EXHIBIT 4.6
ABAXIS, INC.
AND
EQUISERVE TRUST COMPANY, N.A.
as
Rights Agent
RIGHTS AGREEMENT
Dated as of April 23, 2003
TABLE OF CONTENTS
Page
1. Certain Definitions............................................................. 1
2. Appointment of Rights Agent..................................................... 5
3. Issuance of Right Certificates.................................................. 6
4. Form of Right Certificates...................................................... 7
5. Countersignature and Registration............................................... 8
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates.................................... 9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights................... 9
8. Cancellation and Destruction of Right Certificates.............................. 11
9. Reservation and Availability of Shares of Preferred Stock....................... 11
10. Preferred Stock Record Date..................................................... 12
11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price.... 12
12. Certification of Adjustments.................................................... 21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............ 21
14. Fractional Rights and Fractional Shares......................................... 25
15. Rights of Action................................................................ 26
16. Agreement of Right Holders...................................................... 26
17. Right Certificate Holder Not Deemed a Shareholder............................... 27
18. Concerning the Rights Agent..................................................... 27
19. Merger or Consolidation or Changed Name of Rights Agent......................... 27
20. Duties of Rights Agent.......................................................... 28
21. Change of Rights Agent.......................................................... 30
22. Issuance of New Right Certificates.............................................. 31
23. Redemption...................................................................... 31
-i-
TABLE OF CONTENTS
(continued)
Page
24. Exchange of Rights for Common Stock............................................. 32
25. Notice of Proposed Actions...................................................... 33
26. Notices......................................................................... 34
27. Supplements and Amendments...................................................... 35
28. Successors...................................................................... 35
29. Benefits of this Rights Agreement............................................... 35
30. Determinations and Actions by the Board of Directors............................ 35
31. Governing Law................................................................... 35
32. Counterparts.................................................................... 36
33. Descriptive Headings............................................................ 36
34. Severability.................................................................... 36
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RIGHTS AGREEMENT
This Rights Agreement ("Rights Agreement"), is dated as of April 23,
2003, between Abaxis, Inc., a California corporation (the "Company"), and
EquiServe Trust Company, N.A. (the "Rights Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board of Directors of the Company on April 22, 2003 (i)
authorized the issuance and declared a dividend of one right ("Right") for each
share of the common stock, no par value, of the Company outstanding as of the
Close of Business (as such term is hereinafter defined) on May 8, 2003 (the
"Record Date"), each Right representing the right to purchase one one-thousandth
of a share of Series RP Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Certificate of Determination attached
hereto as Exhibit A upon the terms and subject to the conditions hereinafter set
forth, and (ii) further authorized the issuance of one Right with respect to
each share of Common Stock of the Company that shall become outstanding between
the Record Date and the Distribution Date (as such term is hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties agree as follows:
1. Certain Definitions. For purposes of this Rights Agreement the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the outstanding Common Stock of the
Company, without the prior approval of the Board of Directors; provided,
however, that in no event shall a Person who or which, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of less than
15% of the Company's outstanding Common Stock, become an Acquiring Person solely
as a result of a reduction of the number of shares of outstanding Common Stock,
including repurchases of outstanding shares of Common Stock by the Company,
which reduction increases the percentage of outstanding shares of Common Stock
beneficially owned by such Person; provided, further, that if a Person shall
become the Beneficial Owner of 15% or more of the Company's outstanding Common
Stock then outstanding solely by reason of a reduction of the number of shares
of outstanding Common Stock, and shall thereafter become the Beneficial Owner of
any additional shares of Common Stock of the Company, then such Person shall be
deemed to be an "Acquiring Person" if, upon any such subsequent acquisition or
acquisitions such person becomes the Beneficial Owner of at least 15% of the
Company's Common Stock then outstanding. An Acquiring Person shall not include
an Exempt Person (as such term is hereinafter defined). Notwithstanding the
foregoing, if (i) either (x) the Board of Directors determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this paragraph (a), has become such inadvertently
(including, without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of Common Stock that would otherwise cause such
Person to be an "Acquiring Person" or (B) such Person was aware of the extent of
its Beneficial Ownership but had no actual knowledge of the consequences of such
Beneficial Ownership under this Rights Agreement) and without any intention of
changing or influencing control of the Company, or (y) within two Business Days
of being requested by the Company to advise the Company regarding same, such
Person certifies in writing that such Person acquired Beneficial Ownership of
15% or more of the Company's outstanding Common Stock inadvertently or without
knowledge of the terms of the Rights, and (ii) such Person divests as promptly
as practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an Acquiring Person, as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be or
to have become an Acquiring Person for any purposes of this Rights Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Rights
Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of
any securities
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) 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), whether or not in
writing, or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to "beneficially
own," securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act, or any
comparable or successor rule), including pursuant to any agreement, arrangement
or understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to "beneficially own," any
securities if the agreement, arrangement or understanding to vote such security
(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); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding, voting
(except as described in the proviso to clause (B) of subparagraph (ii) of this
Section 1(c)) or disposing of any securities of the Company; provided, however,
that no
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Person who is an officer, director or employee of an Exempt Person shall be
deemed, solely by reason of such Person's status or authority as such, to be the
Beneficial Owner of, to have "beneficial ownership" of, or to "beneficially
own," any securities that are "beneficially owned" (as defined in this Section
1(c)), including, without limitation, in a fiduciary capacity, by an Exempt
Person or by any other such officer, director or employee of an Exempt Person.
For all purposes of this Rights Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including
any calculation for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
(d) "Board of Directors" shall mean the Company's Board
of Directors.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which the NASDAQ National Market or banking
institutions in the State of New York or the State of California are authorized
or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., Eastern Standard Time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Eastern Standard Time, on the
next succeeding Business Day.
(g) "Common Stock" when used with reference to the
Company shall mean the common stock, no par value, of the Company. "Common
Stock" when used with reference to any Person other than the Company which shall
be organized in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such Person or, if such
Person is a Subsidiary of or is controlled by another Person, the Person which
ultimately controls such first-mentioned Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest which shall represent the
right to participate in profits, losses, deductions and credits of such Person
and which shall be entitled to exercise the greatest voting power per unit of
such Person.
(h) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(i) "Company" shall have the meaning set forth in the
preamble hereto.
(j) "Current Market Price" shall have the meaning set
forth in Section 11(d) hereof.
(k) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(l) "Distribution Date" shall have the meaning set forth
in Section 3(a) hereof.
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(m) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(n) "Exempt Person" shall mean the Company or any
Subsidiary of the Company, including, without limitation, in its fiduciary
capacity, any employee benefit plan or employee or director stock plan of the
Company or of any Subsidiary of the Company, or any Person, organized,
appointed, established or holding Common Stock for or pursuant to the terms of
any such plan or any Person funding other employee benefits for employees of the
Company or any Subsidiary of the Company.
(o) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(p) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(q) "Flip-In Event" shall mean any event described in
Section 11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) hereof.
(r) "Flip-In Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(s) "Flip-Over Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(t) "NASDAQ" shall mean the National Association of
Securities Dealers, Inc. Automated Quotations Systems.
(u) "Person" shall mean any individual, firm,
corporation, partnership, trust, limited liability company or other entity, and
shall include any successor (by merger or otherwise) thereof or thereto.
(v) "Preferred Stock" shall mean the Series RP Preferred
Stock, par value $0.001 per share, of the Company having the rights, powers and
preferences set forth in Exhibit A hereto, and, to the extent that there is not
a sufficient number of shares of Series RP Preferred Stock authorized to permit
the full exercise of the Rights, any other series of Preferred Stock, par value
$0.001 per share, of the Company designated for such purpose containing terms
substantially similar to the terms of the Series RP Preferred Stock.
(w) "Preferred Stock Equivalent" shall have the meaning
set forth in Section 11(b) hereof.
(x) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(y) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof.
(z) "Record Date" shall have the meaning set forth in the
Recitals within this Rights Agreement.
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(aa) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(bb) "Redemption Price" shall have the meaning set forth
in Section 23(a) hereof.
