of
$100.00 or 100 times the payment made per each share of Common Stock. Each share
of Preferred Stock will have 100 votes, voting together with the shares of
Common Stock. In the event of any merger, consolidation or other transaction in
which shares of Common Stock are exchanged, each share of Preferred Stock will
be entitled to receive 100 times the amount and type of consideration received
per share of Common Stock. The rights of the Preferred Stock as to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary anti-dilution provisions. Fractional shares of Preferred
Stock will be issuable; however, the Company may elect to distribute depositary
receipts in lieu of such fractional shares. In lieu of fractional shares other
than fractions that are multiples of one one-hundredths of a share, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise.
Amendments to the Rights Agreement
The Rights Agreement may be amended or supplemented from time to time in
order (a) to cure any ambiguity, (b) to correct or supplement any provision
which may be defective or inconsistent with any other provision, (c) to shorten
or lengthen any time period hereunder (including the Final Expiration Date,
subject to certain limitations), (d) to increase or decrease the Purchase Price,
(e) increase or decrease the Exchange Ratio, or (f) to change or supplement the
provisions which the Company may deem necessary or desirable and which shall not
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adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person).
However, if a person becomes an Acquiring Person, the Rights Agreement may not
be amended in any manner which would adversely affect the interests of the
holders of the Rights.
Adverse Person
The Company may, prior to any person becoming an Acquiring Person, amend
the Rights Agreement to lower the 15% threshold to not less than the greater of
(i) any percentage greater than the largest percentage of the Voting Power of
the Company then known by the Company to be beneficially owned by any person or
group (other than the Company, or any of its affiliates), and (ii) 10%.
Shareholder Rights
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Item 2. Exhibits.
Exhibit No. Description of Exhibit
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1 Rights Agreement, dated as of March 25, 1998,
between H&R Block, Inc. and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent,
which includes as Exhibit 1 the form of
Certificate of Amendment of Certificate of
Designation, Preferences and Rights of
Participating Preferred Stock; the form of Right
Certificate as Exhibit 2; and the Summary of
Shareholder Rights Plan as Exhibit 3.
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
H&R BLOCK, INC.
By: /s/ Ozzie Wenich
------------------------------------------
Ozzie Wenich, Senior Vice President and
Chief Financial Officer
Date: July 22, 1998
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
1 Rights Agreement, dated as of March 25, 1998,
between H&R Block, Inc. and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent,
which includes as Exhibit 1 the form of
Certificate of Amendment of Certificate of
Designation, Preferences and Rights of
Participating Preferred Stock; the form of Right
Certificate as Exhibit 2; and the Summary of
Shareholder Rights Plan as Exhibit 3.
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RIGHTS AGREEMENT
H&R BLOCK, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
Dated March 25, 1998
INDEX
Page
Section 1. Certain Definitions..........................................1
Section 2. Appointment of Rights Agent..................................4
Section 3. Issue of Right Certificates..................................4
Section 4. Form of Right Certificates...................................6
Section 5. Countersignature and Registration............................7
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....................................8
Section 8. Cancellation and Destruction of Right Certificates.......10
Section 9. Reservation and Availability of Shares
of Preferred Stock..........................................10
Section 10. Preferred Stock Record Date.................................11
Section 11. Adjustment of Purchase Price, Number
of Shares or Number of Rights...............................11
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares.........................................18
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.........................18
Section 14. Fractional Rights and Fractional Shares.....................20
Section 15. Rights of Action............................................22
Section 16. Agreement of Right Holders..................................22
Section 17. Right Certificate Holder Not Deemed a Shareholder...........22
Section 18. Concerning the Rights Agent.................................23
Section 19. Merger or Consolidation or Change of
Name of Rights Agent........................................23
Section 20. Duties of Rights Agent......................................24
Section 21. Change of Rights Agent......................................25
Section 22. Issuance of New Right Certificates..........................26
Section 23. Redemption and Termination..................................27
Section 24. Exchange....................................................27
Section 25. Notice of Proposed Actions..................................28
Section 26. Notices.....................................................29
Section 27. Supplements and Amendments..................................30
Section 28. Successors..................................................30
Section 29. Benefits of this Agreement..................................30
Section 30. Severability................................................31
Section 31. Governing Law...............................................31
Section 32. Counterparts................................................31
Section 33. Descriptive Headings........................................31
Signatures
Exhibit 1 Form of Certificate of Amendment of Certificate of Designation,
Preferences and Rights of Participating Preferred Stock
Exhibit 2 Form of Right Certificate
Exhibit 3 Summary of Shareholder Rights Plan
i
RIGHTS AGREEMENT
This Agreement, dated March 25, 1998, is entered into between H&R Block,
Inc., a Missouri corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C. (the "Rights Agent").
Recitals
On March 25, 1998, the Board of Directors of the Company (i) authorized the
issuance and declared a dividend distribution of one right (hereinafter referred
to as a "Right") for each share of Common Stock, without par value, of the
Company outstanding at the close of business on the Effective Date (the "Record
Date") (other than shares of such Common Stock held in the Company's treasury on
such date), and (ii) authorized and directed the issuance of one Right in
respect of each share of Common Stock of the Company issued between the Record
Date (whether originally issued or issued from the Company's treasury) and the
Distribution Date (as such term is defined in Section 3 hereof), with each Right
representing the right to purchase one one-hundredth of a share of participating
preferred stock of the Company having the rights, powers and preferences set
forth in the form of Certificate of Designation attached hereto as Exhibit 1
(the "Preferred Stock"), upon the terms and subject to the conditions
hereinafter set forth (the "Rights").
The Company desires to appoint the Rights Agent to act as provided herein,
and the Rights Agent is willing to so act.
Agreements
In consideration of the recitals and the mutual agreements herein set
forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean, except as otherwise provided herein, any
Person (as hereinafter defined) who or which, together with all Affiliates and
Associates (as each term is hereinafter defined) of such Person, without the
Prior Written Approval of the Company, shall be the Beneficial Owner (as
hereinafter defined) of securities of the Company constituting 15% or more of
the Voting Power (as hereinafter defined) of the Company or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of securities representing 15% or more of
the Voting Power of the Company; but "Acquiring Person" shall not include the
Company, any Subsidiary (as hereinafter defined) of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding securities of the Company to the extent organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such employee benefit plan. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of any acquisition of
voting securities of the Company by the Company which, by reducing the amount of
such securities outstanding, increases the proportionate Voting Power of such
securities beneficially owned by such Person to 15% or more of the Voting Power;
provided, however, that if a Person becomes the Beneficial Owner of securities
constituting 15% or more of the Voting Power by reason of purchases by the
Company and shall, after such purchases by the Company, become the Beneficial
Owner of any additional voting securities of the Company without the Prior
Written Approval of the Company, then such Person shall be deemed to be an
Acquiring Person. Any Person who or which, together with all Affiliates and
Associates of such Person, inadvertently becomes the Beneficial Owner of
securities of the Company representing 15% or more of Voting Power of the
Company or otherwise becomes a Beneficial Owner without a plan or intention to
acquire control of the Company, shall not become an "Acquiring Person" so long
as such Person, individually or together with the Affiliates and Associates of
such Person, promptly enters into, and delivers to the Company, an irrevocable
commitment to promptly divest, and thereafter promptly divests (without
exercising or retaining any power, including voting, with respect to such
securities), sufficient securities of the Company so that such Person, together
with all Affiliates and Associates of such Person, ceases to be the Beneficial
Owner of 15% or more of the Voting Power of the Company.