(cc) "Right Certificate" shall have the meaning set forth
in Section 3(a) hereof.
(dd) "Securities Act" shall mean the Securities Act of
1933, as amended.
(ee) "Spread" shall have the meaning set forth in Section
11(a)(iii).
(ff) "Stock Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such or such earlier date as a majority of the directors shall
become aware of the existence of an Acquiring Person.
(gg) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(hh) "Subsidiary" of a Person shall mean any corporation
or other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or other
persons performing similar functions are beneficially owned, directly or
indirectly, by such Person and any corporation or other entity that is otherwise
controlled by such Person.
(ii) "Summary of Rights" shall have the meaning set forth
in Section 3(b) hereof.
(jj) "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, a Business Day.
(kk) "Triggering Event" shall mean any event described in
Section 11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) or Section 13 hereof.
(ll) "Voting Power" shall mean the voting power of all
securities of the Company then outstanding and generally entitled to vote for
the election of directors of the Company.
Any determination required by the definitions contained in this Section
1 shall be made by the Board of Directors in its good faith judgment, which
determination shall be binding on the Rights Agent and the holders of the
Rights.
2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint a
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co-Rights Agent as it may deem necessary or desirable upon ten (10) days prior
written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and in no event be liable for, the acts or omissions of any such
co-Rights Agent. In the event the Company appoints one or more co-Rights Agents,
the respective duties of the Rights Agents and any Co-Rights Agents shall be as
the Company shall determine.
3. Issuance of Right Certificates.
(a) Until the earlier of (i) the Stock Acquisition Date
(or, if the Stock Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date) or (ii) the tenth Business Day (or such later date
as may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than an Exempt Person) of, or of the first public announcement
of the intent of any Person (other than an Exempt Person) to commence (which
intention to commence remains in effect for five business days after such
announcement), a tender or exchange offer upon the successful consummation of
which such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 15% or more of the outstanding Common Stock (irrespective of
whether any shares are actually purchased pursuant to any such offer) (including
any such date which is after the date of this Rights Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(c) hereof) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock and not by separate
Right Certificates, and (y) each Right will be transferable only in connection
with the transfer of a share (subject to adjustment as hereinafter provided) of
Common Stock. As soon as practicable after the Distribution Date, the Rights
Agent will mail, by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the Close of Business on the Distribution Date, as shown
by the records of the Company, to the address of such holder shown on such
records, a Right certificate in substantially the form of Exhibit B hereto (a
"Right Certificate") evidencing one Right for each share of Common Stock so
held. 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 Rights to Purchase
Preferred Stock, substantially in the form attached hereto as Exhibit C (a
"Summary of Rights"), by first-class, postage prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company.
(c) Rights shall be issued in respect of all shares of
Common Stock that are issued (either as an original issuance or from the
Company's treasury) after the Record Date and prior to the earlier of the
Distribution Date or the Expiration Date. With respect to certificates
representing such shares of Common Stock, the Rights will be evidenced by such
certificates for Common Stock registered in the names of the holders thereof
together with the Summary of Rights. Until the Distribution Date (or, if
earlier, the Expiration Date), the surrender for transfer of any certificate for
Common Stock outstanding on the Record Date (with or without a copy of the
Summary of Rights attached thereto), shall also constitute the surrender for
transfer of the Rights associated with the Common Stock represented thereby.
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(d) Certificates issued for Common Stock (including,
without limitation, certificates issued upon transfer or exchange of Common
Stock) after the Record Date but prior to the earlier of the Distribution Date
or the Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Abaxis,
Inc. and EquiServe Trust Company, N.A., as Rights Agent, dated as of
April 23, 2003, as the same may be amended from time to time (the
"Rights Agreement"), the terms of which are incorporated herein by
reference and a copy of which is on file at the principal executive
office of Abaxis, Inc. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
Abaxis, Inc. will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt by it of a written
request therefor. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, BENEFICIALLY OWNED BY OR TRANSFERRED TO
ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR AFFILIATE (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN
TRANSFEREES THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby. In the event that the Company purchases or acquires
any shares of Common Stock after the Record Date but prior to the earlier of the
Distribution Date, the Redemption Date or the Expiration Date, any Rights
associated with such shares of Common Stock shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the shares of Common Stock no longer outstanding.
Notwithstanding this subsection (d), the omission of a legend shall not
affect the enforceability of any part of this Rights Agreement or the rights of
any holder of the Rights.
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), when,
as and if issued, shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Sections 11, 13 and 22 hereof, the Right
Certificates evidencing the Rights issued on the Record Date, whenever such
certificates are issued, shall be dated as of the Record Date and the Right
Certificates evidencing Rights to holders of record of Common Stock issued after
the Record Date shall be dated as of the Record
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Date but shall also be dated to reflect the date of issuance of such Right
Certificate. On their face, Right Certificates shall entitle the holders thereof
to purchase, for each Right, one one-thousandth of a share of Preferred Stock,
or other securities or property as provided herein, as the same may from time to
time be adjusted as provided herein, at the price per one one-thousandth of a
share of Preferred Stock of $24.00, as the same may from time to time be
adjusted as provided herein (the "Purchase Price").
(b) Notwithstanding any other provision of this Rights
Agreement, any Right Certificate that represents Rights that are or were at any
time on or after the earlier of the Stock Acquisition Date or the Distribution
Date beneficially owned by an Acquiring Person or any Affiliate or Associate
thereof (or any transferee of such Rights) shall have impressed on, printed on,
written on or otherwise affixed to it (if the Company or the Rights Agent has
knowledge that such Person is an Acquiring Person or an Associate or Affiliate
thereof or transferee of such Persons or a nominee of any of the foregoing) the
following legend:
The beneficial owner of the Rights represented by this Right
Certificate is an Acquiring Person or an Affiliate or Associate (as
such terms are defined in the Rights Agreement) of an Acquiring Person
or a subsequent holder of such Right Certificates beneficially owned by
such Persons. Accordingly, this Right Certificate and the Rights
represented hereby are null and void and will no longer be transferable
as provided in the Rights Agreement.
The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement
shall be operative whether or not the foregoing legend is contained on any such
Right Certificates.
5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chief Executive Officer, its President or any Vice President,
either manually or by facsimile signature, and 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, either manually or by
facsimile, by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
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;
and any Right Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at one of its offices designated for such
purposes, records for registration and transfer of the Right Certificates issued
hereunder. Such records shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by
each
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of the Right Certificates, the date of each of the Right Certificates and the
certificate numbers for each of the Right Certificates.
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii)
and 14 hereof, at any time after the Close of Business on the Distribution Date
and at or prior to the Close of Business on the Expiration Date, any Right
Certificate or Certificates (other than Right Certificates representing Rights
that have become null and void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be (i) transferred or (ii)
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock or other securities as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer any Right Certificate shall surrender the Right
Certificate at the office of the Rights Agent designated for such purposes with
the form of assignment on the reverse side thereof duly endorsed (or enclose
with such Right Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature guaranteed by a member of a securities approved medallion
program. Any registered holder desiring to 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
split up, combined or exchanged at the office of the Rights Agent designated for
such purposes. Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e),
11 and 14 hereof, countersign (by manual or facsimile signature) and deliver to
the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Subject to the provisions of Section 11(a)(ii)
hereof, upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 11(a)(ii) hereof, the Rights shall
become exercisable, and may be exercised to purchase Preferred Stock, 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 (with such
signature duly guaranteed), to the Rights Agent at 000 Xxxxxx Xxxxxx, Xxxxxx, XX
00000, Attention: Client Administration, together with payment of the Purchase
Price with respect to each Right exercised, subject to adjustment as hereinafter
provided, at or prior to the Close of Business on
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the earliest of (i) April 22, 2013 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (such date
being herein referred to as the "Redemption Date") or (iii) the time at which
all such Rights are exchanged as provided in Section 24 hereof (the earliest of
(i), (ii) and (iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price and the number of shares of
Preferred Stock or other securities or consideration to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof. The Purchase Price shall be payable in lawful
money of the United States of America, in accordance with Section 7(c) hereof.