Notwithstanding the foregoing, no Person who is, as of the Effective Date
of this Agreement, the Beneficial Owner of securities of the Company
constituting 15% or more of the Voting Power of the Company, or who is the
Beneficial Owner of securities and/or rights convertible into or exercisable for
securities of the Company constituting 15% or more of the Voting Power of the
Company (each such Person, together with its Affiliates and Associates, being an
"Exempt Person"), shall be deemed an "Acquiring Person" as a result of the
ownership of such securities or rights, or as a result of the conversion or
exercise of such securities or rights and the ownership of the securities
obtained thereby, unless such Person is deemed to be an Acquiring Person by the
Board of Directors; provided, however, that if after the date hereof any Exempt
Person shall become the Beneficial Owner of additional securities of the Company
so that such Person's Beneficial Ownership is in excess of the amount of
securities of the Company Beneficially Owned by such Person as of the Effective
Date of this Agreement, then such Exempt Person shall be deemed to be an
Acquiring Person.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof.
(c) A person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, beneficially owns as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
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exchange rights, rights (other than the Rights) warrants or options, or
otherwise, provided, however, that a Person shall not be deemed the
"Beneficial Owner" of securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
payment or exchange; 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 any security under this clause (B) if the
agreement, arrangement or understanding to vote such securities (1) arises
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also
then reportable by such person 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 with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
or consent as described in clause (B) of subparagraph (ii) of this
paragraph (c)) or disposing of any securities of the Company; or
(iv) 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.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of Missouri are authorized or
obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., Kansas City
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., Kansas City time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the Common Stock, without par value, of the
Company, except that "Common Stock" when used with reference to any Person other
than the Company shall mean the capital stock with the greatest Voting Power of
such Person or the equity securities or other equity interest having power to
control or direct the management of such Person, or, if such Person is a
Subsidiary of another Person, of the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding such capital stock,
equity securities or equity interests.
(g) "Distribution Date" shall have the meaning defined in Section 3 hereof.
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(h) "Effective Date" of this Agreement shall be the earliest of the
termination or expiration of the Shareholder Rights Plan adopted by the Board on
July 14, 1988, as amended, (the "Existing Plan") or the date for which the
Existing Plan becomes or became ineffective, regardless of the reason therefor.
(i) "Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of any
such entity.
(j) "Prior Written Approval of the Company" shall mean prior express
written consent of the Company to the actions in question, executed on behalf of
the Company by a duly authorized officer of the Company following the express
approval by action of at least a majority of the members of the Board of
Directors then in office.
(k) "Purchase Price" shall have the meaning defined in Section 4 hereof.
(l) "Stock Acquisition Date" shall mean the earlier of (i) the first date
of public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such, or (ii) the date on which the Company first has notice,
direct or indirect, or otherwise determines, that a Person has become an
Acquiring Person.
(m) "Subsidiary" shall mean with respect to any Person, any other Person of
which securities or other ownership interests having ordinary Voting Power, in
the absence of contingencies, to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person or one or more of such Person's Subsidiaries,
except that "Subsidiary" when used with reference to the Company shall mean any
corporation or other entity of which either a majority of the Voting Power of
the voting equity securities or a majority of the equity interests is owned,
directly or indirectly by the Company.
(n) "Voting Power" shall mean the voting power of all securities of a
Person then outstanding generally entitled to vote for the election of directors
of the Person (or, where appropriate, for the election of a person performing
similar functions).
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) 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. In the event the Company appoints one or more co-Rights Agents, the
respective duties of the Rights Agent and any co-Rights Agent shall be as the
Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the Stock Acquisition
Date or (ii) the Close of Business on the tenth Business Day after (or such
later date as may be determined by action of the Board of Directors, but in no
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event later than the date set forth in clause (i) above) the date of the
commencement of, or first public announcement of the intent of any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any entity holding
securities of the Company to the extent organized, appointed or established by
the Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan) to commence (which intention to commence remains in
effect for five Business Days after such announcement), without the Prior
Written Approval of the Company, a tender or exchange offer which would result
in any Person becoming an Acquiring Person (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date") (x)
the Rights will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for the Common Stock registered in the names of
the holders of the Common Stock (which certificates for Common Stock shall be
deemed also to be Right Certificates, as hereinafter defined) and not by
separate Right Certificates, as more fully set forth below, and (y) the Rights
(and the right to receive certificates therefor) will be transferable only in
connection with the transfer of the underlying shares of Common Stock, as more
fully set forth below. As soon as practicable after the Company has notified the
Rights Agent of the occurrence of the Distribution Date, the Company shall
prepare and execute, and the Rights Agent shall countersign and send, by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit 2 hereto (the "Right Certificate"), evidencing
one Right for each share of Common Stock so held. As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date or as soon as practicable thereafter, the Company
will send a copy of a Summary of Shareholder Rights Plan, in substantially the
form of Exhibit 3 hereto (the "Summary of Rights"), by first-class postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for the Common Stock outstanding as
of the Record Date, until the Distribution Date (or the earlier redemption,
exchange, expiration or termination of the Rights), the Rights will be evidenced
by such certificates for the Common Stock registered in the names of the holders
of the Common Stock and the registered holders of the Common Stock shall also be
registered holders of the associated Rights. Until the Distribution Date (or the
earlier redemption, expiration or termination of the Rights), the surrender for
transfer of any of the certificates for the Common Stock outstanding in respect
of which Rights have been issued (with or without a copy of the Summary of
Rights attached thereto) shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
(c) Certificates for the Common Stock (including the Common Stock held in
the Company's treasury on the Record Date) that becomes outstanding after the
Record Date but prior to the earlier of the Distribution Date or the redemption,
expiration or termination of the Rights shall be deemed also to be certificates
for Rights and shall have impressed, printed or written on, or otherwise affixed
to them the following legend:
5
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between H&R Block, Inc.
(the "Company") and ChaseMellon Shareholder Services, L.L.C. (the "Rights
Agent") dated as of March 25, 1998 (the "Rights Agreement") as it may from
time to time be supplemented or amended, the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights may be redeemed, may be
exchanged, may expire, or may be evidenced by separate certificates and no
longer be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement without charge
within five days after receipt of a written request therefor. Under certain
circumstances, Rights issued to or held by Acquiring Persons or their
Affiliates or Associates (as defined in the Rights Agreement) and any
subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier redemption, exchange, expiration or
termination of the Rights), the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any of such certificates shall also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificates.