(c) Except as provided in Section 11(a)(ii) hereof, upon
receipt of a Right Certificate with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) or so much thereof as is
necessary for the shares to be purchased and an amount equal to any applicable
tax or governmental charge, by cash, certified check or official bank check
payable to the order of the Company or the Rights Agent, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) requisition from any
transfer agent of the Preferred Stock (or make available if the Rights Agent is
the transfer agent) certificates for the number of shares of Preferred Stock so
elected to be purchased and the Company will comply and hereby authorizes and
directs such transfer agent to comply with all such requests, (ii) requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14(b) hereof, and (iii) promptly after receipt
of such Preferred Stock certificates 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, when appropriate, after
receipt of the cash requisitioned from the Company promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event of a purchase of securities, other than Preferred Stock, pursuant to
Section 11(a) or Section 13 hereof, the Rights Agent shall promptly take the
appropriate actions corresponding to the foregoing clauses (i) through (iii). In
the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) Except as otherwise provided herein, in case the
registered holder of any Right Certificate shall exercise less than all the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent
to the 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 Sections 6 and 14 hereof.
(e) Notwithstanding anything in this Rights Agreement to
the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the
10
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
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 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.
9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that at all times it
will cause to be reserved and kept available, out of and to the extent of its
authorized and unissued shares of Preferred Stock not reserved for another
purpose (and, following the occurrence of a Triggering Event, other securities)
or held in its treasury, the number of shares of Preferred Stock (and, following
the occurrence of a Triggering Event, other securities) that, as provided in
this Rights Agreement, including Section 11(a)(iii) hereof, will be sufficient
to permit the exercise in full of all outstanding Rights; provided, however,
that the Company shall be required to reserve and keep available shares of
Preferred Stock or other securities sufficient to permit the exercise in full of
all outstanding Rights pursuant to the adjustments set forth in Section
11(a)(ii), Section 11(a)(iii) or Section 13 hereof only if, and to the extent
that, the Rights become exercisable pursuant to such adjustments.
(b) The Company shall (i) use its best efforts to cause,
from and after such time as the Rights become exercisable, the Rights and all
shares of Preferred Stock (and following the occurrence of a Triggering Event,
other securities) issued or reserved for issuance upon exercise thereof to be
reported by NASDAQ or such other system then in use, and if the Preferred Stock
shall become listed on any national securities exchange, to cause, from and
after such time as the Rights become exercisable, the Rights and all shares of
Preferred Stock (and, following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be listed
on such exchange upon official notice of issuance upon such exercise and (ii) if
then necessary, to permit the offer and issuance of such shares of Preferred
Stock (and, following the occurrence of a Triggering Event, other securities),
register and qualify such shares of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities) under the Securities Act and
any applicable state securities or "blue sky" laws (to the extent exemptions
therefrom are not available), cause such registration statement and
qualifications to become effective as soon as possible after such filing and
keep such registration and qualifications effective until the Expiration Date of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed 90 days, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement
11
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Rights Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective.
(c) 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 following the occurrence of a Triggering Event, other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price in respect thereof), be
duly and validly authorized and issued and fully paid and nonassessable shares
in accordance with applicable law.
(d) The Company further covenants and agrees that it will
pay when due and payable any and all taxes and governmental charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any tax
or governmental charge which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates for Preferred Stock (or other securities, as the case
may be) upon exercise of Rights in a name other than that of, the registered
holder of the Right Certificate, and the Company shall not be required to issue
or deliver a Right Certificate or certificate for Preferred Stock (or other
securities, as the case may be) to a Person other than such registered holder
until any such tax and governmental charge shall have been paid (any such tax or
governmental charge 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 or governmental charge is due.
10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Preferred Stock (or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate, as such, shall not be entitled to any rights
of a shareholder of the Company with respect to the 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,
if any, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
11. Adjustments to Number and Kind of Shares, Number of Rights or
Purchase Price. The number and kind of shares subject to purchase upon the
exercise of each Right, the number of Rights outstanding and the Purchase Price
are subject to adjustment from time to time as follows:
12
(a) (i) In the event the Company shall at any time
after the date of this Rights Agreement (A) declare or pay any dividend on
Preferred Stock payable in shares of Preferred Stock, (B) subdivide or split the
outstanding shares of Preferred Stock into a greater number of shares, (C)
combine or consolidate the outstanding shares of Preferred Stock into a smaller
number of shares or effect a reverse split of the outstanding shares of
Preferred Stock, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of Preferred Stock or capital stock, as the case
may be, issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number and kind of
shares of capital stock or other securities, which, if such Right had been
exercised immediately prior to such date, the holder thereof 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 this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, at any time after the date of
this Rights Agreement, directly or indirectly, (1) shall consolidate with or
merge with and into the Company or any of its Subsidiaries or otherwise combine
with the Company or any of its Subsidiaries and the Company or such Subsidiary
shall be the continuing or surviving corporation of such consolidation, merger
or combination and the Common Stock of the Company shall remain outstanding and
no shares thereof shall be changed into or exchanged for stock or other
securities of the Company or of any other Person or cash or any other property,
or (2) shall, in one or more transactions, other than in connection with the
exercise of a Right or Rights and other than in connection with the exercise or
conversion of securities exercisable for or convertible into securities of the
Company or of any Subsidiary of the Company, transfer any assets or property to
the Company or any of its Subsidiaries in exchange (in whole or in part) for any
shares of any class of capital stock of the Company or any of its Subsidiaries
or any securities exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries, or otherwise obtain
from the Company or any of its Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the Company or any of its
Subsidiaries or any securities exercisable for or convertible into shares of any
class of capital stock of the Company or any of its Subsidiaries (other than as
part of a pro rata offer or distribution by the Company or such Subsidiary to
all holders of such shares), or (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire (other than as a pro rata
dividend) or dispose of, to, from or with, as the case may be (in one
transaction or a series of transactions), the Company or any of its
Subsidiaries, any assets (including securities) on terms and conditions less
favorable to the Company or such Subsidiary than the Company or such Subsidiary
would be able to obtain in arm's-length negotiation with an unaffiliated third
party, or (4) shall receive any compensation from the Company or any of its
Subsidiaries for services other than compensation for employment as a
13
regular or part-time employee, or fees for serving as a director, at rates in
accordance with the Company's (or its Subsidiary's) past practices, or (5) shall
receive the benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or tax advantage provided by the Company or any of
its Subsidiaries, or (6) shall engage in any transaction with the Company (or
any of its Subsidiaries) involving the sale, license, transfer or grant of any
right in, or disclosure of, any patents, copyrights, trade secrets, trademarks,
know-how or any other intellectual or industrial property rights recognized
under any country's intellectual property laws which the Company (including its
Subsidiaries) owns or has the right to use on terms and conditions not approved
by the Board of Directors; or
(B) any Person, alone or together with
its Affiliates and Associates, shall become an Acquiring Person; or
(C) during such time as there is an
Acquiring Person, there shall be any reclassification of securities (including
any reverse stock split), or any recapitalization of the Company, or any merger
or consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an Acquiring
Person or any Affiliate or Associate of such Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1% the proportionate
share of the outstanding shares of any class of equity securities of the Company
or any of its Subsidiaries, or securities exercisable for or convertible into
equity securities of the Company or any of its Subsidiaries, which is directly
or indirectly beneficially owned by any Acquiring Person or any Affiliate or
Associate of any Acquiring Person (any of (A), (B) or (C) being referred to
herein as a "Flip-In Event");
then upon the first occurrence of a Flip-In Event (i) the Purchase Price shall
be adjusted to be the Purchase Price in effect immediately prior to the Flip-In
Event multiplied by the number of one one-thousandth of a share of Preferred
Stock for which a Right was exercisable immediately prior to such Flip-In Event,
whether or not such Right was then exercisable, and (ii) each holder of a Right,
except as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii)
hereof, shall thereafter have the right to receive, upon exercise thereof at a
price equal to the Purchase Price (as so adjusted), in accordance with the terms
of this Rights Agreement and in lieu of shares of Preferred Stock, such number
of shares of Common Stock as shall equal the result obtained by dividing the
Purchase Price (as so adjusted) by 50% of the Current Market Price per share of
the Common Stock (determined pursuant to Section 11(d) hereof) on the date of
such Flip-In Event; provided, however, that the Purchase Price (as so adjusted)
and the number of shares of Common Stock so receivable upon the exercise of a
Right shall, following the Flip-In Event, be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof. Notwithstanding anything in
this Rights Agreement to the contrary, however, from and after the Flip-In
Event, any Rights that are beneficially owned by (x) any Acquiring Person (or
any Affiliate or Associate of any Acquiring Person), (y) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a transferee
after the Flip-In Event or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently with
the Flip-In Event pursuant to either (I) a transfer from the Acquiring Person to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding, whether written or
otherwise, regarding the transferred Rights or
14
(II) a transfer which the Board of Directors has determined is part of a plan,
agreement, arrangement or understanding, whether written or otherwise, which has
the purpose or effect of avoiding the provisions of this paragraph, and
subsequent transferees of such Persons, shall be null and void without any
further action and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of this Rights
Agreement. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. From and after the Flip-In
Event, no Right Certificate shall be issued pursuant to Section 3 or Section 6
hereof that represents Rights that are or have become null and void pursuant to
the provisions of this paragraph, and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become null and void
pursuant to the provisions of this paragraph shall be canceled.
(iii) The Company may at its option substitute for
a share of Common Stock issuable upon the exercise of Rights in accordance with
the foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the Current Market Price
of a share of Common Stock. In the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or authorized but unissued to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Board of Directors shall, to the extent permitted by
applicable law and any material agreements then in effect to which the Company
is a party (A) determine the excess (such excess, the "Spread") of (1) the value
of the shares of Common Stock issuable upon the exercise of a Right in
accordance with the foregoing subparagraph (ii) (the "Current Value") over (2)
the Purchase Price (as adjusted in accordance with the foregoing subparagraph
(ii)), and (B) with respect to each Right (other than Rights which have become
null and void pursuant to the foregoing subparagraph (ii)), make adequate
provision to substitute for the shares of Common Stock issuable in accordance
with the foregoing paragraph (ii) upon exercise of the Right and payment of the
Purchase Price (as adjusted in accordance therewith), (1) cash, (2) a reduction
in such Purchase Price, (3) shares of Preferred Stock or other equity securities
of the Company, including, without limitation, shares or fractions of shares of
preferred stock which, by virtue of having dividend, voting and liquidation
rights substantially comparable to those of the shares of Common Stock, are
deemed in good faith by the Board of Directors to have substantially the same
value as the shares of Common Stock (such shares of Preferred Stock and shares
or fractions of shares of preferred stock being hereinafter referred to as
"Common Stock Equivalents"), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having a value which, when
added to the value of the shares of Common Stock actually issued upon exercise
of such Right, shall have an aggregate value equal to the Current Value (less
the amount of any reduction in such Purchase Price), where such aggregate value
has been determined by the Board of Directors upon the advice of a nationally
recognized investment banking firm selected in good faith by the Board of
Directors; provided, however, that if the Company shall not make adequate
provision to deliver value pursuant to clause (B) above within 30 days following
the date of the Flip-In Event (the "Flip-in Trigger Date"), then the Company
shall be obligated to deliver, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring payment of such Purchase
Price, shares of Common Stock (to the extent available), and then, if necessary,
such number or fractions of shares of Preferred Stock
15
(to the extent available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. If the Board of Directors shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock and/or Common Stock Equivalents could be authorized for issuance
upon exercise in full of the Rights, the 30-day period set forth above may be
extended to the extent necessary, but not more than 90 days after the Flip-In
Trigger Date, in order that the Company may seek shareholder approval for the
authorization of such additional shares of Common Stock or Common Stock
Equivalents (such 30-day period, as it may be extended, being hereinafter
referred to as the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the second and/or third
sentence of this Section 11(a)(iii), the Company (x) shall provide, subject to
the last sentence of this Section 11(a)(ii) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to the first sentence of Section 11(a)(iii) and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section 11(a)(iii),
the value of the Common Stock shall be the Current Market Price per share of the
Common Stock on the Flip-In Trigger Date and the per share or per unit value of
any Common Stock Equivalent shall be deemed to equal the Current Market Price
per share of the Common Stock on such date. The Board of Directors may, but
shall not be required to, establish procedures to allocate the right to receive
Common Stock upon the exercise of the Rights among holders of Rights pursuant to
this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all holders
of Preferred Stock entitling them to subscribe for or purchase Preferred Stock
(for a period expiring within 45 calendar days after such record date), shares
having the same rights, privileges and preferences as the Preferred Stock (a
"Preferred Stock Equivalent") or securities convertible into Preferred Stock or
Preferred Stock Equivalent at a price per share of Preferred Stock or Preferred
Stock Equivalent (or having a conversion price per share, if a security
convertible into Preferred Stock or Preferred Stock Equivalent) less than the
Current Market Price per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or Preferred Stock Equivalent (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Preferred Stock Equivalent to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which is in a form other
than cash, the value of such non-cash consideration shall be as determined in
good faith by 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
16
successively whenever such a record date is fixed, and in the event that such
rights or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for 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 corporation) of evidences of indebtedness, cash, assets (other than a
dividend payable in Preferred Stock, but including any dividend payable in stock
other than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Preferred Stock on such record
date, less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness to
be distributed or of such subscription rights or warrants applicable to a share
of Preferred Stock and the denominator of which shall be such Current Market
Price per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation
hereunder, other than computations made pursuant to Section 11(a)(iii) hereof,
the "Current Market Price" per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of the Common Stock for
the 30 consecutive Trading Days immediately prior to such date, and for purpose
of computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of the Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of the Common Stock for the 10
consecutive Trading Days immediately following such date; provided, however,
that in the event that the Current Market Price per share of the Common Stock is
determined during a period following the announcement by the issuer of the
Common Stock of (i) any dividend or distribution on the Common Stock (other than
a regular quarterly cash dividend and other than the Rights), (ii) any
subdivision, combination or reclassification of the Common Stock, and prior to
the expiration of the requisite 30 Trading Day or 10 Trading Day period, as set
forth above, after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification occurs,
then, and in each such case, the Current Market Price shall be properly adjusted
to take into account ex-dividend trading. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date the shares of Common Stock
17
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
Common Stock selected by the Board of Directors. If on any such date no market
maker is making a market in the Common Stock , the fair value of such shares on
such date as determined in good faith by the Board of Directors shall be used
and shall be binding on the Rights Agent. If the Common Stock is not publicly
held or not 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.
(ii) For the purpose of any computation
hereunder, the "Current Market Price" per share (or one one-thousandth 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(d) (other than the
last sentence thereof). If the Current Market Price per share (or one
one-thousandth 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(d), the "Current
Market Price" per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1,000 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock occurring after the date of this Rights Agreement) multiplied
by the Current Market Price per share of the Common Stock, and the "Current
Market Price" per one one-thousandth 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 nor the Preferred Stock is
publicly held or so listed or traded, "Current Market Price" shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share of
Common Stock or other share or one-hundred-thousandth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which mandates
such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock other
than Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof 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 of Preferred Stock
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms to any such other shares.