In the event that the Company purchases or acquires any Common Stock after
the Record Date but prior to the Distribution Date, any Rights associated with
such Common Stock shall be deemed canceled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Stock which
are no longer outstanding. Upon reissuance of such Common Stock by the Company
prior to the Distribution Date (or earlier redemption, exchange, expiration or
termination of the Rights) the Rights shall again attach to such Common Stock as
set forth in this Section 3(c).
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall be in
substantially the same form as Exhibit 2 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, rule or regulation 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
customary usage. Subject to the provisions of Section 11 and Section 22 hereof,
the Right Certificates, whenever issued, shall be dated as of the Record Date,
and on their face shall entitle the holders thereof to purchase such number of
one one-hundredths of a share of Preferred Stock as shall be set forth therein
at the price per one one-hundredths of a share as set forth therein (the
"Purchase Price"), but the number of such shares and the Purchase Price shall be
and remain subject to adjustment as provided in Sections 11, 13 and 22 hereof.
6
(b) Any Right Certificate issued pursuant to Section 3(a) hereof that
represents Rights as to which an Acquiring Person or any Associate or Affiliate
thereof is the Beneficial Owner and any Right Certificate issued at any time
upon the transfer of any Rights to an Acquiring Person or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate, and any Right Certificate issued pursuant to Section 6 hereof,
Section 11 hereof, Section 13 hereof or Section 22 hereof upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate were issued
to a Person who was an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person. This Right Certificate and
the Rights represented hereby may become void in the
circumstances specified in Section 7(e) of the Rights
Agreement.
The failure to print the foregoing legend on any such Right Certificate or
any defect therein shall not affect in any manner whatsoever the application of
interpretation of the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company by
its President, its Chief Financial Officer or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be countersigned manually or by facsimile signature
by the Rights Agent or any registrar for the Common Stock (the "Registrar") and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company whose manual or facsimile signature is affixed to the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent or the Registrar and issuance and delivery
by the Company, such Right Certificates, nevertheless, may be countersigned by
the Rights Agent or the Registrar, issued and delivered 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. 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 the office of the Registrar or such other office designated for such
purpose, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by
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each of the Right Certificates, the certificate number of each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date (as such term is defined in Section 7(a) hereof), any Right
Certificate or Certificates (other than Right Certificates representing Rights
that have become void pursuant to Section 7(e) hereof) may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
office of the Registrar or such other office designated for such purpose.
Thereupon, the Rights Agent or the Registrar shall countersign and deliver to
the person entitled thereto a Right Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
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 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 or the Registrar for countersignature and delivery to
the registered owner in lieu of the Right Certificate so lost, stolen, destroyed
or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the office of the Registrar or such other office
designated for such purpose together with payment of the Purchase Price for each
one one-hundredth of a share of Preferred Stock as to which the Rights are
exercised, at or prior to the Close of Business on the earlier of (i) March 25,
2008 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 or (iii) the time at which the Rights are
exchanged as provided in Section 24 hereof (such earlier date being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $215.00, shall be
8
subject to adjustment from time to time as provided in Sections 11 and 13 hereof
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for each one one-hundredth of a share of Preferred Stock to
be purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of the Rights pursuant hereto in accordance with Section 9
hereof in cash, or by certified check or money order payable to the order of the
Company or the Rights Agent, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i) either (A) requisition from any transfer agent of
the shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent), certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company hereby irrevocably authorizes the depositary agent to comply with all
such requests, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) promptly after receipt of such certificates or
depositary receipts cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder, and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate. In the event the Company is obligated to issue other
securities of the Company, or distribute property pursuant to Section 11(a), the
Company shall make all arrangements necessary so that such other securities or
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
(except pursuant to Section 11(b) hereof) less than all of 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. In addition, in the case of an exercise of
the Rights by a holder pursuant to Section 11(b), the Rights Agent shall return
such Right Certificate to the registered holder thereof after imprinting,
stamping or otherwise indicating thereon that the rights represented by such
Right Certificate no longer include the rights provided by Section 11(b) of the
Rights Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to include
the rights provided by Section 11(b).
(e) Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of any of the events listed in Section 11(b) or in Section 13(a)
hereof, any Rights of which an Acquiring Person or any Associate or Affiliate of
the Acquiring Person is the Beneficial Owner shall become void with respect to
Rights provided under Section 11(b), Section 13(a) and Section 24 hereof and any
holder of such Rights shall thereafter have no right to exercise such Rights
under the provisions of Section 11(b) and Section 13(a), or to receive any
Common Stock in exchange therefor pursuant to the provisions of Section 24
hereof.
9
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certification contained in the
appropriate form of election to purchase set forth on the reverse side of the
Right Certificate surrendered for such exercise shall have been properly
completed and duly executed by the registered holder thereof and the Company
shall have been provided with such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) of such Rights or Affiliates or
Associates of such Beneficial Owner (or former Beneficial Owner) as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
its authorized and issued shares of Preferred Stock held in treasury, the number
of shares of Preferred Stock that will be sufficient to permit the exercise in
full of all outstanding Rights and, after the occurrence of an event specified
in Section 11 hereof, shall so reserve and keep available a sufficient number of
shares of Preferred Stock, Common Stock and/or other securities which may be
required to permit the exercise in full of the Rights pursuant to this
Agreement.
(b) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Preferred Stock and/or other
securities delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares or other securities (subject to payment of the
"Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares or securities.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of any event which would establish
the Distribution Date, a registration statement on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities purchasable upon exercise of the Rights, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
10
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the date of
the expiration of the Rights. The Company will also take such action as may be
appropriate under the Blue Sky laws of the various states.
(d) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any share of Preferred Stock and/or other securities upon the exercise of the
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer involved in the transfer or
delivery of Right Certificates or the issuance or delivery of certificates or
depositary receipts for Preferred Stock and/or other securities in a name other
than that of the registered holder of the Right Certificates evidencing Rights
surrendered for exercise, nor shall the Company be required to issue or deliver
any certificates or depositary receipts for shares of Preferred Stock and/or
other securities upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person (other than the
Company) in whose name any certificate for shares of Preferred Stock (or other
securities) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Stock (or other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or other securities) transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificates shall be dated, the next
succeeding Business Day on which the Preferred Stock (or other securities)
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 stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) In the event the Company shall at any time after the date of this
Agreement (i) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (ii) subdivide the outstanding Preferred Stock, (iii) combine
the outstanding Preferred Stock into a smaller number of shares, or (iv) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11, the Purchase Price in effect at the
time of the record date for such dividend or the time of the effective date of
such subdivision, combination or reclassification, and the number and kind of
11
shares of capital stock, including Preferred Stock, issuable upon exercise of a
Right, shall be proportionately adjusted so that the holder of any Right
exercised after such time, upon payment of the aggregate Purchase Price such
holder would have to pay to exercise such Right prior to such time, shall be
entitled to receive the aggregate number and kind of shares of capital stock,
including Preferred Stock, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of the
Company were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both Section 11(a) and Section 11(b), the adjustment provided for in this
Section 11(a) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(b).
(b) In the event any Person shall become an Acquiring Person, then proper
provision shall be made so that each holder of a Right, subject to Section 7(e)
and Section 24 and except as provided below, shall after the later of the
occurrence of such event and the effective date of an appropriate registration
statement pursuant to Section 9 hereof, have a right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of shares of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one one-hundredths of a share
of Preferred Stock for which a Right is then exercisable and dividing that
product by (y) 50% of the current market price per one share of Common Stock
(determined pursuant to Section 11(f) hereof on the date of the occurrence of
any one of the events listed above in this subparagraph (b)) (such number of
shares being referred to as the "Number of Adjustment Shares").
(c) In the event that there shall not be sufficient shares in treasury or
authorized but unissued shares of Common Stock to permit the exercise in full of
the Rights in accordance with the foregoing Section 11(b) and the Rights become
so exercisable, notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law and any agreements in effect on
the date hereof to which the Company is a party, each Right shall thereafter
represent the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, a number of
shares, or unit of shares, of (x) Common Stock, and (y) any class or series of
preferred stock (or other equity securities) of the Company, including, but not
limited to Preferred Stock, equal in the aggregate to the Number of Adjustment
Shares where the Board of Directors shall have in good faith deemed such shares
or units, other than the shares of Common Stock, to have at least the same value
and voting rights as the Common Stock (a "common stock equivalent"); provided,
however, if there are unavailable sufficient shares (or fractions of shares) of
Common Stock and/or common stock equivalents, then the Company shall take all
such action as may be necessary to authorize additional shares of Common Stock
or common stock equivalents for issuance upon exercise of the Rights, including
the calling of a meeting of shareholders; and provided, further, that if the
Company is unable to cause sufficient shares of Common Stock and/or common stock
equivalents to be available for issuance upon exercise in full of the Rights,
then the Company, to the extent necessary and permitted by applicable law, and
any agreements or instruments in effect on the date thereof to which it is a
party, shall make provision to pay an amount in cash equal to twice the Purchase
Price (as adjusted pursuant to this Section 11), in lieu of issuing shares of
12
Common Stock and/or common stock equivalents. To the extent that the Company
determines that some action needs to be taken pursuant to this Section 11(c), a
majority of the Board of Directors may suspend the exercisability of the Rights
for a period of up to sixty days following the date on which the event described
in Section 11(b) hereof shall have occurred, in order to decide the appropriate
form of distribution to be made pursuant to this Section 11(c) and to determine
the value thereof. In the event of any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights has been
temporarily suspended. The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Common Stock and common
stock equivalents upon exercise of the Rights among holders of Rights, which
such allocation may be, but is not required to be, pro rata.
(d) If the Company shall fix a record date for the issuance of rights or
warrants to all holders of Preferred Stock entitling them (for a period expiring
within ninety calendar days after such record date) to subscribe for or purchase
Preferred Stock (or securities having the same or more favorable rights,
privileges and preferences as the Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent preferred
stock, at a subscription or purchase price per share of Preferred Stock or per
share of equivalent preferred stock or having a conversion price per share, as
the case may be, less than the current market price per share of Preferred Stock
(as defined in Section 11(f) hereof) on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date plus the number of shares of Preferred Stock which the
aggregate subscription or purchase price of the total number of shares of
Preferred Stock or equivalent preferred stock to be offered for subscription or
purchase (and/or the aggregate initial conversion price of the convertible
securities so to be offered for subscription or purchase) would purchase at such
current market price, and the denominator of which shall be the number of shares
of Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription or purchase price
(and/or the conversion price of convertible securities) 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 a majority
of the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such
record date is fixed; and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(e) If the Company shall fix a record date for the making of a distribution
to all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness, cash (other than a
regular periodic cash dividend out of earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), the Purchase Price to be in effect after
13
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price for one share of Preferred stock (as defined
in Section 11(f) hereof) on such record date less the fair market value (as
determined in good faith by a majority of the Board of Directors, 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 convertible securities, subscription rights or warrants applicable to
one share of Preferred Stock, and the denominator of which shall be such current
market price for one share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(f) (i) For the purpose of any computation hereunder, the "current market
price" of any security (a "Security" for purposes of this Section 11(f)(i)) on
any date shall be deemed to be the average of the daily closing prices per share
of such Security for the thirty consecutive Trading Days (as hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the current market price per share of such 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 shares of such Security or (B) any, subdivision,
combination or reclassification of such Security, and prior to the expiration of
thirty 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 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 in 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 average of the last
transaction price as reported in the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotations System (NASDAQ), or
if not so reported, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use,
or, if on any such date the Security is not reported by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker in the Security selected by a majority of the Board of Directors.
If on any such date no market maker is making a market in the Security, the fair
value of such Security on such date as determined in good faith by a majority of
the Board of Directors shall be used. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day. If the Security is not publicly held or not so listed
or traded, "current market price" shall mean the fair value as determined in
good faith by a majority of the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent.
14
(ii) For the purposes of any computation hereunder, the "Current market
price" per share (or one one-hundredth of a share) of Preferred Stock shall be
determined in the same manner as set forth above for the Common Stock in clause
(i)of this Section 11(f) (other than the last sentence thereof). If the current
market price per share (or one one-hundredth of a share) of Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause (i) of
this Section 11(f), the "current market price" per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the current market price per share of the Common
Stock and the "current market price" per one one-hundredth of a share of
Preferred Stock shall be equal to the current market price per share of the
Common Stock (as appropriately adjusted). If neither the Common Stock or the
Preferred Stock is publicly held or so listed or traded, "current market price"
per share shall mean the fair value per share as determined in good faith by the
Board of Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
(g) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(g) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share, as the case may be.
Notwithstanding the first sentence of this Section 11(g), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
(h) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a) or (b) hereof, the holder of any Right shall be
entitled to receive upon exercise of such Right any shares of capital stock of
the Company other than shares of Preferred Stock, thereafter the number of such
other shares so received upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in Section
11(a) through (e) hereof, inclusive, and the provisions of Section 7, 9, 10, 13
and 14 hereof with respect to the shares of Preferred Stock shall apply on like
terms to any such other shares.
(i) 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 shares of Preferred
Stock or other capital stock of the Company purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment of the
Purchase Price.
15
(j) Unless the Company shall have exercised its election as provided in
Section 11(k) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(d) and (e) hereof, 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 of a share of Preferred Stock (calculated to the nearest
ten-thousandth) obtained by (i) multiplying (A) the number of one one-hundredths
of a share of Preferred Stock covered by a Right immediately prior to the
adjustment by (B) 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.
(k) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-hundredths of a
share of Preferred Stock for which such Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in affect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(k), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(l) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of shares which were expressed in the initial
Right Certificates issued hereunder.
(m) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the shares of Common Stock
or other securities and below one one-hundredth of the then par value, if any,
of the Preferred Stock, issuable upon exercise of the Rights, the Company shall
16
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of such Preferred Stock, Common Stock or other securities
at such adjusted Purchase Price. If upon any exercise of the Rights, a holder is
to receive a combination of Common Stock and common stock equivalents, a portion
of the consideration paid upon such exercise, equal to at least the then par
value of a share of Common Stock of the Company, shall be allocated as the
payment for each share of Common Stock of the Company so received.