18
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of shares of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandth of a share of Preferred Stock (calculated to the nearest one
one-thousandth) obtained by (i) multiplying (x) the number of one one-thousandth
of a share of Preferred Stock covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price or any adjustment to the number of shares of
Preferred Stock for which a Right may be exercised made pursuant to Sections
11(a)(i), 11(b) or 11(c), to adjust the number of Rights in lieu of any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of shares of Preferred
Stock for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one hundred-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company 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 to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of
the Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price per
19
share and the number of shares which were expressed in the initial Right
Certificate issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
shares of Common Stock, Preferred Stock or other capital stock issuable upon
exercise of the Rights, the Company shall take any corporate action, including
using its best efforts to obtain any required shareholder approvals, 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 Common Stock,
Preferred Stock or other capital stock 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.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuance 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 xxxx or other appropriate instrument evidencing such holder's right
to receive such additional shares of Preferred Stock and other capital stock or
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly permitted or required
by this Section 11, as and to the extent that in their good faith judgment the
Board of Directors of the Company shall determine to be advisable in order that
any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance for
cash of any shares of Preferred Stock at less than the Current Market Price,
(iii) issuance for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of Preferred Stock,
(iv) stock dividends or (v) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any other Person,
(ii) merge with or into any other Person, or (iii) sell or transfer (or permit
any Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, if (x) at the time of or immediately after such
consolidation, merger or sale there are any charter or by-law provisions or any
rights, warrants or other instruments or securities outstanding or agreements in
effect which substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the shareholders of the Person who
constitutes, or would
20
constitute, the Principal Party for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or any of its
Affiliates and Associates. The Company shall not consummate any such
consolidation, merger or sale unless prior thereto the Company and such other
Person shall have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this subsection.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Rights Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Record Date and prior to the Distribution Date (i) declare or pay any dividend
on the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event equals the result obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such event by a fraction,
the numerator or which shall be the number of shares of Common Stock outstanding
immediately prior to the occurrence of such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately following
the occurrence of such event.
12. Certification of Adjustments. Whenever an adjustment is made
as provided in Sections 11 and 13 hereof, the Company shall (a) promptly prepare
a certificate signed by its Chief Executive Officer, its President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company setting forth such adjustment and a brief
statement of the facts giving rise to 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 (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in accordance
with Section 26 hereof. Notwithstanding the foregoing sentence, the failure of
the Company to give such notice shall not affect the validity of or the force or
effect of or the requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any certificate prepared by the Company pursuant
to Sections 11 and 13 and on any adjustment therein contained and shall not be
deemed to have knowledge of any such adjustment unless and until it shall have
received such certificate. Any adjustment to be made pursuant to Sections 11 and
13 of this Rights Agreement shall be effective as of the date of the event
giving rise to such adjustment.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that following the first occurrence of a
Flip-In Event, directly or indirectly, (x) the Company shall consolidate with,
or merge with and into, any other Person
21
or Persons and the Company, as the case may be, shall not be the surviving or
continuing Person of such consolidation or merger, or (y) any Person or Persons
shall consolidate with, or merge with and into, the Company, and the Company
shall be the continuing or surviving Person of such consolidation or merger and,
in connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or of the Company or cash or any other property
other than, in the case of the transactions described in subparagraphs (x) or
(y), a merger or consolidation which would result in all of the Voting Power
represented by the securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the Voting Power
represented by the securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and the holders of
such securities not having changed as a result of such transactions), or (z) the
Company or one or more of its Subsidiaries shall sell, mortgage or otherwise
transfer to any other Person or any Affiliate or Associate of such Person, in
one transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole), then, on the first occurrence of any such event
(a "Flip-Over Event"), proper provision shall be made so that (i) each holder of
a Right (other than Rights which have become null and void pursuant to Section
11(a)(ii) hereof) shall thereafter have the right to receive, upon the exercise
thereof at the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof), in accordance with the terms of this Rights Agreement
and in lieu of shares of Preferred Stock or Common Stock of the Company, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by dividing
the Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof) by 50% of the Current Market Price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; provided, however,
that the Purchase Price (as theretofore adjusted in accordance with Section
11(a)(ii) hereof) and the number of shares of Common Stock of such Principal
Party so receivable upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 11(f) hereof to reflect any
events occurring in respect of the Common Stock of such Principal Party after
the occurrence of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Flip-Over Event, all the obligations and duties of the Company pursuant to
this Rights Agreement; (iii) the term "Company" for all purposes of this Rights
Agreement shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall only apply
to such Principal Party following the first occurrence of a Flip-Over Event; and
(iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled
22
to receive, upon exercise of a Right, such cash, shares, rights, warrants and
other property which such holder would have been entitled to receive had he, at
the time of such transaction, owned the shares of Common Stock of the Principal
Party purchasable upon the exercise of a Right, and such Principal Party shall
take such steps (including, but not limited to, reservation of shares of stock)
as may necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
(x) or (y) of the first sentence of Section 13(a) hereof: (A) the Person that is
the issuer of the securities into which shares of Common Stock of the Company
are converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer the Common Stock of which has the greatest aggregate
market value or (B) if no securities are so issued, (x) the Person that is the
other party to the merger or consolidation and that survives said merger or
consolidation, or, if there is more than one such Person, the Person the Common
Stock of which has the greatest market value or (y) if the Person that is the
other party to the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or consolidation
(including the Company if it survives); and
(ii) in the case of any transaction described in
(z) of the first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest portion of
the assets or earning power cannot be determined, whichever of such Persons that
is the issuer of Common Stock having the greatest aggregate market value of
shares outstanding;
provided, however, that in any such case described in the foregoing paragraphs
(b)(i) or (b)(ii), (1) 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 of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest market value of shares outstanding, or (3) if
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in clauses (1) and (2) above shall apply to each of the
owners having an interest in the joint venture as if the Person owned by the
joint venture was a Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations set forth in this
Section 13 in the same ratio as its interest in such Person bears to the total
of such interests.
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) unless the Principal Party
shall have a sufficient number of authorized shares of its Common Stock that
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
23
thereto the Company and the Principal Party involved therein shall have executed
and delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance with
their terms and that such consolidation, merger, sale or transfer of assets
shall not result in a default by the Principal Party under this Rights Agreement
as the same shall have been assumed by the Principal Party pursuant to Sections
13(a) and (b) hereof and further providing that, as soon as practicable after
executing such agreement pursuant to this Section 13, the Principal Party at its
own expense shall:
(i) prepare and file a registration statement
under the Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, use
its best efforts to cause such registration statement to become effective as
soon as practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the date of expiration of
the Rights, and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of
the Principal Party shall become listed on a national securities exchange, to
list (or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Stock of
the Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchased upon exercise of the Rights to be
reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first
refusal or preemptive rights in respect of the shares of Common Stock of the
Principal Party subject to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a).
(d) Furthermore, in case the Principal Party which is to
be a party to a transaction referred to in this Section 13 has a provision in
any of its authorized securities or in its Certificate of Incorporation or
Bylaws or other instrument governing its corporate affairs, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal Party
at less than the then Current Market Price per share (determined pursuant to
Section 11(d) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then current market price (other
than to holders of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of Section
13; then, in such event, the Company hereby agrees
24
with each holder of Rights that it shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions
of Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the holders of record
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the then
current market value of a whole Right. For the purposes of this Section 14(a),
the then current market value of a Right shall be determined in the same manner
as the Current Market Price of a share of Common Stock shall be determined
pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions
of shares of Preferred Stock or Preferred Stock Equivalents (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock) upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock or Preferred Stock Equivalents
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock or Preferred Stock
Equivalents 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 or Preferred Stock Equivalents represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock or Preferred Stock
Equivalents that are not integral multiples of one one-thousandth of a share of
Preferred Stock or Preferred Stock Equivalents, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one one-thousandth of a share of Preferred Stock or a Preferred
Stock Equivalent. For purposes of this Section 14(b), the current market value
of one one-thousandth of a share of Preferred Stock or Preferred Stock
Equivalents shall be the Current Market Price of a share of Common Stock (as
determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of a Flip-In Event, the
Company shall not be required to issue fractions of shares or units of Common
Stock or Common Stock Equivalents or other securities upon exercise of the
Rights or to distribute certificates which evidence fractional shares of such
Common Stock or Common Stock Equivalents or other securities. In lieu of
fractional shares or units of such Common Stock or 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 or Common Stock Equivalent or other securities. For
purposes of this Section 14(c), the Current Market Value shall be
25
determined in the manner set forth in Section 11(d) hereof for the Trading Day
immediately prior to the date of such exercise and, if such Common Stock
Equivalent is not traded, each such Common Stock Equivalent shall have the value
of one one-thousandth of a share of Preferred Stock.