(n) 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 the shares
of Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(o) 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 in their good faith judgment a majority of the Board of Director
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
Preferred Stock at less than the then current market price, (iii) issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred Stock,
shall not be taxable to such stockholder.
(p) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock) into
a greater or lesser number of Common Stock, then in any such case (x) the number
of one one-hundredth shares of a Preferred Stock purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredth shares of Preferred Stock so purchasable immediately prior
to such event by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately before such event and the denominator of
which is the number of shares of Common Stock outstanding immediately after such
event, (y) each share of Common Stock outstanding immediately after such event
shall have issued with respect to it that number of Rights which each share of
Common Stock outstanding immediately prior to such event had issued with respect
to it and (z) 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
consolidation shall be proportionately adjusted by multiplying such Purchase
17
Price by the fraction described in clause (x)above. The adjustments provided for
in this Section 11(p) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
(q) The Company covenants and agrees that it shall not, at any time after
the Distribution Date and so long as the Rights have not been redeemed pursuant
to Section 23 hereof or exchanged pursuant to Section 24 hereof, (i) consolidate
with, (ii) merge with or into, or (iii) sell or transfer, in one or more
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person, if at the time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which, would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(r) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Sections 23 and 24 hereof, take any
action the purpose or effect of which is to diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(s) The exercise of Rights under Section 11(b) shall only result in the
loss of rights under Section 11(b) to the extent so exercised and shall not
otherwise affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock
and the Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 26
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustments therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, directly or indirectly, following the Distribution
Date, (x) the Company shall consolidate with, or merge with and into, any other
Person, (y) 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 Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell, or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person other than to the Company or one or more
of its wholly-owned Subsidiaries, then, and in each such case, proper provision
shall be made so that (i) each holder of a Right, subject to Section 7(e), shall
18
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in lieu
of Preferred Stock, such number of shares of freely tradable Common Stock of the
Principal Party (as hereinafter defined), free and clear of liens, rights of
call or first refusal, encumbrances or other adverse claims, as shall be equal
to the result obtained by (A) multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Preferred Stock for which a Right is
then exercisable (without taking into account any adjustment previously made
pursuant to Section 11(b) hereof) and dividing that product by (B) 50% of the
current market price per share of the Common Stock of such Principal Party
(determined in the manner described in Section 11(f) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) the Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof, except for the provisions of 11(b), shall apply
to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the authorization and reservation of a
sufficient number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 13(a)) 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
shares of its Common Stock thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a) hereof, the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person, including the Company, that is the other party to the
merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; provided, however, that in
any case described in clause (i) or (ii) in this Section 13(b), (x) if the
Common Stock of such person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect Subsidiary or
Affiliate of another Person, "Principal Party" shall refer to such other
Person; (y) in case such Person is a Subsidiary, directly or indirectly, or
an Affiliate of more than one Person, the Common Stock of two or more of
which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest market value, and (z) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in
(x) and (y) above shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a "Subsidiary" of both
or all of such joint venturers and the Principal Parties in each such chain
19
shall bear the obligation set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the total of such
interest.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of shares
of its authorized Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and each Principal Party and
each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger or sale of assets
mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement on an appropriate form
under the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights, will use its best efforts to cause
such registration statement to become effective as soon as practicable
after such filing and will use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirement of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the Blue Sky laws
of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respected with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
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 or 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 fractions of the current market
value of a whole Right. For 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 transactions 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
20
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 transaction price as reported in the National Market System of NASDAQ, or,
if not so reported, 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 reported by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker in the Rights selected by a majority of the Board of Directors. If
on any such date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by a majority of
the Board of Directors shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Right Certificates at the time
such Right Certificates are exercised as herein provided, an amount in cash
equal to the same fraction of the current market value of one one-hundredth of a
share of Preferred Stock. For purposes of this Section 14(b), the current market
value of one one-hundredth of a share of Preferred Stock shall be one
one-hundredth of the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(f)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of one of the transactions or events specified
in Section 11 hereof giving rise to the right to receive Common Stock, common
stock equivalents or other securities (other than Preferred Stock) upon the
exercise of a Right, the Company shall not be required to issue fractions of
shares or units of such Common Stock, common stock equivalents or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractional shares of such Common Stock, common stock equivalents or
other securities. In lieu of fractional shares or units of such Common Stock,
common stock equivalents or other securities, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a share or unit of such Common Stock, common stock equivalent or
other securities. For purposes of this Section 14(c), the current market value
shall be determined in the manner set forth in Section 11(f)(i) hereof for the
Trading Day immediately prior to the date of such exercise and, if such Common
Stock, common stock equivalent or other securities are not traded, each such
share or other unit of Common Stock, common stock equivalent or other securities
shall have the value of one one-hundredth of a share of Preferred Stock.
21
(d) Except as otherwise expressly provided in this Section 14, the holder
of a Right by the acceptance of the Rights expressly waives his right to receive
any fractional Rights or any fractional share upon exercise of Rights.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except for 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
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement. Holders
of Rights shall be entitled to recover the reasonable costs and expenses,
including attorneys' fees, incurred by them in any action to enforce the
provisions of 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 Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Preferred Stock, Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
22
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 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. 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 expenses, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability.
The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for Preferred Stock, Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business or stock transfer business of the Rights Agent or any successor Right
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provision 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 or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
23
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 in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall give full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the President or any Vice President and
by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Right Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own negligence,
bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, and all such statements and recitals are and shall be deemed to have been
made by the Company only. Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, indirect, consequential or
incidental 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.
(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 Section 11
and 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 to the Rights Agent 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 Stock or other securities to be issued pursuant to this Agreement
or any Right Certificate or as to whether any shares of Preferred Stock or other
securities will, when issued, be validly authorized and issued, fully paid and
nonassessable.
24
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the 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 all of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorney 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.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause l, 2 and/or 3
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty days' notice in writing mailed to the Company and to each transfer
agent of the Common Stock and Preferred Stock by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon thirty day notice
25
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock and Preferred Stock by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty days after 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 successor Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of any state, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$25,000,000 or (b) an affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed. 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 mail a written notice thereof in
writing with the predecessor Rights Agent by certified or registered mail and
each transfer agent of the Common Stock and Preferred Stock, and mail a written
notice thereof to the registered holders of the Right Certificates by first
class mail. Failure to give any notice provided for in this Section 21, 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 a majority of the Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the redemption, exchange or
expiration of the Rights, the Company (a) shall with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee benefit plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
Rights Certificates shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificates would be issued and (ii) no Rights Certificates shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
26
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any time
prior to the earlier of (x) the time that any person becomes an Acquiring
Person, or (y) the Final Expiration Date, elect to redeem all but not less than
all of the then outstanding Rights at a redemption price of $.00125 per Right,
as 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 of Directors may be made effective at such time, in such form, on
such basis, and with such conditions as the Board of Directors in its sole
discretion may establish.
(b) Immediately upon the action of a majority of the Board of Directors
electing to redeem the Rights, evidence of which shall be promptly filed with
the Rights Agent, or, when appropriate, immediately upon the time or
satisfaction of such conditions as the Board of Directors may have established,
and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
disclosure of any such redemption; provided, however, that the failure to give,
or any defect in, any such disclosure shall not affect the validity of such
redemption. Within ten days after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the holders of the then outstanding Rights by mailing by first class mail
such notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
(c) Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time or in any manner other than
that specifically set forth in this Section 23 and Section 24 hereof, and other
than in connection with the purchase of shares of Common Stock prior to the
Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for Common Stock
at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Stock then outstanding.
27
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a)of this Section 24
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company 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 Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute common stock equivalents (as such term is defined in
Section 11(c) hereof) for some of all of the Common Stock exchangeable for
Rights.
(d) In the event that there shall not be sufficient Common Stock or common
stock equivalents available 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 Stock or common stock equivalents
for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this paragraph (e), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
11(f)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Proposed Actions. In case the Company shall propose
at any time after the Distribution date (a) to pay any dividend payable in stock
of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
periodic cash dividend out of earnings or retained earnings of the Company), or
(b) to offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any other class or any other securities, rights or options, or (c)
to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (d) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sales or other transfer), in one or more
28
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, or (e) to effect the
liquidation, dissolution or winding up of the Company, or (f) to declare or pay
any dividend on the Common Stock payable in Common Stock or to effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock),
then, in each such case, the Company shall mail by first class mail to each
holder of a Right, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Stock and/or Preferred Stock, if any such
date in to be fixed. Such notice shall be so given in the case of any action
covered by clauses (a) or (b) above at least ten days prior to the record date
for determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least ten days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section 25, or any defect therein, shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
In case any of the events set forth in Section 11(b) of this Agreement
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter mail by first class mail to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(b) 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 (unless another address is filed in writing
with the Rights Agent) as follows:
H&R Block, Inc.
4400 Main Street
Kansas City, Missouri 64111
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (unless another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
Attention: Secretary
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
29
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 or the Rights Agent.
Section 27. Supplements and Amendments. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order (a) to cure any ambiguity, (b) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (c) to shorten or lengthen any time period hereunder
(including, without limitation, to extend the Final Expiration Date), (d) to
increase or decrease the Purchase Price, (e) to increase or decrease the
Exchange Ratio or (f) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights; provided further that
this Agreement may not be supplemented or amended to lengthen pursuant to clause
(c) of this sentence, (A) the time period relating to when the Rights may be
redeemed if at the time of such amendment the Rights are not then redeemable, or
(B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of the Rights; provided further that the Company shall have the right to
make any changes unilaterally necessary to facilitate the appointment of a
successor Rights Agent, which such changes shall be set forth in a writing by
the Company or by the Company and such successor Rights Agent. Without limiting
the foregoing, the Company may at any time prior to such time as any Person
becomes an Acquiring Person amend this Agreement to lower the threshold set
forth in Section 1(a) hereof from 15% to not less than the greater of (i) any
percentage greater than the largest percentage of the Voting Power of the
Company then known by the Company to be beneficially owned by any Person (other
than the Company, any Subsidiary of the Company, or any employee benefit plan or
compensation arrangement of the Company or any Subsidiary of the Company, and
any entity holding securities of the Company to the extent organized, appointed
or established by the Company or any such Subsidiary for or pursuant to the
terms of any such employee benefit plan or compensation arrangement) together
with all Affiliates or Associates of such Person, and (ii) 10%. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any person or corporation other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Agreement. This Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).
30
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. It is
the intent of the parties hereto to enforce the remainder of the terms,
provisions, covenants and restrictions to the maximum extent permitted by law.
Without limiting the foregoing, if any provision requiring that a determination
be made by less than the entire Board of Directors (or at a time or with the
concurrence of a group of directors consisting of less than the entire Board of
Directors) is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, such determination shall then be made by the
Board of Directors in accordance with applicable law and the Company's Articles
of Incorporation and Bylaws.
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
Missouri 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 purpose 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.
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
Attest: H&R BLOCK, INC.
By:/s/James H. Ingraham By:/s/ Frank L. Salizzoni
-------------------- -----------------------------
James H. Ingraham, Frank L. Salizzoni, President
Vice President, Legal
and Secretary
Attest: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By:/s/L. Welch By: /s/ H. E. Bradford
------------------------- -----------------------------
L. Welch, Assistant H.E. Bradford, Vice President
Vice President
32
Exhibit 1
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF PARTICIPATING PREFERRED STOCK
OF
H&R BLOCK, INC.
I, Ozzie Wenich, Senior Vice President and Chief Financial Officer of H&R
Block, Inc. (the "Company"), a corporation organized and existing under The
General and Business Corporation Law of the State of Missouri, in accordance
with the provisions of Section 351.180.7 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Company's Articles of Incorporation, as amended, the Board of Directors on July
14, 1988 adopted a resolution creating a series of shares of voting Preferred
Stock designated as Participating Preferred Stock, pursuant to a Certificate of
Designation, Preferences and Rights of Participating Preferred Stock filed with
the Missouri Secretary of State, with such Participating Preferred Stock having
the powers, preferences and relative, participating, optional and other special
rights with the qualifications, limitations or restrictions set forth below.
That pursuant to the authority conferred upon the Board of Directors by the
Company's Articles of Incorporation, as amended, the Board of Directors on July
20, 1998, adopted the following resolution amending the Company's Certificate of
Designation, Preferences and Rights of Participating Preferred Stock to increase
the number of shares designated Participating Preferred Stock:
RESOLVED, that it is desirable and in the best interests of the Company
that the number of shares designated Participating Preferred Stock be increased
from 600,000 to 1,200,000.
The powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as set forth below:
Section 1. Designation and Amount. There shall be a series of the voting
preferred stock of the Company which shall be designated as "Participating
Preferred Stock", without par value, and the number of shares constituting such
series shall be 1,200,000. 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 Participating Preferred Stock to a number less than that
of the shares then outstanding plus the number of shares issuable upon exercise
of outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Company.
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any series of
preferred stock of the Company ranking prior and superior to the Participating
Preferred Stock with respect to dividends, the holders of shares of
Participating Preferred Stock, in preference to the holders of shares of Common
Stock, without par value (the "Common Stock"), of the Company and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of January, April, July and October
in each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Participating Preferred Stock. In the event the Company shall at any time after
July 25, 1998 (the "Rights Declaration Date") 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 Participating Preferred Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) The Company shall declare a dividend or distribution on the
Participating 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); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Participating 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 Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
2
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 Participating Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than sixty days prior to
the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Participating Preferred
Stock shall have the following voting rights:
(a) Each share of Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Company.
(b) Except as otherwise provided herein, in the Company's Articles of
Incorporation or by law, the holders of shares of Participating Preferred Stock,
the holders of shares of Common Stock, and the holders of shares of any other
capital stock of the Company having general voting rights, shall vote together
as one class on all matters submitted to a vote of stockholders of the Company.