(d) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares upon exercise of a Right.
15. Rights of Action. As of the Record Date, all rights of action
in respect of this Rights Agreement, other than any rights of action vested in
the Rights Agent pursuant to Sections 18 and 20 hereof, are vested in the
respective holders of record of the Right Certificates (and, prior to the
Distribution Date, the holders of record of the Common Stock); and any holder of
record 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 or any
other Person 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 Rights 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 Rights Agreement and, accordingly, that they 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 Rights 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 Rights Agreement.
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 not
be evidenced by a Right Certificate and will be transferable only in connection
with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates
will be transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(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 Certificate or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent or the
transfer agent of the Common Stock) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Rights Agreement to
the contrary, neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or other
26
Person as a result of its inability to perform any of its obligations under this
Rights Agreement by reason of any preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, that the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.
17. Right Certificate Holder Not Deemed a Shareholder. No holder
of a Right, as such, shall be entitled to vote, receive dividends in respect of
or be deemed for any purpose to be the holder of Common Stock or any other
securities of the Company which may at any time be issuable upon the exercise of
the Rights, 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 right to vote in 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 in respect
of any such stock or securities, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Rights Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability or expense incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent for any thing done
or omitted to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability in the premises. The indemnity provided
herein shall survive the expiration of the Rights and the termination of this
Rights Agreement. Notwithstanding anything in this Rights Agreement to the
contrary, in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss damage and regardless of the form of action.
(b) The Rights Agent shall be protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance upon any
Right Certificate, certificate for Common Stock or 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, guaranteed, verified or acknowledged, by the proper Person or
Persons.
27
19. Merger or Consolidation or Changed Name of Rights Agent.
(a) Any Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Rights
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 Person would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Rights Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver such 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
Certificate shall have the full force provided in the Right Certificates and in
this Rights Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Rights Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted to be taken by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person and the determination of Current Market Price) 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
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 Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Rights Agreement in reliance upon such
certificate.
28
(c) The Rights Agent shall be liable hereunder only for
its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Rights Agreement
or in the Right Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Rights 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 Rights
Agreement or in any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Sections 11, 13, 23 or 24 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 receipt of a Certificate furnished pursuant to Section 12 describing 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 Common Stock to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Common Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the President or any
Vice President or the Secretary or any Assistant Secretary or 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. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Rights Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. Subject to Section 20(c)
hereof, the Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
29
(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 Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Rights 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 contained in the
form of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise of transfer
without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing, or such earlier period as shall be
agreed to in writing, mailed to the Company and to each transfer agent of the
Common 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 (with or without cause) upon 30 days' notice in writing,
or such earlier period as shall be agreed to 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 by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. In the event the transfer agency
relationship in effect between the Company and the Rights Agent terminates, the
Rights Agent will be deemed to resign automatically on the effective date of
such termination and any required notice will be sent by the Company. If the
Rights Agent shall otherwise resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 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 incumbent Rights Agent or the holder of
record of any Right Certificate
30
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a Person organized and doing business under the laws
of the United States or any State thereof, 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 $50,000,000 or (b) an Affiliate controlled by a Person
described in clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price per share 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 Rights Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company shall, with respect to shares of Common Stock so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however, that (i)
no such Right Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued, if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
23. Redemption.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (x) the first occurrence of a
Flip-In Event or (y) the Close of Business on the Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of
$0.0001 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price").
31
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights (or at such later time as
the Board of Directors may establish for the effectiveness of such redemption),
and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors ordering the
redemption of the Rights (or such later time as the Board of Directors may
establish for the effectiveness of such redemption), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of redemption shall state the method by which the payment of the Redemption
Price will be made. The failure to give notice required by this Section 23(b) or
any defect therein shall not affect the legality or validity of the action taken
by the Company.
(c) In the case of a redemption permitted under Section
23(a) hereof, the Company may, at its option, discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the manner
of redemption of the Rights and (ii) mailing payment of the Redemption Price to
the registered holders of the Rights at their last addresses as they appear on
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent of the Common Stock, and upon such
action, all outstanding Right Certificates shall be null and void without any
further action by the Company.
24. Exchange of Rights for Common Stock.
(a) The Board of Directors of the Company may, at its
option, at any time after the occurrence of a Flip-In Event, exchange all or
part of the then outstanding and exercisable Rights (which (i) shall not include
Rights that have become null and void pursuant to the provisions of Section
11(a)(ii) hereof, and (ii) shall include, without limitation, any Rights issued
after the Distribution Date in accordance with Section 22 hereof) for shares of
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of shares of Common Stock aggregating 50% or more of the shares
of Common Stock then outstanding. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been
exchanged pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
24(a).
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to subsection (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
32
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 shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become null and void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute, and, in the event that there shall not
be sufficient shares of Common Stock issued but not outstanding or authorized
but unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall substitute to the extent of such
insufficiency, for each share of Common Stock that would otherwise be issuable
upon exchange of a Right, a number of shares of Preferred Stock Equivalents or
fractions thereof having an aggregate current per share market price (determined
pursuant to Section 11(d) hereof) equal to the current per share market price of
one share of Common Stock (determined pursuant to Section 11(d) hereof) as of
the date of the Flip-In Event.
(d) In the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock 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 (d),
the current market value of a whole share of Common Stock shall be the Current
Market Price of a share of Common Stock (as defined in Section 11(d) hereof for
the purposes of computations made other than pursuant to Section 11(a)(iii)) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date,
shall propose (i) to effect any of the transactions referred to in Section
11(a)(i) hereof or to pay any dividend to the holders of record of its Preferred
Stock payable in stock of any class or to make any other distribution to the
holders of record of its Preferred Stock (other than a regular periodic cash
dividend), or (ii) to offer to the holders of record of its Preferred Stock or
options, warrants, or other rights to
33
subscribe for or to purchase shares of Preferred Stock (including any security
convertible into or exchangeable for Preferred Stock) or shares of stock of any
other class or any other securities, options, warrants, convertible or
exchangeable securities or other rights, or (iii) to effect any reclassification
of its Preferred Stock or any recapitalization or reorganization of the Company,
or (iv) to effect any consolidation or merger with or into, or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of record of a Right Certificate, in accordance with
Section 26 hereof, notice of such proposed action, which shall specify the
record date for the purposes of such transaction referred to in Section 11(a)(i)
hereof, or such dividend or distribution, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger, sale
or transfer of assets, liquidation, dissolution or winding up is to take place
and the record date for determining participation therein by the holders of
record of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least 10 days prior to the record date for determining holders of record of
the Preferred Stock for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of record of
Preferred Stock, whichever shall be the earlier.
(b) In case any of the transactions referred to in
Section 11(a)(ii) or Section 13 of this Rights Agreement are proposed, then, in
any such case, the Company shall give to each holder of Rights, in accordance
with Section 26 hereof, notice of the proposal of such transaction at least 10
days prior to consummating such transaction, which notice shall specify the
proposed event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13 hereof, as the case may be, and, upon
consummating such transaction, shall similarly give notice thereof to each
holder of Rights.
(c) 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.
26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or Right to or on behalf of the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Abaxis, Inc.
0000 Xxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Corporate Secretary
Subject to the provisions of Section 20 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the
34
Company) as follows:
EquiServe Trust Company, N.A.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Client Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent.
27. Force Majeure. Notwithstanding anything to the contrary
contained in this Rights Agreement, Rights Agent shall not be liable for any
delays or failures in performance resulting from acts beyond its reasonable
control including, without limitation, acts of God, terrorist acts, shortage of
supply, breakdowns or malfunctions, interruptions or malfunction of computer
facilities, or loss of data due to power failures or mechanical difficulties
with information storage or retrieval systems, labor difficulties, war or civic
unrest.