(c) Except as otherwise set forth herein or in the Company's Articles of
Incorporation, and except as otherwise provided by law, holders of Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Participating Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Participating Preferred
Stock outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Participating Preferred
Stock, except dividends paid ratably on the Participating Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;
3
(iii) except as permitted in Section 4(a)(iv) below, redeem or
purchase or otherwise acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Participating Preferred Stock, provided that the
Company may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for share of any stock of the Company ranking
junior (either as to dividends or upon dissolution, liquidation or winding
up) to the Participating Preferred stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Participating Preferred Stock, or any shares of stock ranking on a parity
with the Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(b) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company unless
the Company 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 Participating Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. The Company shall
cause all such shares upon their cancellation to be authorized but unissued
shares of Preferred Stock which may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Company, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Participating Preferred Stock unless, prior thereto, the
holders of shares of Participating Preferred Stock shall have received per
share, the greater of $100.00 or 100 times the payment made per share of Common
Stock, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the "Liquidation
Preference"). Following the payment of the full amount of the Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Participating Preferred Stock, unless, prior thereto, the holders of shares
of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Liquidation
Preference by (ii) 100 (as appropriately adjusted a set forth in subparagraph
(c) below to reflect such events as stock dividends, and subdivisions,
combinations and consolidations with respect to the Common Stock) (such number
in clause (ii) being referred to as the "Adjustment Number"). Following the
payment of the full amount of the Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Participating Preferred Stock
4
and Common Stock, respectively, holders of Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Participating Preferred Stock and Common Stock,
on a per share basis, respectively.
(b) In the event there are not sufficient assets available to permit
payment in full of the Liquidation Preference and the liquidation preferences of
all other series of preferred stock, if any, which rank on a parity with the
Participating Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their respective
liquidation preferences. In the event there are not sufficient assets available
to permit payment in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock
(c) In the event the Company shall at any time after the Rights Declaration
Date declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise then 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 Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment 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 are outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, Etc. In case the Company 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 the shares of
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in 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 exchanged or changed.
In the event the Company shall at any time after the Rights Declaration Date
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Participating
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that are outstanding immediately prior to such event.
Section 8. Redemption. The shares of Participating Preferred Stock shall
not be redeemable.
5
Section 9. Ranking. The Participating Preferred Stock shall rank junior to
all other series of the Company's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such series shall
provide otherwise.
Section 10. Amendment. The Articles of Incorporation of the Company shall
not be further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Participating Preferred Stock so as
to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Participating Preferred Stock
voting separately as a class.
Section 11. Fractional Shares. Participating Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Participating Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate of
Designation has been executed by the Company by its President and attested by
its Secretary on this 17th day of July, 1998.
H&R BLOCK, INC.
By: /s/ Ozzie Wenich
------------------------------------
Ozzie Wenich, Senior Vice President
and Chief Financial Officer
ATTEST:
/s/ James H. Ingraham
- ---------------------------------
James H. Ingraham, Vice President, Legal
and Secretary
6
STATE OF MISSOURI )
) SS.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 17th day of July, 1998, before me, the
undersigned, a Notary Public in and for said County and State, personally
appeared Ozzie Wenich and James H. Ingraham, who declared that they are the
President and Secretary, respectively, of the corporation named in the foregoing
certificate, and acknowledged that they executed the foregoing certificate on
behalf of the corporation.
/s/ Barbara Phillips
-----------------------------------------
Notary Public
My Commission Expires:
BARBARA PHILLIPS
Feb. 7, 2002 NOTARY PUBLIC-NOTARY SEAL
- ------------------------------- STATE OF MISSOURI
JACKSON COUNTY
MY COMMISION EXP. FEB. 7, 2002
Exhibit 2
Form of Right Certificate
Certificate No. R- Rights
----- ------------
NOT EXERCISABLE AFTER MARCH 25, 2008, UNLESS
EXTENDED BY THE BOARD OF DIRECTORS OR
EARLIER IF NOTICE OF REDEMPTION IS GIVEN,
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.00125 PER RIGHT
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
[THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE
WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING
PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(e) OF THE RIGHTS AGREEMENT.](1)
Right Certificate
H&R BLOCK, 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 March 25, 1998 between H&R Block, Inc., a
Missouri corporation (the "Company"), and ChaseMellon Shareholder Services,
L.L.C. (the "Rights Agent"), as amended (the "Rights Agreement"), 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. (Kansas City time) on
March 25, 2008 at the office of the Registrar, or such other office designated
for such purpose, one one-hundredth of a fully paid, nonassessable share of the
Participating Preferred Stock, without par value ("Preferred Stock"), of the
Company, at a purchase price of $215.00 per one one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-hundredths of a
share of Preferred Stock which may be purchased upon exercise of each Right) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of March 25, 1998, based on the shares of Preferred Stock of the
Company as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a share of Preferred Stock which may be purchased upon the
exercise of each of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events.
- --------------
(1) The portion of the legend in brackts shall be inserted only as applicable.
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 office of the Company and the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Registrar or such other office designated for
such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive, upon surrender hereof, another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.00125 per Right, or (ii) may be exchanged in whole or part
for shares of Common Stock.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Rights evidenced hereby (other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock, which may, at the election
of the Company, be evidenced by depositary receipts). In lieu of such fractions
of a share, 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 shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the 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.
-2-
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of
--------------------
Attest: H&R BLOCK, INC.
By: By:
----------------------- -----------------------
Name: Name:
Title: Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By:
------------------------------------
Name:
Title:
-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.
Dated:
------------------------
-----------------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
----------------------------------------------------------
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
[Form of Reverse Side of Right Certificate - Continued]
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was, or subsequently became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated:
----------------------- ----------------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
-5-
[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 H&R Block, Inc.:
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate to purchase the
- ---------------
shares of Preferred Stock (or other securities) issuable upon the exercise of
such Rights and requests that certificates for such shares be issued in the name
of:
Name:
-----------------------------------
Address:
-------------------------------
-------------------------------
Social Security or taxpayer identification number:
----------------------------------
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:
Name:
----------------------------------
Address:
-------------------------------
-------------------------------
Social Security or taxpayer identification number:
------------------------------------------
Dated:
-----------------------
-----------------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
-6-
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
-7-
[Form of Reverse Side of Right Certificate - Continued]
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was, or became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person.
Dated:
--------------------------- ---------------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
NOTICE
The signature in the foregoing Forms of Assignment and Election to Purchase
must conform to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or
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 Right Agreement) and such Assignment or
Election to Purchase will not be honored.
-8-
Exhibit 3
H & R BLOCK, INC.
SUMMARY OF SHAREHOLDER RIGHTS PLAN
The Board of Directors of H&R Block, Inc. (the "Company") declared a
dividend distribution of one right (a "Right") for each outstanding share of the
Company's Common Stock, without par value (the "Common Stock") payable to the
shareholders of record at the close of business on the Effective Date (the
"Record Date"). Except as set forth below, each Right, when exercisable,
entitles the registered holder to purchase from the Company one one-hundredth of
a share of a newly issued series of the Company's preferred stock, designated
Participating Preferred Stock, without par value (the "Preferred Stock"), at a
purchase price of $215.00 per one one-hundredth (1/100) of a share, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
The following is a general description only and is subject to the detailed
terms and conditions of the Rights Agreement. Capitalized terms herein have the
same meaning set forth in the Rights Agreement.
Effective Date of Plan
The Plan will become effective upon the earliest of the termination or
expiration of the existing Shareholder Rights Plan (first effective on July 14,
1988 (the "Existing Plan")) or the date upon which the Existing Plan is
determined to have become ineffective, regardless of the reasons therefor.
Rights Evidenced by Common Stock Certificates
The Rights will not be exercisable until the Distribution Date (defined
below). Certificates for the Rights will not be sent to shareholders and the
Rights will attach to and trade only together with Common Stock certificates.
Accordingly, Common Stock certificates outstanding on the Record Date will
evidence the rights related thereto (even if such Certificates make reference to
a prior plan), and Common Stock certificates issued after the Record Date will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange, or expiration of the
Rights), the surrender or transfer of any certificates for Common Stock
outstanding as of the Record Date, even without notation or a copy of this
Summary being attached thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Distribution Date
The Rights will separate from the Common Stock certificates, Right
Certificates (as defined below) will be issued, and the Rights will become
exercisable upon the "Distribution Date," which is the earlier of the following
dates:
(i) the first to occur of (a) a public announcement that, without the
prior written consent of the Company, a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, 15% or more of the outstanding shares of Common Stock, or
(b) the date on which the Company first has notice or otherwise determines
that a person has become an Acquiring Person (the "Stock Acquisition
Date"); or
(ii) ten days (or such later date as may be determined by action of
the Board of Directors, but in no event later than the date set forth in
(i) above) following the commencement of, or announcement of an intention
to make, a tender offer or exchange offer for 15% or more of the
outstanding shares of Common Stock without the Prior Written Approval of
the Company.
Issuance of Right Certificates
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date, and such separate Right Certificates alone will then evidence
the Rights.
Final Expiration Date
The Rights will expire on the earliest of (i) March 25, 2008 (the "Final
Expiration Date") unless the Final Expiration Date is extended by the Board, or
(ii) the redemption or exchange of the Rights by the Company, as described
below.
Initial Exercise of the Rights
Following the Distribution Date, and until one of the further events
described below, holders of the Rights will be entitled to receive, upon
exercise and the payment of $215.00 per Right, one one-hundredth of a share of
Preferred Stock.
Adjustments to Prevent Dilution
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for Preferred Stock, certain convertible securities or
2
securities having the same or more favorable rights, privileges and preferences
as the Preferred Stock at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
out of earnings or retained earnings) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right are subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock.
Cash Paid Instead of Issuing Fractional Shares
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractions of shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
Right to Buy Common Stock at Half Price
In the event that an Acquiring Person becomes such, proper provisions shall
be made so that each holder of a Right will 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 having a market value of two times the exercise price of
the Right, to the extent available, and then (after all authorized and
unreserved shares of Common Stock have been issued) a common stock equivalent
(such as Preferred Stock or another equity security with at least the same
economic value as the Common Stock) having a market value of two times the
exercise price of the Right, with Common Stock to the extent available being
issued first (such right being called the "Subscription Right").
Right to Buy Acquiring Company Stock at Half Price
In the event that following the Distribution Date, the Company is involved
in a merger or other business combination transaction in which the Common Stock
is exchanged or changed, or 50% or more of the Company's assets or earning power
are sold (in one transaction or a series of transactions), proper provision
shall be made so that each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company (or, in
the event there is more than one acquiring company, the acquiring company
receiving the greatest portion of the assets or earning power transferred) which
at the time of such transaction would have a market value of two times the
exercise price of the Right (such right being called the "Merger Right"). The
holder of a Right will continue to have the Merger Right whether or not such
holder exercises the Subscription Right, in whole or in part.
3
Acquiring Person Rights Void
Upon the occurrence of any of the events giving rise to the exercisability
of the Merger Right or the Subscription Right, any Rights that are or were at
any time owned by an Acquiring Person shall become void insofar as they relate
to the Merger Right or the Subscription Right.
Redemption
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $.00125 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. The redemption of the Rights by the Board of Directors may
be made effective at such time, in such form and on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon the action of a majority of the Board of Directors of the
Company electing to redeem the Rights, evidence of which should be promptly
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive the Redemption Price.
Exchange
After a person or group has become an Acquiring Person, the Company may
exchange all or part of the then outstanding and exercisable Rights (other than
Rights owned by an Acquiring Person that became void with respect to the Merger
Right or the Subscription Right) for Common Stock or common stock equivalents at
an Exchange Ratio of one share of Common Stock (or equivalent value of common
stock equivalent) per Right or such other Exchange Ratio as determined by the
Board of Directors. The Company may not effect such an exchange, however, at any
time after any person (other than the Company and related entities), together
with certain related parties, beneficially owns 50% or more of the Common Stock.
Upon action by the Company ordering such exchange, the right to exercise the
Rights subject to the exchange will terminate and the only right of the holders
of such Rights will be to receive shares of Common Stock based on the above
Exchange Ratio.
Terms of Preferred Stock
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock the Company may
issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential quarterly dividend in an amount equal
to 100 times the dividend declared on each share of Common Stock, but in no
event less than $1.00. In the event of liquidation, the holders of Preferred
Stock will receive a preferred liquidation payment equal to the greater of
$100.00 or 100 times the payment made per each share of Common Stock. Each share
of Preferred Stock will have 100 votes, voting together with the shares of
Common Stock. In the event of any merger, consolidation or other transaction in
which shares of Common Stock are exchanged, each share of Preferred Stock will
4
be entitled to receive 100 times the amount and type of consideration received
per share of Common Stock. The rights of the Preferred Stock as to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary anti-dilution provisions. Fractional shares of Preferred
Stock will be issuable; however, the Company may elect to distribute depositary
receipts in lieu of such fractional shares. In lieu of fractional shares other
than fractions that are multiples of one one-hundredths of a share, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise.
Amendments to the Rights Agreement
The Rights Agreement may be amended or supplemented from time to time in
order (a) to cure any ambiguity, (b) to correct or supplement any provision
which may be defective or inconsistent with any other provision, (c) to shorten
or lengthen any time period hereunder (including the Final Expiration Date,
subject to certain limitations), (d) to increase or decrease the Purchase Price,
(e) increase or decrease the Exchange Ratio, or (f) to change or supplement the
provisions which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person).
However, if a person becomes an Acquiring Person, the Rights Agreement may not
be amended in any manner which would adversely affect the interests of the
holders of the Rights.
Adverse Person
The Company may, prior to any person becoming an Acquiring Person, amend
the Rights Agreement to lower the 15% threshold to not less than the greater of
(i) any percentage greater than the largest percentage of the Voting Power of
the Company then known by the Company to be beneficially owned by any person or
group (other than the Company, or any of its affiliates), and (ii) 10%.
Shareholder Rights
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Availability of Rights Agreement
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company upon
written request.
5