28. Supplements and Amendments. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Rights Agreement in any respect without the approval of any holders of the
Rights. At any time when the Rights are no longer redeemable, except as provided
in the penultimate sentence of this Section 27, the Company may, and the Rights
Agent shall, if the Company so directs, supplement or amend this Rights
Agreement without the approval of any holders of Right Certificates in order to
(i) cure any ambiguity, (ii) correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) shorten or lengthen any time period hereunder, or (iv) change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; provided, that no such supplement or amendment shall
adversely affect the interests of the holders of Rights as such (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no
such amendment may cause the Rights again to become redeemable or cause the
Agreement again to become amendable other than in accordance with this sentence.
Notwithstanding anything contained in this Rights Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
29. Successors. All of the covenants and provisions of this Rights
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.
30. Benefits of this Rights Agreement. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the
35
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
Rights Agreement; this Rights Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the holders of record of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).
31. Determinations and Actions by the Board of Directors. The
Board of Directors shall have the exclusive power and authority to administer
this Rights Agreement and to exercise the rights and powers specifically granted
to the Board of Directors or to the Company, or as may be necessary or advisable
in the administration of this Rights Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this Rights Agreement and
(ii) make all determinations deemed necessary or advisable for the
administration of this Rights Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend or not amend this
Rights Agreement). All such actions, calculations, interpretations and
determinations that are done or made by the Board of Directors in good faith
shall be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties.
32. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of California and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made solely by residents of such state and performed entirely within such
state.
33. Counterparts. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
34. Descriptive Headings. Descriptive headings of the several
sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
35. Severability. If any term, provision, covenant or restriction
of this Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, illegal or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Rights Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, and their seals affixed and attested, all as of
the date and year first above written.
[SEAL]
ATTEST: ABAXIS, INC.
36
By:____________________________ By:___________________________________
Name: Zara Xxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Secretary Title: Chief Executive Officer
[SEAL]
ATTEST: EQUISERVE TRUST COMPANY, N.A.
By:____________________________ By:___________________________________
Name: Name:
Title: Title:
37
Exhibit A
Certificate of Determination
EXHIBIT B
Form of Right Certificate
Certificate No. W- Series RP Preferred Stock Rights
RIGHT CERTIFICATE
NOT EXERCISABLE AFTER APRIL ___, 2013, OR EARLIER IF REDEEMED OR
EXCHANGED AT THE OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED AT
$0.001 PER RIGHT OR EXCHANGED FOR COMMON STOCK ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. IN THE EVENT THAT THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR
CERTAIN TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS, THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL BE NULL AND
VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHT CERTIFICATE
ABAXIS, 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 April ___, 2003 (the "Rights Agreement") between ABAXIS,
Inc., a California corporation (the "Company"), and Equiserve Trust Company,
N.A. (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m. (New York time) on April ___, 2003, at the principal office of the
Rights Agent, or its successors as Rights Agent, designated for such purposes,
one one-thousandth of a fully paid and nonassessable share of Series RP
Preferred Stock of the Company (the "Preferred Stock") at a purchase price of
$_____ per one one-thousandth of a share, as the same may from time to time be
adjusted in accordance with the Rights Agreement (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Rights
Agreement.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events and, upon the
happening of certain events, securities other than shares of Preferred Stock, or
other property, may be acquired upon exercise of the Rights evidenced by this
Right Certificate, as provided by the Rights Agreement.
Upon the occurrence of a Flip-In Event, if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such
Acquiring Person, (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a Person who, after such transfer, became an
Acquiring Person, or any Affiliate or Associate of an Acquiring Person, such
Rights shall be null and void and will no longer be transferable and no holder
hereof shall have any right with respect to such Rights from and after the
occurrence of such Flip-In Events.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
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 of the Rights Agent,
the Company and the holders of record of the Right Certificates, which
limitation of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive office of
the Company and are available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder of record 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, at any time prior to
the earlier of (i) the occurrence of a Flip-In Event (as such term is defined in
the Rights Agreement) or (ii) the Expiration Date (as such term is defined in
the Rights Agreement), the Rights evidenced by this Certificate may be redeemed
by the Company at its option at a redemption price of $0.001 per Right. Subject
to the provisions of the Rights Agreement, the Company may, at its option, at
any time after a Flip-In Event, and prior to the acquisition of 50% or more of
the outstanding Common Stock by an Acquiring Person, exchange all or part of the
Rights evidenced by this Certificate for shares of the Company's Common Stock or
for Preferred Stock (or shares of a class or series of the Company's preferred
stock having the same rights, privileges and preferences as the Preferred
Stock).
In the event (i) any Person or group becomes an Acquiring Person or
(ii) any of the types of transactions, acquisitions or other events described
above as self-dealing transactions occur, and prior to the acquisition by such
person or group of 50% or more of the outstanding shares of Common Stock, the
Board of Directors may require all or any portion of the outstanding Rights
(other than Rights owned by such Acquiring Person which have become null and
void) to be exchanged for Common Stock on a pro rata basis, at an exchange ratio
of one share of Common Stock or one one-thousandth of a share of Preferred Stock
(or of a share of a class or series of the Company's Preferred Stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
No fractional shares of Preferred Stock shall be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the option of the Company, be evidenced by depositary receipts), and no
fractional shares of Common Stock will be issued upon the exchange of any Right
or Rights evidenced hereby, and in lieu thereof, as provided in the Rights
Agreement, fractions of shares of Preferred Stock or Common Stock shall receive
an amount in cash equal to the same fraction of the then Current Market Price
(as such term is defined in the Rights Agreement) of a share of Preferred Stock
or Common Stock, as the case may be.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common 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 in 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 (other than certain actions specified in
the Rights Agreement) or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised or exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of April ___, 2003.
ATTEST: ABAXIS, INC.
___________________________ By:__________________________________________
Zara Xxxxxx Name: Xxxxxxx X. Xxxxxxxx
Secretary Title: President and Chief Executive Officer
COUNTERSIGNED: EQUISERVE TRUST COMPANY, N.A.
As Rights Agent
By:__________________________________________
Authorized Officer
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of transferee)
___________________________________ (_______________) of the Rights represented
by this Right Certificate, together with all right, title and interest in and to
said Rights, and hereby irrevocably constitutes and appoints
_________________________ attorney to transfer said Rights on the books of the
within-named Company with full power of substitution.
Dated:___________________, ______ ________________________________
(Signature)
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
36. the rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person (as such capitalized terms are defined in the Rights
Agreement);
37. 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 or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Dated:___________________, ______ ________________________________
(Signature)
Signature Guaranteed:
Form of Reverse Side of Right Certificate
(continued)
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a participant in a
Securities Transfer Association ("STA") recognized signature program.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
Form of Reverse of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To Abaxis, Inc.:
The undersigned hereby irrevocably elects to exercise _______________
(__________) of the Rights represented by this Right Certificate to purchase the
shares of the Common Stock of the Company, or other securities or property
issuable upon the exercise of said number of Rights pursuant to the Rights
Agreement.
The undersigned hereby requests that a certificate for any such securities and
any such property be issued in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights shall not
be all the Rights represented by this Right Certificate, a new Right Certificate
for the remaining balance of such Rights be issued in the name of and delivered
to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated:___________________, ______ ________________________________
(Signature)
Signature Guaranteed:
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 or an Affiliate or Associate
of any such Acquiring Person (as such terms are defined pursuant to the Rights
Agreement);
38. 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 or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Dated:___________________, ______ ________________________________
(Signature)
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of the this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever, and 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.
In the event that the foregoing Certificate is not executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
EXHIBIT C
Summary of Rights to Purchase Preferred Stock
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT DATED
APRIL ___, 2003 (THE "RIGHTS AGREEMENT") BETWEEN ABAXIS, INC. AND EQUISERVE
TRUST COMPANY, N.A., RIGHTS ISSUED TO, BENEFICIALLY OWNED BY OR TRANSFERRED TO
ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) OR AN ASSOCIATE OR AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT)
THEREOF AND CERTAIN TRANSFEREES THEREOF WILL BE NULL AND VOID AND WILL NO LONGER
BE TRANSFERABLE.
Abaxis, Inc.
SUMMARY OF TERMS OF
RIGHTS AGREEMENT
NATURE OF RIGHT: When exercisable, each Right (a "Right") will initially
entitle the holder to purchase one one-thousandth of a
share of Series RP Preferred Stock ("Preferred Stock")
of Abaxis, Inc. (the "Company").
MEANS OF DISTRIBUTION: The Rights will be distributed to holders of the
Company's outstanding Common Stock as a dividend of one
Right for each share of Common Stock. The Rights will
also be attached to all future issuances of Common Stock
prior to the Distribution Date (as defined below).
EXERCISABILITY: Rights become exercisable on the earlier of: (i) the
date of public announcement by the Company or by any
person or group (an "Acquiring Person") that such person
or group has acquired beneficial ownership of 15% or
more of the Company's outstanding Common Stock, or (ii)
the tenth business day (unless extended by the Board
prior to the time a person becomes an Acquiring Person)
following the commencement, or announcement of an
intention to commence, by any person or group of a
tender or exchange offer which would result in such
person owning 15% or more of the outstanding Common
Stock of the Company (the earlier of such dates being
referred to as the "Distribution Date"), provided, that
an Acquiring Person does not include an Exempt Person
(as such terms are defined in the Rights Agreement).
Rights will trade separately from the Common Stock once
the Rights become exercisable.
PURCHASE PRICE: $24.00 per one one-thousandth of a share of Preferred
Stock, which is the amount that in the judgment of the
Board of Directors represents the long-term value of the
Common Stock over the term of the Rights Agreement (the
"Purchase Price").
TERM: The Rights will expire upon the earlier of (i) ten years
after the date of issuance, or April 22, 2013 or (ii)
redemption or exchange by the Company as described
below.
REDEMPTION OF RIGHTS: Rights are redeemable at a price of $0.001 per Right, by
the vote of the Company's Board of Directors, at any
time until the occurrence of a Flip-In Event (defined
below).
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 other series).
Each share of Preferred Stock will have a preferential
cumulative quarterly dividend in an amount equal to the
greater of (a) $600.00 or (b) 1,000 times the dividend
declared on each share of Common Stock. In the event of
liquidation, the holders of Preferred Stock will receive
a preferred liquidation payment equal to the greater of
(a) $24,000.00 per share, plus accrued dividends to the
date of distribution whether or not earned or declared,
or (b) an amount per share equal to 1,000 times the
aggregate payment to be distributed per share of Common
Stock. Each share of Preferred Stock will have 1,000
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 for or changed into other securities, cash
and/or other property, each share of Preferred Stock
will be entitled to receive 1,000 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 (in integral
multiples of one one-thousandth) 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-thousandth
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. Because of
the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of one
one-thousandth of a share of Preferred Stock purchasable
upon exercise of each Right should approximate the value
of one share
of Common Stock.
RIGHTS IN EVENT OF In the event that an Acquiring Person engages in certain
SELF-DEALING self-dealing transactions or becomes a beneficial owner
TRANSACTION OR of 15% or more of the outstanding Common Stock ("Flip-In
ACQUISITION OF Events"), a holder of a Right thereafter has the right
SUBSTANTIAL AMOUNT OF to purchase, upon payment of the then current Purchase
COMMON STOCK: Price, in lieu of one one-thousandth of a share of
Preferred Stock per outstanding Right, such number of
shares of Common Stock having a market value at the time
of the transaction equal to the Purchase Price divided
by one-half the Current Market Price (as defined in the
Rights Agreement) of the Common Stock. Notwithstanding
the foregoing, Rights held by the Acquiring Person or
any Associate or Affiliate thereof or certain
transferees will be null and void and no longer be
transferable.
Self-dealing transactions are defined to include a
consolidation, merger or other combination of an
Acquiring Person with the Company in which the Company
is the surviving corporation, the transfer of assets to
the Company in exchange for securities of the Company,
the acquisition of securities of the Company (other than
in a pro rata distribution to all stockholders), the
sale, purchase, transfer, distribution, lease, mortgage,
pledge or acquisition of assets by the Acquiring Person
to, from or with the Company on other than an arm's
length basis, compensation to an Acquiring Person for
services (other than for employment as a regular or
part-time employee or director on a basis consistent
with the Company's past practice), a loan or provision
of other financial assistance (except proportionately as
a stockholder) to an Acquiring Person or the licensing,
sale or other transfer of proprietary technology or
know-how from the Company to the Acquiring Person on
terms not approved by the Board of Directors or a
reclassification, recapitalization or other transaction
with the effect of increasing by more than 1% the
Acquiring Person's proportionate share of any class of
securities of the Company.
RIGHTS IN EVENT OF If, following the occurrence of a Flip-In Event, the
BUSINESS COMBINATION: Company is acquired by any person in a merger or other
business combination transaction in which the Common
Stock is exchanged or converted or in which the Company
is not the surviving corporation, or 50% or more of its
assets or earnings power are sold to any person
("Flip-Over Events"), each holder of a Right (other than
an Acquiring Person, or Affiliates or Associates
thereof) shall thereafter have the right to purchase,
upon payment of the then current Purchase Price, such
number of shares of common stock of the acquiring
company having a current market value equal to the
Purchase Price divided by one-half the Current Market
Price of such common stock.
EXCHANGE OPTION: In the event (i) any person or group becomes an
Acquiring Person or (ii) any of the types of
transactions, acquisitions or other events described
above as self-dealing transactions occur, and prior to
the acquisition by such person or group of 50% or more
of the outstanding shares of Common Stock, the Board may
require all or any portion of the outstanding Rights
(other than Rights owned by such Acquiring Person which
have become void) to be exchanged for Common Stock on a
pro rata basis, at an exchange ratio of one share of
Common Stock or one one-thousandth of a share of
Preferred Stock (or of a share of a class or series of
the Company's Preferred Stock having equivalent rights,
preferences and privileges), per Right (subject to
adjustment).
FRACTIONAL SHARES: No fractional shares of Common Stock will be issued upon
exercise of the Rights and, in lieu thereof, a payment
in cash will be made to the holder of such Rights equal
to the same fraction of the current market value of a
share of Common Stock.
ADJUSTMENT: 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 or convertible securities 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 dividends
payable in Preferred Stock) or of subscription rights or
warrants (other than those referred to above). The
number of Rights associated with each share of Common
Stock is also subject to adjustment in the event of a
stock split of the Common Stock or a stock dividend on
the Common Stock payable in
Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such
case, prior to the Distribution Date.
RIGHTS AS STOCKHOLDER: The Rights themselves do not entitle the holder thereof
to any rights as a stockholder, including, without
limitation, voting rights or to receive dividends.
AMENDMENT OF RIGHTS: Until the Rights become nonredeemable, the Company may,
except with respect to the redemption price, amend the
Agreement in any manner. After the Rights become
nonredeemable, the Company may amend the Agreement to
cure any ambiguity, to correct or supplement any
provision which may be defective or inconsistent with
any other provisions, to shorten or lengthen any time
period under the Rights Agreement, or to change or
supplement any provision in any manner the Company may
deem necessary or desirable, provided that no such
amendment may adversely affect the interests of the
holders of the Rights (other than the Acquiring Person
or its Affiliates or Associates) or cause the Rights to
again be redeemable or the Agreement to again be freely
amendable.
A COPY OF THE RIGHTS AGREEMENT IS AVAILABLE, FREE OF CHARGE, FROM THE
COMPANY, ABAXIS, INC., 0000 XXXXXXX XXXX, XXXXX XXXX, XX 00000;
ATTENTION: CORPORATE SECRETARY. THIS SUMMARY DESCRIPTION OF THE RIGHTS
AGREEMENT DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, AS AMENDED FROM TIME TO
TIME, WHICH IS INCORPORATED IN THIS SUMMARY DESCRIPTION BY REFERENCE.
